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CARL WA,LDRE.P On Behalf of Himself and All Ote.rs Similarly Situated,
Plaintiff, vs.
VALUECLICK, INC., JAMES R. ZARLEY and SAMUEL J. PAISLEY,
Case No. 2:07-cv-0541 1-DDP-AJW
DECLARATION OF JASON ROWE IN SUPPORT OF PLAINTIFFS' OPPOSITION TO DEFENDANTS' RULE I I MOTION
2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 1 of 26 Page ID #:1
BARRACK, RODOS & BACINE STEPHEN R. BASSER(121590) sbasseri.barrack. corn JOHN L H. ..AEUSSLER (215044) jhaeuss1erbarrack. corn 402 West Broadway, Suite 850 San Diego, CA 92101 Telephone: (619) 230-0800 Facsimile: (619) 230-1874
BARRACK, RODOS & BACINE LEONARD BARRACK DANIEL E. BACINE MARK R. ROSEN (139506) rnrosen(Zbarrack. corn CHAD A. CARDER 3300 Two Commerce Square
Market Street Philadelphia, PA 19103 Telephone: (215) 963-0600 Facsimile: (2.15) 963-0838
Counsel for .Laborers International Union of North America National (Industrial) Pension Fund and LIUNA. Staff & Affiliates Pension Fund and Lead Counsel for Plaintiffs and the Class
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
Defendants. JURY TRIAL DEMANDED
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2 I, Jason Rowe, pursuant to 28 Usc Section 1746 declare and state as follows:
3 1. I have been a licensed private investigator in the State of California
4 for over 25 years. I moved my residence last year, and do not recall if I notified
5 the Secretary of State licensing office. I recently, through defendant's motion,
6 realized I did not receive my annual renewal fee notice from the State, which I no
7 understand was due in November 2007. Upon learning of this I promptly sent the
8 applicable annual fee plus the required late fee to the Licensing Board for private
9 investigators in California. The department has now confirmed that my license
10 remains in good standing, and a copy of the California record of my license status
11 is attached to this declaration as Exhibit 1. California does not require licensed
12 investigators to go through a re-licensing procedure, unless fees become delinquei
for a three year period. Therefore, once the Licensing Board processes late fees, ii
14 California considers investigators to have been continuously licensed since the dat
15 of initial issuance which in my case was in 1982. I have never been disciplined for
16 any type of professional misconduct, nor told that any complaint against me or any
17 employee working for me under my license was ever filed with the Licensing
Board. 18
19 2. I began working as an investigator in 1977 in the Los Angeles area,
20 where I have always been based. In 1982 I became licensed and began my own
21 business called Jason Rowe Investigations. For about my first ten years working
22 as an investigator, I primarily did field work in the Southern California area,
23 interviewing and taking handwritten statements in person from witnesses, as well
24 as conducting background investigations and further reviewing public records and
25 files at outlying courts. During those years I grew a small firm, primarily doing
26 insurance defense work for clients that included house counsel for several large
27 insurance companies.
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3. During the mid 1980s, my caseload began to shift more toward
Plaintiff work and then I had the good fortune of working for several of the leading
trial lawyers in Southern California. My firm and I primarily worked on larger
litigation matters, and I developed expertise in the areas of product liability,
especially auto crashworthiness and stability cases beginning with the Ford Pinto
gas tank explosions; then more recent tire failure and SUV rollover accidents; as
well as construction related accidents; and both plaintiff and defense work on cases
involving toxic landfills and old defense contractor plant sites. I did this work on
the phone and still many times in person, such as interviewing and obtaining
declarations from residents and former workers in World War II contractor
facilities by going door-to-door in areas where toxins were disposed or released. I
continue to investigate auto products liability and toxic tort cases.
4. Beginning in 1987, I also began developing a specialty investigating
cases filed under the Qui Tam provisions of the False Claims Act, where for the
next decade I worked closely with my trial lawyer clients, as well as Assistant U.S.
Attorneys, attorneys for the Department of Justice and investigators for various
military agencies on cases alleging fraud under government and military contracts.
This work also led to assignments to investigate military engagement incidents,
where failures of weapons systems resulted in deaths to civilians and soldiers. In
the mid-nineties my workload transitioned to investigating complex business
litigation including the areas of breach and fraud, intellectual property, anti-trust,
then consumer and class litigation matters; including insurance industry and
securities actions which have dominated my workload as an investigator since
approximately 1999.
5. The predominant type of work I have always been assigned by my
investigation clients, has involved developing facts through interviews of
percipient and expert witnesses. This work has ranged from telephone interviews
Df former employees of defendant companies, to in-person interviews and
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1 obtaining witness declarations for discovery from percipient as well as designated
2 and lay experts.
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6. In approximately 1997, I began contracting with L.R. Hodges &
4 Associates ("LRH&A"), the investigation firm formed by my long-time associate
5 and colleague, Lynne Hodges. Through LRH&A, I have received over 125
6 assignments primarily on securities or "shareholder" class actions. I have worked
7 on thousands of litigation cases. In the course of this work I have interviewed
8 F thousands of witnesses.
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7. My approach to witnesses since the beginning of my work knocking
10 on doors as an investigator 30 years ago, has always been courteous and respectful.
11 I observe and always use high moral and ethical standards in doing this work. I
12 believe that tantamount to having success as an investigator to develop facts -I ii
-, through witness interviews is the process of forming a trust with the people I
14 contact. I have always sought to establish this trust and create comfort, through full
15 disclosure of my role and the purpose of my inquiry; as well as to appreciate and
16 address any concerns or issues the witness may raise that could hinder or prohibit
17 them from providing information.
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8. I have never represented myself as government investigator or to be
19 an employee or agent of any government agency. If I become aware of any
20 potential misunderstanding during an interview, I am careful to correct and clarify
21 any issue and make sure I have thoroughly explained my role to the witness. I am
22 confident that my private attorney clients as well as local government and U.S.
Department of Justice attorneys, whom I have worked closely with in the past,
24 would attest to the carefulness I have always exhibited in this regard. I have always
25 expressed to those that I have employed, trained or spoken to over the years, the
26 importance of "leaving the door open" for re-contacting witnesses in the future,
27 which cannot be accomplished by the introduction of any falsity, pressure, or bad
28 feeling.
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9. I have done great deal of trial work as an investigator over the years,
2 for private lawyers and also to assist trial lawyers for the Department of Justice in
3 one of the only Qui Tam actions to have ever been tried by the government, where
4 I had conducted much of the witness work in the case. I believe I worked over 20
5 litigation trials in my career, having done the witness work, obtained their
6 declarations, brought them to trials, and many times worked at the attorney tables
7 throughout. I know the importance of maintaining the integrity of the investigator
8 relationship with witnesses. I know and have trained the dozens of investigators
9 who have worked for me over the years, that misrepresenting ones capacity as an
10 investigator, and the use of any threatening or intimidation tactics, do not yield any
11 modicum of consistent results, nor any career longevity in a business that seeks to
12 gain the voluntary cooperation from the general public in litigation matters.
13 Having started this work with many years of knocking on doors to obtain
14 handwritten statements at the homes of people at night in any area of town, at 5'9",
15 135 pounds I can attest that pressure and intimidation were just never part of my
16 skill set.
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10. In 1998, at age 42, I decided to return to college and attended UCLA
18 in the evenings to obtain enough units to qualify for law school. I then attended a
19 local law school at night and obtained my J.D. in January 2003, and passed the
20 February 2003 California Bar exam. I have been an active member of the
21 California Bar since 2003. I have continued to work regularly as an investigator
22 with LRH&A on securities cases, while simultaneously developing a plaintiff law
23 practice. I observe the highest ethical and moral standards incumbent upon
24 members of the Bar, consistent with my existing practice as an investigator for 30
25 years.
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11. In late 2007, I was assigned to work on the ValueClick, Inc. Securities
27 Litigation by LRH&A for the law firm of Barrack Rodos & Bacine ("Barrack"). 1
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m familiar, and have worked in the past with attorneys at the Barrack firm, and
2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 6 of 26 Page ID #:10
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have always found them to be professional, ethical, thorough, and interested to
know the true facts that underlie and relate to actions brought by their shareholder
clients. On the ValueClick matter, 1 was asked to conduct the same type of
investigative efforts to contact and interview witnesses that LRH&A and I have
routinely performed on many similar cases over the past decade. I was assigned to
work on the matter by LRH&A with investigator Amy Riviere, with whom I have
also worked on similar matters in the past four years. I know Ms. Riviere to be an
honest, hard working, soft spoken and intelligent investigator. At times in the past
I have conducted joint witness interviews with Ms. Riviere, both on the phone and
in person, and I know her to demonstrate a high degree of ethics, care and
appreciation for the people we interview.
12. Upon contacting prospective witnesses, as I did in the ValueCli
matter, I seek to confirm at the outset of the call that the person is a for.m€
employee. If I learn that person is still employed by the company, it is LRH&A'
typical protocol, and the protocol I followed on the ValueClick investigation, ti
politely and promptly discontinue the dialogue without seeking any furthe
infonnation. For those who indicated they are former employees and willing t
proceed with an informal interview, I followed LRH&A protocol on th
ValueClick matter and advised them that I was not seeking confidential, privilege
or proprietary information. After conducting substantive interviews with witnesse
on the ValueClick investigation, I compiled detailed memorandums and submitte
them to counsel for the shareholders.
13. In the course of working on the ValueClick litigation, the following
describes my contact with specific witnesses:
David Rose
14. On or about January 5, 2008, I contacted David Rose by calling a
iumber that LRH&A had developed which turned out to be his cell phone. As is
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1 my custom and practice, I identified myself by name and told Mr. Rose that I was
2 investigating a shareholder litigation matter involving ValueClick. I have a clear
3 recollection of this call because Mr. Rose immediately stated "boy have you come
4 to the right place, I have lots of dirt on them." Rose stated he was aware that
5 ValueClick was under some kind of FTC investigation, and asked if I was working
6 for the FTC. I then specifically identified that I was working for LRH&A, an
7 investigation firm that had been contracted by attorneys who represent the lead
8 plaintiff shareholders in the ValueClick matter, and that I was not at all involved
9 with the government investigation. Rose told me that he was surprised that he had
10 not been contacted by government investigators and asked if I knew what was
11 going on with the government investigation to which I honestly responded that I
12 did not know. Rose said he was currently working as a school teacher in New
13 York City, and we scheduled an interview to take place after his work on January
14 8, 2008. Toward the end of our conversation, Rose stated that I was "going to like"
15 the information he planned to tell me.
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15. On January 8, 2008, I called Mr. Rose at the scheduled time for our
17 interview, and was able to conduct a comprehensive interview on that date. At
18 different points during our conversation, Rose made statements that during his
19 employment with ValueClick he found the company was "not in compliance" with
20 certain requirements relating to email advertisements and that he reported his
21 findings to the company's management. This prompted me to ask him if he had
22 any responsibilities related to compliance with these practices, to which he
responded that he was surprised to find ValueClick had no "compliance officer,"
24 and that it seemed to him he was the only person in the company who was
25 addressing compliance issues. He said he learned during the course of his previous
26 work for two companies in the same industry, that each had a compliance officer.
27 At the ValueClick subsidiary WebClients, Rose said he reported to Brad Kelly,
28 Manager of WebClients' email department (commenting that he was told upon
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2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 8 of 26 Page ID #:1
I being hired by Scott Piotroski that he would have Kelly's job within a year), and
2 Kelly reported to Piotroski. Rose said he would was put in charge of all third-party
3 email platforms and to consult on WebClients internal platforms, and that this
4 work resulted in Rose assuming responsibility for compliance issues by default.
5 Toward the end of the interview Rose asked me if, because he was "the only one"
6 at ValueClick with the responsibilities of a compliance officer, he might be
7 subpoenaed in the future. I told him I thought it could be a possibility, but that I
8 just could not predict any likelihood. Rose said he was willing to testify about his
9 experience at WebClients and that I was welcome to call him back if I needed any
10 additional information.
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16. During the interview, Rose said he worked for WebClients from April
12 2006 until September 2006. He said that when he arrived at WebClients he began
13 to review the company's emailing practices as part of his job responsibilities. He
14 found that WebClients was not "scrubbing" its emailing lists, against any
15 "unsubscribed list," which he said was a requirement of the CAN-SPAM Act. He
16 said WebClients did accumulate lists of those consumers who elected to
17 "unsubseribe" to WebCiients' various emailing campaigns, but that there was no
18 procedure or practice employed to remove those recipients from active ernailing
19 lists used for its ongoing email campaigns.
20
17. Rose also said that WebClients was not engaging in standard "best
21 business practices" for the industry, because there was no practice or procedure in
22 place to provide its customers with "unsubscribed" lists. He said he alerted
Li WebClients' management about these two failures of the company's emailing
24 practices and what he believed to be exposure to regulatory prosecution, through
25 discussions with EVP Josh Gray and Piotroski. He said he spoke with Piotroski
26 more often because Gray was a "prick," but he did raise these issues directly
27 numerous times with both Gray and Piotroski. I asked him about these managers'
28 response, and he said Gray responded that WebClients made more money from not
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I scrubbing its lists or reporting unsubscribeds to its customers, so "we don't really
2 care." Rose then added that Piotroski and Shannon Gierasch were present during
3 at least one of these conversations and also indicated, in Rose's words that they
4 "did not care at all." He said all three parroted the same comments that "as long as
5 we make our numbers we don't care how we do it," and "we are making our
6 I numbers so who cares." I then asked Rose who Gierasch was and he identified her
7 as the Legal Department Manager. I never initiated any discussion about Rose's
8 contacts with Gierasch or the legal department, and had no information that he had
9 such contacts until he offered that Gierasch was present and joined in responses by
10 Piotroski and Gray when Rose expressed his concerns to them. After Rose offered
11 this information about Gierasch, I did not inquire further about his contacts with
12 her or anyone from the legal department.
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18. Rose stated that CAN-SPAM prohibits Internet ad campaigns
14 including both on-screen ads and emails from advertising "free" products or gifts
15 when a consumer will actually be required to buy something in order to receive the
16 free item. He described that the products advertised as "free" in WebClients
17 campaigns included flat screen TVs, iPods, and iPod Nanos, and other popular
18 items with substantial values attracted many to click and provide email
19 information, sometimes just to receive a confirming email for a password in order
20 to negotiate through the path of the offer.
21
19. Rose stated that WebClients' business was "basically a scam" to
22 collect user information and sell it to advertisers, while making promises that those
who clicked on the campaigns would receive the gifts just for participating or
24 responding to questions. He described that users would then find they had to make
25 purchases, sometimes multiple purchases, to qualify for the free item. He said
26 magazine subscriptions were a common requirement, as were credit card
27 applications that only qualified with acceptance and use, fie said other products
28 were also commonly listed as a choice of purchase requirements. Rose described
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1 that in order to get a free plasma TV, a user was required to sign up with as many
2 as 10 or 12 advertising partners in about 20 steps or pages with each requiring the
3 user to input information. He said oftentimes, users were required to input the
4 same identifiers of name, email address, home address, and phone numbers, and
5 each click automatically and in real-time sent this personal information to many,
6 usually about 30 advertiser-customers.
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20. Rose said it was a "joke" around the company that users would not
8 receive the free items promised in free ad campaigns because of what they would
9 have to go through and all they would have to sign up for, or buy. He also recalled
10 a large Sweepstakes campaign for people to enter and win a free lawn tractor
11 where internally people laughed about how nobody was ever going to get that
12 either. He said no campaign was launched at WebClients without approval from
13 Piotroski and Gray. He stated that both knew all details of each step involved in
14 each campaign posted or emailed by WebClients. He described Gray as a
15 tyrannical micro-manager who ruled with his temper and profanity, while Piotroski
16 was his more political right-hand man.
17
21. Rose offered information I had not learned of before, that WebClients
18 set up a "shell corporation" in Delaware or Nevada for each of its free gift and
19 Sweepstakes sites, so that each was operated under the shell which he said was
20 done in order to hide WebClients' involvement. The idea was, according to Rose,
21 that these campaigns could only be tied to the shell corporation by any consumer
22 looking for who was responsible. He added there were two WebClients employees
23 assigned to fielding calls from angry consumers complaining about these types of
24 campaigns in particular.
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22. When asked about WebClients business performed under the shell
26 corporations he had described, Rose said he had been assigned to assist an outside
27 lawyer who created the shell names and incorporated these sites in Delaware or
10
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1 Nevada. I did not follow up with any further questions about this lawyer or Rose's
2 work with him.
3
23. Rose stated that Gray had a long-time business relationship with one
4 Scott Richter the operator of an Applications Services Provider (ASP) - and
5 described Richter as a well-known spamming scam artist, who has previously been
6 charged with FTC violations. Rose said Richter's ASP was the recipient of real
7 time data delivered by WebClients from its users, that Richter emailed from
8 WebClients lists out of his own location where he ran WebClients campaigns and
9 funneled money to WebClients. Rose participated in two or three phone
10 conferences with Gray and Richter, and said he could tell the two were very
11 friendly and had worked together for a number of years by virtue of statements the
12 two made to each other. Rose described there was little said within WebClients 1 about this ASP or Richter, but that the two were clearly "doing a ton of business
14 together." He described Richter as "the scummiest in this industry" and suggested
15 this shareholder investigation include a background review of Richter's history and
16 the arrangement between Richter and WebClients.
17
24. Rose said WebClients was basically a "data collection agency", whic
18 collected large volumes of consumer data in mass and, without scrubbing, sold this
19 data as "leads" to it's advertising customers. Since WebClients bought and sold
20 lead information in mass, there was usually no connection between the offering
21 that developed a lead and the products offered by customers purchasing this
22 information from WebClients. He described how Gray boasted about this business
Li model, that WebClients sold the same leads generated by one free product
24 campaign, to multiple customers (advertisers) of completely different products.
25 This was Gray's "claim to fame" according to Rose, taking a $30 lead and turning
26 it into $2.00 or more. However Rose's concern was that these leads sold over and
27 over were not "scrubbed" from unsubscribed lists. He recounted conversations
28 where he questioned Gray and Piotroski "how often can you sell the same leads to
2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 12 of 26 Page ID #:
1 the same people?", including those who had chosen to "unsuhscribe", expressing
2 them his belief that there would soon be a predictable drop in revenue. He said
3 they responded that as long as numbers "were good", "we aren't going to fix what
4 ain't broke."
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25. At the end of our discussion Rose and I talked about the New York
6 City school system where he was teaching, and his good feeling about having left
7 that industry. I shared with him that I have a son in elementary school, and we
8 talked about the differences in private and public schools, and whether Rose
9 thought he would some day return to work in the corporate world because of the
10 poor pay teachers get in cities like New York. Based on our conversations, I had
11 no reason to believe that Rose was not telling me the truth.
12
Shayne Mihalka
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26. I called and contacted Shayne Mihalka on 11/28/07 for an
14 interview. I observed the practices I have described above in identifying myself,
15 the matter I was working on and my client. At the end of this interview, Mihalka
16 asked if I could provide him with contact information in the event he needed it to
17 recall who he had spoken with about this case. I provided him with my phone
18 number, and also offered to email him a letter that LRH&A calls our "LoC," or
19 "letter of confirmation," which we provide to any witness who requests written
20 confirmation of our roll, or sometimes just to have our contact information, a copy
21 of the complaint, or both. I asked Amy Riviere of LRH&A to send an LoC to
22 Mihalka, which she later did on or about 12/17/07, to the email address Mihalka
23 provided me for this purpose.
24
27. At the outset of our interview, Mihalka identified himself as a
25 former Executive Vice President of Operations at ValueClick from September
26 2005 to July 2007, although it is possible I misunderstood or mis-heard the date he
27 said he left.
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28. Mihalka said he managed the design and operations of email and
2 advertising media campaigns for the "FastClick" segment of ValueClick's
3 business, and worked in the ValueClick corporate headquarters in Westlake
4 Village, CA. He said his work at times included running ads created by the
5 WebClients lead generation department in Harrisburg, PA. He said he knew
defendants Zarley and Paisley well. He attended monthly management meetings,
7 which included VPs and the senior executives, where the company's operations
8 and general financial status for the Media and FastClick part of the business was
9 discussed.
10
29. Mihalka said he had several years of experience in the Internet
11 advertising business when he joined ValueClick. He provided a general
12 description of ValueC lick's lead-generation component, and how the WebC lients
13 group in Harrisburg, PA operated this business. He said that advertisers paid the
14 company for obtaining email addresses and other identifiers (or "profile"
15 information) obtained through various types of ads run by WebClients, including
16 those that flash on the screen, pop-ups and email campaigns. He said the company
17 runs many different campaigns out of this Harrisburg division, which promises free
18 gifts to consumers. He described that in these campaigns when people open up an
19 email or click on an ad, they are typically put through several stages in which they
20 have to provide information and usually have to buy something; oftentimes a
21 magazine subscription before they get the promised free gift. According to
22 Mihalka, this is a standard practice among ValueClick competitors as well.
23
30. At the end of our discussion, Mihalka indicated he would be
24 available for additional contact if needed. Our discussion was friendly throughout.
25
Gabrielle Bennett
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31. I contacted Gabrielle Bennett for an initial interview on 12/28/07. 1
27 observed my practice of full disclosure as described above. She said she worked
28 for WebClients (which was acquired by ValueClick) from February 2004 through
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October 2005. In her capacity as an ad writer (called "copywriter" at WebClients),
Bennett wrote the ads for marketing campaigns, including those offering
consumers "free" gifts if they would click on certain ads. She stated the company
"made heavy use" of asterisks and disclaimers, especially as its "free" product
campaigns became more complicated and burdensome for a consumer to reach the
point where they qualified for the gift.
32. Bennett said that WebClients increased use of disclaimers during her
employment, as it was her responsibility to include these in the ads she wrote. She
indicated that the text served to advise consumers clicking on a free gift campaign
that the ads were not endorsed by the manufacturers or providers of the offered
free gift. She specifically recalled she was required to include disclaimers when a
campaign offered a "free" gift that was the subject of a registered trademark; and
described instances when WebClients received a "cease and desist" letter from
those producing or associated with those products offered as the "free" gift. In one
example she recalled WebClients used images for a movie in a free ad campaign
offering free movie tickets, it received a letter from a production company (she
was not certain, but thought it may have been 20th Century Fox) directing
WebClients to stop the unauthorized reproduction of images on its website. In
addition, she said other companies like Apple Computer (when a WebClients
campaign advertised iPod as a free gift) demanded WebClients not run any such
advertisements without disclaiming any affiliation with Apple or rights to Apple's
wholly-owned trademarks. She recalled a similar letter from Microsoft regarding a
campaign offering a free laptop with Microsoft software.
33. Bennett stated that WebClients often mounted "sweepstakes"
campaigns, offering winners major prizes which in the past included a Ford F- 150
pick-up truck, a Hummer and a college scholarship. Bennett said there were never
any winners. She said no drawings were held, there was no procedure for selecting
a winner, and the sweepstakes prizes were never purchased or secured by the
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company for the winner, as these campaigns were nothing more than a "phony
2 gimmick." She described that entrants either printed out. completed and mailed in
3 sweepstakes forms provided by WebClients in these online campaigns, or filled the
4 forms out online where they were supposed to be printed out by the company and
5 included in the drawings. Bennett said all forms received went into large bags she
6 personally saw. She stated the entry forms were not segregated by individual
7 campaigns, and these bags were ultimately disposed of but she did not know how.
8
34. Bennett stated that during these campaigns, the final dates for entries
9 and drawings were regularly altered and moved forward. She stated "they kept
10 changing the rules" and pushing the entry and drawing dates forward so that the
11 company didn't have to 'make good" on any of the sweepstakes. She said these
12 campaigns were conceived of, and directed by the top managers of WebClients -
13 Josh Gray and Scott Piotroski. In response to questions about who then created
14 and managed these campaigns she called "phony," Bennett also named Alex
15 Hartzer and Shannon Gierasch, and then described both as attorneys in the
16 WebClients legal department. I did not ask her about the legal department or about
17 any of her communications with WebClients attorneys.
18
35. Bennett said that during her 20-month tenure, she could recall
19 approximately six sweepstakes campaigns in total and none ever had a winner. She
20 said at one point, she was asked by management to count all of the entries in the
21 sweepstakes entry bags, which she believed she did in the summer of 2005, within
22 two or three months before her departure. She stated that she counted a total of
23 almost 700,000 entries. She said all of these forms included names, addresses, and
24 email addresses and this data from emailed entries was also captured for sale to
25 WebClients' advertising customers.
26
36. During this initial interview, Bennett offered to look at WebClients'
27 current campaigns and to identify which were still active without ever having had
28 winner. I next received a call from Bennett and conducted a follow up interview
15
2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 16 of 26 Page ID #:
1 with her on January 3, 2008, after she had reviewed the company's current ad
2 campaigns in order to provide additional information she thought was important.
3
37. Bennett said she confirmed the company was continuing to post
4 "phony" sweepstakes campaigns in 2008 that have been running for several years,
5 by continuing to move dates forward so as to never hold a drawing or otherwise
6 choose a winner. She first described details of two in particular, and said among
7 others in the list, these exact same sweepstakes had been running since even before
8 she started working for WebClients in February 2004, and were continuing to run
9 with entry and drawing dates that had been moved forward. She provided me with
10 the URLs for these two WebClients sweepstakes - "Rernodel4Free.corn" and
11 "DirectScholar.com ." She directed me to look at the DirectScholar.com site, and
12 click on the link to "sweepstakes rules," which identified rules for all WebClients
13 sweepstakes in addition to listing all of the current sweepstakes WebClients was
14 running as of the date of our second interview.' The list of current Sweepstakes
15 campaigns identified under the "Sweepstakes Rules" link on this site as of 1/3/08
16 were:
17
18
Creative Presentation Start Date End Date Prize Value
19 Remodel4Free 1/1/07 12/3 1/08 $10,000.00
20
21 Lenders Avenue. 1/1/07 12/31/08 $ 10,000.00
22 Direct Scholar 11 1/1/07 12/31/08 $10,000MO
23
College Information Direct 1/1/07 12/31/08 $4,500.00
24
25
26
The URL was:
27
httj!/www 2 .directschoIarcomicgLbin/indexrnp?src=WC-52253aaa:63661 :&conuig506
28
16
2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 17 of 26 Page ID #:
1
ConsumerOpinionGroup 1/1/07 12/31/08 $5,000,00
2 f indYourDegreeFast 1/1/07 12/31/08 $5,000.00
3
4 FindAnOnlineDegree 1/1/07 12/31/08 $12,000.00
5 SmartDegreeFinder JAM 12/31108 $12,000.00
6
CareerPath 101
1/1/07 .12/31/08 $8,000.00
7 •YourOn Ii neC ol legeDirectory 1/1/07 12/31/08 $5,000.00
8 YourDreamDegrce 1/1/07 12/31/08 $5,000.00
9
10 OnlineSehoolConnection
1/1/07 12/31/08 $5,000.00
11 MyDegreeC enter
1/1/07 12/31/08 $5,000.00
12
BabyToBee 1/1/07 : 12/31/08 $1,000.00
13
14
38. Bennett said she also worked on "Remodel4Free",
15 "LendersAvenue," "College Information Direct," and "Consumer Opinion Group"
16 (identified in the table above), and stated that all of these are also the exact same
17 sweeepstakes campaigns only with eligibility dates moved forward. She further
18 stated that by moving entry dates forward, all entries submitted before the new
19 entry dates were also "automatically eliminated." Bennett indicated that some of
20 the current sweepstakes were not familiar to her, but said some or all may have
21 been running since 2004 or 2005 where WebClients moved those dates forward as
22 well. Bennett was adamant there was never any "Drawing" or "Winner" for any
23 WebClients sweepstakes campaigns, and felt this conduct was "criminal."
24
39. Bennett drew my attention to the section under the "Sweepstakes
25 Rules", which indicated there was a "Drawing Date", and stated that this date was
26 also consistently moved forward to correspond with the entry dates that were
27 moved forward as well, so that any drawing date indicated is always a year or
28
2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 18 of 26 Page ID #:
I in the future and no drawings ever take place. She also drew my attention to a
2 section in the rules that purported to identify sweepstakes winners and invites user
3 to "click here" for winner information. However, Bennett said this link was never
4 operative as there were never any winners, and I confirmed it was not operative on
5 1/3/08. The following is the reference to this link in the rules as of 1/3/08:
6 "511. Winner's List/Official Rues. For the name, city and state of the
7 winner, click here.
8 40. Bennett described WebClients' offer for a "free" gift of a $25.00
9
10 Home Depot gift certificate as typical in terms of what a consumer encountered
11 when negotiating through the campaign to receive the gift. She explained it was
12 WebClients' standard practice to require the consumer to keep checking the status
13 of the special site for the status of their offer, which required them to negotiate
14 multiple pages through to the site where various customers pay WebClients for
15 information being provided by the consumer. Bennett described that near the end
16 of the path, WebClients was also paid a "cost per sale" by its ad customers when
17 consumers made purchases, and many times multiple purchases as required to
18 qualify for the "free" gift. For example, in the last page of this campaign, Bennett
19 believed a person had to buy two out of six product offers in order to receive the
20 free Home Depot gift card. She said that if one of the offers is for a credit card,
21 typically the "applicant" had to first qualify to get the card, and then actually to us 22 the card in order to qualify for the free gift. In addition, the consumer was require 23 to obtain and use the credit card by a certain date in order to qualify. Bennett cited 24
this as an example of why WebClient's "free gift" ad campaigns were not truthful 25
because for the duration of her employment, the WebClients' free-gift campaigns 26
consistently required purchases to qualify. 27
28
18
2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 19 of 26 Page ID #:
1
41. It is my normal practice and the normal practice for LRH&A as well,
2 to ask witnesses for leads to other former employees in securities cases, who may
3 have additional information. Bennett suggested I contact two additional former
4 employees of WebClients, also provided background information about their roles
5 at WebClients and the type of information she believed they could provide.
6
7
Mary Kate Lawlor
8
9
42. I contacted Mary Kate Lawlor for a phone interview on January 5,
10 2008. I observed my normal practices of full disclosure in conducting this
11 interview as described herein. Lawlor described her work at
12 ValueClicklWebClients in Harrisburg, PA from October 23, 2006 to May 15,
13 2007, as an "account executive." She said she had trouble understanding how the
14 company could make money or at least how it was going to survive very long
15 because of the "ridiculousness" of its free gift ad campaigns. She said she could
16 not conceive of how consumers would participate in more than one or two
17 campaigns, without becoming disillusioned and finding there were too many thi
18 they had to do and buy in order to get to the "free gift."
19
43. Lawlor said that once a new customer was acquired, she prepared
20 information concerning their desired ad campaign and financial requirements, and
21 transitioned this infonTnation to the WebClients designers who then worked direct!
22 with the customer to actually prepare the ads. Then, once the ads were run, she
23 monitored clicks on the campaign through electronic programs, and prepared
24 weekly reports summarizing the number of clicks, revenue derived, and details of
25 the clients' orders. Lawlor said most of the clients on the accounts she managed
26 were customers who paid WebClients on a per-click basis, and in addition
27 WebClients derived extra revenue from information provided by the consumer
28 while negotiating through a particular campaign.
19
2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 20 of 26 Page ID #:1
I
44. Lawlor stated it was at least a regular practice, if not the standard at
2 WebClients, to require consumers to make a purchase or multiple purchases in
order to receive a free gift, in its free ad campaigns. This was true in both email
4 campaigns where WebClients sent thousands of emails to consumers with free gift
5 offers in the subject line, as well as website ads that enticed consumers to click on
6 free product offers. She indicated that each week there was a management meetin
7 at WebClients regularly attended by Piotroski, as well as account managers. At
8 these meetings, the details of ad campaigns were reviewed and progress was
9 briefed per account (client), along with any problems with advertisers. She said
10 one of the items always of interest to Piotroski was revenue, and not just per-click
11 but also "cost per sale" The witness described that WebClients was "paid very
12 well" when consumers went far enough into "free gift" campaigns to actually make
13 purchases.
14
45. Lawlor described working on an Applebee's free-gift campaign where
15 consumers who met all requirements along the path would receive a $500 dollar
16 gift certificate. She recalled this being one campaign which required multiple
17 purchases, and further there were so many pages to go through she could not
18 understand how anyone would be such a fan of Applebee's to endure the campaign
19 let alone make purchases to get the gift - even though it was one of the larger value
20 campaigns she could recall.
21
46. Lawlor volunteered that I contact another former employee, who she
22 said was in upper management and would have "a lot of information" regarding
Li WebClients. However, LRH&A then determined this individual was currently
24 working for another ValueClick subsidiary, and therefore no contact was
25 attempted.
26
47. My conversation with Lawlor was friendly, and she said I could call
27 her back any time if needed.
28
20
2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 21 of 26 Page ID #:
Media Articles
2 48. With regard to the two old media articles quoting me cited by the
3 defense in its motion, I disagree with the characterization of my statements in thos'
4 articles. In my quote to the New York Times in September 1997 about private
5 investigators' use of computerized information sources, the article accurately
6 quoted me. It was me who introduced the issue of morals and ethics as my own
7 concern about how much personal and private information was becoming avaiIab1
8 at the time. I believe this quote indicates that I suggested morals and ethics should
9 provide thoughtful restraint for investigators when performing background
10 investigations for their clients. This is why I raised the issue with the reporter, and
ii I have always acted consistently with this view.
12
49. With regard to the 1992 article about investigation of Qui Tam and
13 other cases related to military contracts, this article was written by Scott Shugar
14 (now deceased), a former Navy man and long-time advocate of defense contracting
15 oversight on Capitol Hill. Mr. Shugar was a frequent guest on Nightline and other
16 news programs as an expert in military procurement and engagement issues. His
17 writing represents his characterization of my work with Lynne Hodges, during this
18 time of great public scrutiny over the military budget and fraud in Government
19 contracts. Since Qui Tarn cases are brought by private citizens on behalf of the
20 government, all information I developed in those cases was turned over to
21 government agents and the U.S. Department of Justice. I expressed a concern I
22 shared with far more knowledgeable and well-known experts that fraud was
23 occurring in confidential or classified programs, which would remain concealed
24 because workers were prevented from bringing information out. I never sought c
25 information in classified programs or classified documents, but said if I learned I
26 iad been given such material it would not deter me from turning it over to the
27 appropriate government prosecutorial agencies and I would do so without concern
28
21
e 2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 22 of 26 Page ID #:
for myself. This was consistent with my personal concerns and those of many
others in the private and public sectors at the time, that contractor fraud could
compromise the safety of U.S. soldiers in Desert Storm and other conflicts.
Information that I and Lynne Hodges developed during our years of work on Qui
Tam cases prompted Congressional hearings and investigations as well as
successful civil and criminal prosecutions by the government. We received media
attention we did not seek, because we were able find and interview knowledgeable
witnesses and obtain important information in this area without badges or
government credentials. it has been my common experience in this business that
public citizens and witnesses are generally more comfortable to be candid and
spontaneous with private investigators than with government agents.
I declare under penalty of perjury that the forgoing is true and correct. Executed
this 2 day of June, 2008. /2
Jason Rowe
1
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1-, E.)
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Li
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Case 2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 23 of 26 Page ID #:1112
1 *16"1"1 Met 1, oil 0 on
Case 2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 24 of 26 Page ID #:1113 of I
BUREAU OF SECURITY AND INVESTIGATIVE SERVICES Licensee Name: JASON ROWE INVESTIGATIONS License Type: Private Investigator License Number: 9044 License Status: CLEAR Definition Expiration Date: November 30, 2009 Issue Date:
April 20, 1982 City:
MOORPARK County:
VENTURA Actions:
No
Business Owners
I7AiA'I
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No records returned
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No information available from this agency
This information is updated Monday through Friday - Last updated: JUN-25-2008
Disclaimer lii information provided by the Department of Consumer Affairs on this web page, and on its other web pages and internet sites, is made available to provide immediate access for the convenience of interested persons. While the Department believes the information to be reliable, human or mechanical error remains a possibility, as does delay in he posting or updating of information. Therefore, the Department makes no guarantee as to the accuracy, :ompleteness, timeliness, currency, or correct sequencing of the information. Neither the Department, nor any of the ources of the information, shall be responsible for any errors or omissions, or for the use or results obtainedfrom the se of this information. Other specific cautionary notices may be included on other web pages maintained by the
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ciir,i112cicnrinJormatiQiiajctUc...
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Status Definition The License/Registration/Permit is current and valid.
Case 2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 26 of 26 Page ID #:1115
CERTIFICATE OF SERVICE
WALDREP v. VALUECLICK, INC. Case No.: 2:07-cv-054 11 -DDP-AJW
I, the undersigned, state that I am employed in the City of Philadelphia,
State of Pennsylvania; that I am over the age of eighteen (18) years and not a party
to the within action; that I am employed at Barrack, Rodos & Bacine, 2001
Market Street, Philadelphia, PA 19103; and that on June 26, 2008, 1 served a true
copy of the attached: DECLARATION OF JASON ROWE IN SUPPORT OF LEAD PLAINTIFFS' OPPOSITION TO DEFENDANTS' RULE 11 MOTION
to the parties listed on the attached Service List by the following means of service: BY E-FILE: I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the e-mail addresses denoted on the attached Electronic Mail Notice List, and I hereby certify that I have mailed the foregoing document or paper via the United States Postal Service to the non-CM/ECF participants indicated on the attached Service List. BY E-MAIL: I c-mailed a true copy addressed as indicated in the attached Service List, on the above-mentioned date. BY MAIL: I placed a true copy in a sealed envelope with postage thereon fully prepaid and addressed to the parties listed on the attached Service List, on the above-mentioned date. I am familiar with the firms practice of collection and processing correspondence for mailing. it is deposited with the U.S. Postal Service on that same day in the ordinary course of business and there is a regular communication by mail between the place of mailing and the place so addressed. BY UPS: I placed a true copy in a sealed envelope and addressed to the parties listed on the attached Service List, on the above-mentioned date.
I declare under penalty of perjury that the foregoing is true and correct.
Executed this 26th day of June, 2008.
Is! Sheila D. Davis SHEILA D. DAVIS