Posted on 05/17/2006 11:58:59 AM PDT by BurbankKarl
Capping a five-week trial that grew out of a sweeping investigation into City Hall corruption, a federal jury on Tuesday found two former Fleishman-Hillard executives guilty of padding bills to the DWP by more than $300,000.
Doug Dowie, a power broker who headed the Los Angeles office of the prestigious public relations firm, and John Stodder, his right-hand man, showed little emotion as the verdicts were read by U.S. District Judge Gary Allen Feess.
The jury deliberated 51/2 days before finding Dowie, 58, and Stodder, 50, guilty of conspiracy and wire fraud charges.
Dowie faces up to 240 years in prison, Stodder up to 225 years. A sentencing date has not been set and both remain free on bond.
"I'm very, very disappointed," Dowie said as he left the courtroom flanked by his attorneys. One of them, Tom Holliday, said Dowie would continue his legal fight.
Stodder's attorney, Jan Handzlik, called the verdict "deeply disappointing."
"We continue to believe John Stodder was a victim of Fleishman-Hillard's chaotic and haphazard billing system. We also believe John Stodder never intended to cheat or defraud anyone," he said.
Attorneys for Dowie and Stodder said they will appeal after filing motions this summer that are expected to include a request to the judge to dismiss the jury's verdict.
Assistant U.S. Attorney Adam Kamenstein said his office was pleased with the convictions.
While Fleishman-Hillard was not a defendant in the federal trial, Richard S. Kline, the firm's general manager in Los Angeles, said the company hopes the verdict will end a difficult chapter.
"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," Kline said in a statement.
The company paid nearly $6 million to settle a civil lawsuit filed by the city alleging overbilling of the Department of Water and Power.
Neither Dowie nor Stodder took the stand in their trial as prosecutors called more than a dozen witnesses to bolster e-mails and billing records that they claimed showed a conspiracy to defraud the DWP, the Port of Los Angeles, the Worldwide Church of God and architect Frank Gehry's firm.
The charges grew out of a sweeping federal-state investigation into accusations that former Mayor James Hahn's administration engaged in "pay-to-play" practices, although no public officials have been charged in connection with any of the allegations of squeezing political money from city contractors.
City Controller Laura Chick, who in the summer of 2002 questioned the DWP's $3 million-a-year contract with Fleishman-Hillard, expressed mixed feelings about the verdict against Dowie, who had been a friend.
"It's very difficult to see how it played out for him and his family," Chick said. "It's very sad when good people cross the line. But it's important that the justice system works like it did today, giving a strong warning ... (so) the rest of us don't cross the line."
After the verdict, jurors said they were convinced by the accumulation of evidence, including an exchange of e-mails Jan. 6, 2003, when Dowie asked Stodder how much they could "pad" the DWP account with "ambiguous counseling" for then-Mayor Hahn and two former top-ranking utility officials.
"That chain of e-mails was the glue that cemented in our minds (what we saw) in the billing records," one juror said.
Another juror said the e-mails - in which Stodder cautioned Dowie that adding $30,000 to the DWP's bill for December 2002 was "more than the system could bear" - helped crystallize the issue as hundreds of billing documents were presented and witnesses testified that the bills had been inflated for work not performed.
Dowie is a former managing editor of the Los Angeles Daily News and ex-chief of staff to former state Assemblyman Richard Katz. Dowie was joined Tuesday by Stodder and a contingent of several dozen attorneys, family members and friends who paced the corridor of the Roybal Federal Courthouse for nearly an hour, waiting for the verdict to be read.
After the verdict, Dowie, an ex-Marine who served in Vietnam, walked out onto a plaza where television cameras followed him along the sidewalk. Stodder left with less fanfare.
During the trial, Steve Sugerman, a former Fleishman-Hillard senior vice president and spokesman for former Mayor Richard Riordan, testified that Dowie ordered him to "figure it out" when billings fell short of monthly projections on the DWP account, even though it was too late to do more legitimate work. Lawyers for Dowie said in opening and closing statements that any wrongdoing was the result of subordinates acting without his authorization.
On cross-examination, Sugerman - who pleaded guilty to wire fraud in a deal with prosecutors - said he believed Dowie wanted him to inflate the bills, although he was never told to do so directly.
Former company Vice President Monique Moret testified under immunity that Dowie was told in an Oct. 10, 2003, meeting by Stodder that the DWP bills were being inflated. She said Dowie asked whether Fred Muir, a senior vice president who had made allegations of fraudulent DWP billings as he resigned that day, had any evidence. But defense witness Matt Middlebrook - formerly Hahn's spokesman, who had just joined the firm - testified he couldn't recall such a conference, although Moret said he was in the meeting with her, Dowie and Stodder.
Moret also testified that she added unworked hours worth tens of thousands of dollars starting in December 2002 at the direction of Stodder, her boss. Her former assistant, Candice Campbell, also testifying under immunity, said Stodder twice told her to "write up" the DWP account by $10,000. Prosecutors emphasized the series of Jan. 6, 2003, e-mails among Dowie, Stodder and others after notification that the L.A. office was $59,000 short of its December revenue projections.
In one e-mail to Stodder, Dowie asked how much they could "pad" the DWP account and whether it could take as much as $30,000. When Stodder e-mailed back that was more than the system could bear, Dowie responded, "How much will it bear?" Told by Stodder that Moret thought she could add $15,000 across the board, Dowie e-mailed, "OK let's do it."
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