LOS ANGELES—John Stodder, one of three executives dismissed last week by Fleishman-Hillard, has become the first executive indicted over alleged over-billing of the Los Angeles Department of Water and Power. Stodder, who was head of the firm’s Los Angeles public affairs practice, was charged with 11 counts of federal wire fraud.
Each count carries a maximum possible penalty of 20 years in federal prison.
According to the indictment, Stodder and “others known and unknown to the grand jury, knowingly and with intend to defraud, devised, participated in, and executed a scheme to defraud Fleishman-Hillard clients and to obtain money from Fleishman-Hillard clients by means of materially false and fraudulent pretenses, representations, and promises, and by the concealment and nondisclosure of material facts.”
Stodder and his unnamed co-schemers “would falsely increase the amount of billable time reported as having been spent performing various services or would record time for services that actually had not been provided at all,” according to the indictment.
The indictment also suggests that several other clients were over-billed, including the Port of Los Angeles, architect Frank Gehry’s Gehry Partners, and the World Wide Church of God.
Jan Handzlik, Stodder’s attorney, denied the charges. “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 someone who has been there such a short period of time,” said Hendrik in a statement. “He has always conducted himself in an ethical and above-board manner, and feels that this will become known as the proceedings unfold.”
While Stodder is the only executive identified in the indictment, it does refer to two other FH executives, one of whom allegedly asked Stodder to pad a DWP bill by $30,000—a request Stodder apparently refused—and another who later suggested that $15,000 could be added to the bill without generating too much scrutiny.
At least one observer says the inclusion of such information suggests that Stodder was indicted in an effort to persuade him to give evidence against the other two executives.
“This is an ongoing investigation, and charges may or may not be filed against other individuals,” says assistant U.S. attorney Adam Kamenstein, who is directing a joint inquiry that involves the FBI, the Los Angeles County district attorney’s office, and the U.S. Department of Transportation.
Richard Kline, general manager of Fleishman-Hillard’s Los Angeles office, said the firm would “never condone” the activities outlined in the indictment, and added that the firm was “saddened and deeply disappointed that a former employee has been charged with wrongdoing.”