A former vice president at Fleishman-Hillard Inc. who managed a $3 million-per-year contract with the Department of Water & Power was indicted today by federal prosecutors on charges he helped submit $250,000 in fraudulent bills to the city department.
John Stodder, who was in charge of the public affairs practice group and worked on the contract from 2002 to 2004, was charged with 11 felony counts of wire fraud. The counts are based on bills to the DWP between January 2003 and February 2004. Each count carries a maximum possible penalty of 20 years in federal prison.
The indictment includes allegations that other Fleishman clients were overbilled, including the Port of Los Angeles, Gehry Partners LLP and the World Wide Church of God.
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," the indictment states.
Federal prosecutors claim in the indictment that Stodder directed as-yet unnamed "co-schemers" to increase billings in order to meet monthly forecasts. The indictment alleges that changes were made to draft bills issued by the firm's St. Louis headquarters, which calculated billings from a computerized time entry program that included an employee's name, a description of the work, the amount of time spent on the work and the name of the client. Stodder and others "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 firm's headquarters incorporated the changes and sent back the approved billings to be mailed to clients in activity reports, the indictment says.
The indictment cites one instance, in January 2003, when a "co-schemer," referred to as "CS-2," asked Stodder "if they could 'pad' the DWP bill by $30,000 with 'ambiguous counseling for the mayor, (DWP General Manager) wigs, (DWP Chief Operating Officer) salas, etc.,'" referring to Mayor James Hahn, former DWP General Manager David Wiggs and former DWP Operating Officer Frank Salas.
Stodder told the co-schemer that "$30,000 was 'more than the system could bear' but that CS-1 had said that she could 'slip through another $15K without incurring too much more scrutiny,'" the indictment says.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Charges Seen as Way to Widen Probe
- Update: Former Fleishman-Hillard Executive Doug Dowie Indicted
- Former Fleishman-Hillard Executive Sugerman Pleads Guilty
- Former Fleishman-Hillard Execs Convicted
- P.R. Executive Pleads Not Guilty
- PR Employees Interviewed as Billing Inquiry Goes Forward
- Software No Fix For Billing Fraud
- Fleishman-Hillard Agrees to Settlement to End Claims it Overbilled L.A. Departments