LOS ANGELES—Douglas Dowie, former general manager of the Los Angeles office of Fleishman-Hillard and longtime aide to former Los Angeles mayor James Hahn, was convicted Tuesday of 15 counts of conspiracy and fraud after a jury found him responsible for over-billing city agencies and other clients of the international public relations firm.
Dowie’s deputy and co-defendant, John Stodder, was convicted of 12 similar charges after hearing evidence that the two had instructed employees at the agency to exaggerate the number of hours worked for clients including the Department of Water & Power.
The jury foreperson told the Los Angeles Times that a combination of precise billing records and e-mails presented by prosecutors convinced jurors of the existence of the criminal enterprise, while another juror told the paper that a series of e-mails between executives of the firm—including one in which Dowie asked that the billing be “padded” to help meet monthly revenue projections, and others in which Stodder repeatedly directed his subordinates to bill more time to the city—were critical.
Dowie and Stodder were indicted last year after seven former Fleishman-Hillard employees told the Times they were encouraged or instructed to falsify the hours they worked under the DWP contract.
In April of last year, Fleishman reached an agreement with the Los Angeles city attorney to settle all civil claims against the agency arising from over-billing on its work with for various city agencies, and agreed to pay the city $4.5 million and waive payment of approximately $1.3 million the DPW owed the firm for unpaid invoices.
Fleishman had conducted an extensive internal investigation of Los Angeles office records covering its six-year, $11 million contract with DWP and other City departments, and said it believed “some senior executives of the Los Angeles office, who are no longer with the firm, caused certain bills to be presented to the City that appear to be improper and indefensible.”
Dowie had sued the firm, claiming he was made a scapegoat for the over-billing and fired without cause and his attorneys had insisted throughout the trial that Dowie was unaware of an illegal activity. Neither Dowie nor Stodder testified in their own defense during the trial, and neither issued any comment on the verdict.
Each man was convicted of one count of conspiracy, which carries a sentence of up to five years in prison. Dowie’s 14 wire fraud convictions and Stodder’s 11 are punishable by prison terms that range up to a maximum of 20 years per count. A sentencing date was not set.
“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,” says Richard Kline, regional president and L.A. general manager. “Fleishman-Hillard was not a defendant in the trial and has cooperated fully with authorities since the beginning of their inquiry.
“For 60 years, Fleishman-Hillard has built a business based on quality work, client service and strong bonds of agency-client trust. We never have condoned and never will condone anything less than the highest ethical standards. Beginning in 2004, when questions were first raised about billings in our Los Angeles office, we have taken numerous steps to avoid the possibility of something like this ever occurring again.”