A federal grand jury on Thursday indicted former Fleishman-Hillard senior VP John Stodder on 11 counts of wire fraud. These are felony counts and allege that he "participated in a scheme" to inflate bills to the city Department of Water and Power, the Port of Los Angeles, Gehry Partners LLP and the World Wide Church of God by a total of $250,000. Stodder is to surrender tomorrow. The indictment and press release suggest the involvement of others at Fleishman-Hillard, but there is no explanation of why he was the only person indicted so far. It's the first legal action to result from year-long investigations into Fleishman-Hillard and possible City Hall corruption by the U.S. Attorney and the L.A. County District Attorney. An early web story at LATimes.com says that Stodder is accused of entering into the fraud scheme "almost immediately" after his hiring by Fleishman's L.A. boss at the time, Doug Dowie.
The L.A. Business Journal story quotes Stodder's attorney saying, "Mr. Stodder is shocked and dismayed that the U.S. Attorney would file these serious charges against a mid-level manager at Fleishman-Hillard, especially one who has been there such a short period of time. He has always conducted himself in an ethical and above-board fashion and feels the evidence will demonstrate this."
Friday stories: The Times leads the paper and labels the indictment part of the ongoing federal and local "pay to play" probes of corruption in city contracts (and notes that Stodder turned 49 yesterday.) Lobbyist Lucy McCoy gives context, calling Stodder a "smart, well-liked guy—one of those guys who is very down-to-earth, pleasant with everyone. The opposite of many folks in the services and political arena...I do not believe for one minute that he created the culture at Fleishman-Hilliard that promoted fraudulent billing practices." The Times story cites two former Fleishman employees who say that Dowie encouraged false billings, and the Daily News story raises the question of whether others at Fleishman have gotten immunity from prosecution to help authorities. The Daily Breeze puts the story into the context of the race for mayor and notes again some of the connections between Fleishman and Jim Hahn's office. All of the papers quote Hahn, City Controller Laura Chick and the candidates for mayor or their spokespeople.
Coincidence: The mayoral candidates were all at a debate Thursday night moderated by KNBC's Ana Garcia, an ex-city official who has done some of the best investigative reporting on Fleishman-Hillard and Dowie. Afterward, analyst Raphael Sonenshein said the Stodder indictment makes the corruption issue being thrown at Hahn by his rivals "a live issue you can actually see and feel....It's a bad news item for Hahn but he handled it better, I think, than anyone else."