LOS ANGELES—Steve Sugarman, a former senior vice president at Fleishman-Hillard Los Angeles, has agreed to plead guilty to charges that he helped defraud the city of Los Angeles and to testify against other executives at the firm, including former general manager Douglas Dowie, who was indicted last week.
Sugarman, who was previously director of communications for Mayor Richard Riordan and who now runs his own public relations firm, admitted participating in a scheme that over-billed the city’s Department of Water & Power “in accordance with Dowie’s general directions.” He agreed to cooperate with government prosecutors in exchange for possible leniency.
He faces a maximum sentence of 15 years in prison after acknowledging involvement in over-billing of more than $120,000—although he is charged with only $68,000 of that total. Sugerman’s lawyer, Ellyn Garofalo, told reporters that her client left Fleishman-Hillard to start his own business “effectively because he was very unhappy with the environment at Fleishman-Hillard, particularly with the conduct of the DWP account.
“He entered into the agreement because he felt it was the right thing to do and to make amends for whatever may have occurred at Fleishman-Hillard.”
Prosecutors allege that Dowie led a conspiracy to defraud the city of about $325,000 in 2000, 2002, and 2003, directing Sugarman and his successor as head of Fleishman’s L.A. public affairs operation John Stodder to create fictitious billings when revenue on the Department of Water & Power account fell short of billing projections.
Both Dowie and Stodder maintain their innocence. Trial dates for both are tentatively set for August. 2.
Fleishman has indicated its regret for any “improper actions” of the Los Angeles office and recently announced a $5.7 million settlement of all civil claims arising from the over-billing incidents.