Fired Fleishman-Hillard boss Doug Dowie and his former deputy in the Los Angeles office, John Stodder, were found guilty today of cheating on billings to the city Department of Water and Power. A federal jury convicted Dowie, at one time the managing editor of the Daily News, on all 14 counts of wire fraud and one count of conspiracy. Stodder was convicted on all eleven counts of wire fraud and one of conspiracy. Each wire fraud charge carries a possible sentence of twenty years in federal prison and the conspiracy charge is good for five. Neither defendant put up much of a defense—Dowie actually none—after several former co-workers testified that there was a systematic effort to overbill the DWP. Dowie was close to former mayor Jim Hahn and these are the only prosecutions to come out of a joint federal-county investigation into alleged political corruption during the Hahn years. Times, Daily News
Jurors deliberated for about four days then yesterday listened to several hours of read-back testimony by Steve Sugerman, another former Fleishman-Hillard exec who pleaded guilty to a lesser charge and testified about practices at the agency. The jury resumed deliberations this morning and returned to court in the afternoon with verdicts. At its essence, the case was about a $3 million annual contract that DWP officials awarded to Fleishman-Hillard for public relations services, starting in the Richard Riordan administration. DWP was quite happy, even eager, to pay the fee. But to receive payment, Fleishman needed to account for the services it provided. The charges were that Dowie and Stodder padded the paperwork, puffing up billable hours to justify the $3 million fee when the ledgers were short in a given time period. There were no allegations that either exec profited personally (though they may have received bonuses from Fleishman for running such a "profitable" office.) The DWP wasn't out any money, and even renewed the contract several times. The DWP simply didn't receive full value in return for the fees paid.
A couple of other clients also received padded bills. After the verdicts, Dowie's successor at Fleishman-Hillard, Richard S. Kline, issued a statement:
"We deeply regret that improper and indefensible bills were presented to several of our Los Angeles clients, and we again apologize to the residents of Los Angeles. Fleishman-Hillard was not a defendant in the trial and has cooperated fully with authorities since the beginning of their inquiry."
* Edited post
Dowie photo: Los Angeles Times/Robert Gauthier