Several current and former employees of Fleishman-Hillard Inc. have been called in or interviewed by federal and county investigators recently as part of a criminal investigation of a contract with the Department of Water & Power, according to sources familiar with the investigation.

At least 10 individuals have contacted an attorney who was retained by the firm, sources said.

Robert Corbin, a partner at Corbin & Fitzgerald LLP, confirmed that he represents several current and former Fleishman employees who have been identified as witnesses. He declined further comment.

In interviewing Fleishman employees, investigators at the U.S. Attorney’s Office and Los Angeles County District Attorney’s Office would appear to be stepping up a probe into the way city contracts are handled. This includes allegations of both a “pay-to-play” environment, and in Fleishman’s case, overbilling the DWP.

Federal and county investigators are focusing on the airport, harbor and water and power departments, the city’s three revenue-generating divisions.

County investigators began looking at Fleishman after several city officials questioned the necessity of a $3 million-per-year public relations contract at a time the DWP was seeking to raise its rates. Investigators, who were joined by the U.S. Attorney’s Office, are looking into whether there was overbilling.

“Usually, by the time you’re getting counsel for people you have a fair idea of who the people are who might be in the crosshairs of the government,” said James Gallagher, a white collar criminal defense attorney at McKenna Long & Aldridge LLP who is not involved in the Fleishman investigation.

Questions about billing

Some current and former employees have retained their own attorneys a move that sometimes indicates they are targets or subjects of the investigation, several former prosecutors said.

Among them is the former manager of the firm’s Los Angeles office, Douglas Dowie, who was placed on paid leave in July. Others include Senior Vice President John Stodder and Monique Moret, a former senior vice president who resigned about six months ago.

Dowie declined comment, and Stodder did not return calls. Moret could not be reached.

Targets are generally considered those who have a significant possibility of being indicted. Subjects have some possibility of becoming either a target or a witness.

“An individual can find his own attorney, but that’s not done all that often as a practical matter,” Gallagher said. “It’s probably more often if you’re a target of an investigation as opposed to any other status.”

Several former Fleishman employees told the Los Angeles Times that as a general practice they were expected to fabricate hours worked if they did not meet a monthly billing figure. They said they felt pressured to falsify time sheets and inflate bills, including those for the DWP contract.

The work included in the DWP contract included scanning articles, contacting reporters, writing press releases, making videos and arranging speakers and events. Dowie, who managed the Los Angeles office for five years, has been identified as having close ties to Los Angeles Mayor James Hahn.

Besides the joint federal-county probe, City Attorney Rocky Delgadillo has filed a civil suit against the company and Dowie for fraud, alleging that Fleishman defrauded the city by inflating billable hours on $20 million worth of paid invoices, including those for the most recent contract, dating back to May 1999. The suit includes multiple claims, including fraud and negligent misrepresentation, plus punitive damages.

Separately, City Controller Laura Chick is conducting an audit of Fleishman’s contract.

In April, after federal investigators served subpoenas at Fleishman’s St. Louis headquarters for e-mails between its Los Angeles executives and city officials, the firm offered legal counsel to all its Los Angeles employees, said Richard Kline, vice president and manager of its Los Angeles office.

Several former employees also opted for legal services hired by the firm, which is represented separately by Mark Beck, a partner at Beck DeCorso Daly Kreindler & Harris PLC. Beck declined to comment.

“When there’s an ongoing investigation, we feel it’s appropriate to give our employees the sense of security and the assistance of legal counsel,” said Kline. “The firm is covering the legal bills of our employees as it relates to these investigations.”

‘Pool counsel’

One source familiar with the investigation said those who have contacted Corbin generally work at the lower-level positions of account executives or account managers.

Investigators often begin questioning former employees and those who worked for people considered targets or subjects in the case, sources say.

Under California law, companies must provide legal counsel to current and former employees if they were acting within the scope of their job. A “pool counsel,” or an attorney who represents the employees, is routine in most large public corruption cases.

“Generally, some employees get contacted by a government investigator,” said Brad Lewis, a former federal prosecutor and partner at Fenwick & West LLP. “That tends to make people nervous. They start asking their employer about whether they need a lawyer and most responsible employers say, ‘Sure, here’s somebody we’re providing.”

A “pool counsel” often represents witnesses only because prosecutors view dual representation of targets or subjects as a conflict, he said. But there may be other reasons an employee hires his own attorney. Sometimes, the employee has more assets at stake than his colleagues. Other times, an employee may believe the company would not represent his best interests.

“They have potentially diverse interests,” Gallagher said. “An individual might decide it’s a better course for him to make a deal with the prosecutor. That’s not in the company’s best interest but in their interest.”

Corbin represented Larry Satchell, one of the three Boeing Co. officials who was charged this year in connection with stealing trade secrets from Lockheed Martin Corp. while competing for a $2 billion satellite contract. The charges were dropped a few months ago.

He also represented John Archibald, vice president of Casden Properties LLC, who was indicted last year along with 13 subcontractors on charges of laundering $200,000 in campaign contributions to various city officials. Archibald pleaded no contest this month to misdemeanor charges and faces three years’ probation, thousands of dollars in fines and 250 hours of community service.