BARRACK, RODOS & BACINE STEPHEN R. …securities.stanford.edu/filings-documents/1038/...r07d_07CV05411.pdfespecially auto crashworthiness and stability cases beginning with the Ford

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


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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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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.

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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.

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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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2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 10 of 26 Page ID #:

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.

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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

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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.

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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.

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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


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.

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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.

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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.

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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.

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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


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.

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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.

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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.

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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

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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


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


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


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


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


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

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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

Related Licenses/Registrations/Permits

No records returned

Disciplinary Actions

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

Department. All access to and use of this web page and any other web page or internet site of the Department is overned by the Disclaimers and Conditions for Access and Use as set forth at çaiiforniq,Department qfç:.cnsumer

ciir,i112cicnrinJormatiQiiajctUc...

LicenseHoldCase 2:07-cv-05411-DDP-AJW Document 57 Filed 06/26/08 Page 25 of 26 Page ID #:1114 1 of

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

Documents

BARRACK, RODOS & BACINE STEPHEN R. …securities.stanford.edu/filings-documents/1038/...r07d_07CV05411.pdfespecially auto crashworthiness and stability cases beginning with the Ford