Posted on 06/03/2005 10:52:13 AM PDT by BurbankKarl
The former head of Fleishman-Hillard's Los Angeles public relations office who got millions of dollars in city contracts while providing free services to Mayor James Hahn's administration was indicted Thursday by a federal grand jury on 16 counts of fraud and conspiracy. In the latest development in the investigation of City Hall corruption, Douglas R. Dowie, 57, of West Hills was accused in a 14-page indictment of bilking the city Department of Water and Power out of at least $300,000 over a four-year period.
The firm held a $3 million-a-year contract with the DWP as well as public relations contracts with the Harbor and Airport departments and Dowie, a former news executive, worked closely with Hahn's top aides on numerous projects, including the mayor's trip to China.
Dowie, who denied the charges through his attorney, is scheduled to appear before a federal magistrate today after surrendering to federal authorities. Arraignment is set for Monday. He faces a maximum penalty of 245 years in prison, based on up to 20 years on each of 11 counts of wire fraud and five years each on the conspiracy charge and remaining fraud counts.
Hahn was "outraged that anyone would misuse the public's trust and the public's money," said Deputy Mayor Doane Liu. "He's supportive of the U.S. attorney's action to prosecute this case to the fullest extent of the law, including Doug."
Fleishman-Hillard, which paid the city nearly $6 million to settle a lawsuit over the alleged overbilling, distanced itself from possible criminal wrongdoing in the case and said it had cooperated fully in the investigation.
City Controller Laura Chick, who once regarded Dowie as a close political confidant but raised serious questions about the DWP contracts in a series of audits, called the indictment a "sad" but necessary step if justice is to be served.
"This indictment begins to close a sordid tale in the history of Los Angeles. The message is clear, you better think twice before you defraud the taxpayers of Los Angeles."
The indictment supersedes an earlier indictment of Dowie lieutenant John Stodder, 49, of Palos Verdes Estates, who also was fired by the P.R. giant. Stodder has pleaded not guilty to 11 counts of wire fraud under the original indictment, with the new one including those counts and a conspiracy charge.
"Mr. Stodder looks forward to all the facts coming out at trial," Stodder's attorney Jan Handzlik said.
The indictment includes sequences of e-mails regarding the alleged overbillings, including one in January 2003 where Dowie asked Stodder if they could "pad" DWP's bill by $30,000 with "ambiguous" counseling for the mayor and top DWP officials. Stodder allegedly responded that was "more than the system could bear" but that a "co-conspirator" had said $15,000 could be absorbed.
"Dowie, in response, told Stodder in an e-mail message, 'OK, let's do it."' Later, $6,855 was fraudulently added, the indictment says.
Assistant U.S. Attorney Adam D. Kamenstein declined to comment on the case or whether other indictments will be handed up.
Speculation has run high for weeks that others will face charges growing out of the joint local-federal investigation that started in late 2003.
Dowie's lawyer Tom Holliday of Gibson Dunn & Crutcher said his client had cooperated fully with federal prosecutors and was disappointed that charges were filed.
"It impacts his career and his family, but he fully intends to defend himself and he looks forward to being vindicated," Holliday said.
"We believe the charges are ill-founded and misplaced," Holliday added.
Dowie joined Fleishman-Hillard in 1991 after leaving the Daily News where he was an editor for five years. A senior partner in the firm and general manager of its Los Angeles office, he filed a wrongful termination lawsuit against Fleishman-Hillard in March, claiming he was made a "scapegoat." His attorney in that case asserted he had passed a polygraph test.
Fleishman-Hillard's regional president, Richard Kline, who replaced Dowie as head of the Los Angeles office, said the company regrets what's happened but that "unfortunately no organization is immune from someone violating its policy."
"We have been cooperating fully with the investigating authorities since this inquiry began and will continue to do so. We have taken full responsibility for any improper actions that occurred in our Los Angeles office."
The firm negotiated a settlement of the city's claims in April with City Attorney Rocky Delgadillo.
"You don't pay $6 million if no one did anything wrong," Delgadillo said Thursday.
Mayor-elect Antonio Villaraigosa, who raised the corruption issue repeatedly during the campaign against Hahn, said he was not surprised by the indictments.
"As the judicial procedures and investigations in this unfortunate chapter in the city's past continues, I want to make it clear that I look forward to beginning a new chapter on July 1," Villaraigosa said. "A fresh start. One with higher standards, greater management responsibility and strong stewardship of the public funds."
The indictment said Dowie and Stodder conspired as they oversaw billing records to include false information to increase the amount they would charge the city -- activities which appeared to increase during 2003.
The indictment said that the billing documents for various clients -- which were transferred between Los Angeles and Fleishman-Hillard's headquarters in St. Louis -- would be reviewed against those clients' forecasts for the month.
"On those occasions when the billings were less than forecast, defendants Dowie and Stodder together would fraudulently increase FH-LA (Fleishman-Hillard Los Angeles) billings by altering the billing work sheets to reflect a greater number of hours," the indictment said.
An unnamed "co-conspirator" on the DWP account, also allegedly e-mailed Stodder in September 2003 that she needed time to go through her activity report to add work "for just about everyone that will pass the smell test," the indictment said.
Stodder allegedly e-mailed back, "Thank you. I totally understand."
The indictment also alleges Dowie and Stodder fraudulently increased billing for the city's Harbor Department as well as architect Frank Gehry's firm and the World Wide Church of God.
It is funny how Hahn, who was integral to all this, just walks away.
Mexican immigrants want to duplicate Mexico - but with "benefits". They don't care who the mayor is or what his sins are , so long as he's Hispanic. LA will soon resemble Santa Ana, CA - a den of corruption, election fraud and illegal immigration.
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