A third Fleishman-Hillard Inc. executive was charged today and pleaded guilty with participating in a scheme to overbill the city on a $3 million-per-year contract with the Department of Water & Power.
Steve Sugerman, former senior vice president of the public affairs department at the firm's Los Angeles office, pleaded guilty to three counts of wire fraud and has agreed to cooperate fully in the investigation.
Sugerman served as deputy mayor in charge of communications for Mayor Richard Riordan prior to joining Fleishman-Hillard and currently heads Sugerman Communications Group in Los Angeles. His clients include the Pacific Maritime Association and Playa Vista President Steve Soboroff.
Last week, federal prosecutors indicted Douglas Dowie, Fleishman-Hillard's former general manager of the Los Angeles office, on one count of conspiracy and 15 counts of wire fraud related to more than $300,000 in public relations bills submitted from January 2000 through January 2004.
The indictment superseded an earlier indictment brought against another former executive, John Stodder, who was in charge of the local office's public affairs department from the time Sugerman left until this year.
Stodder and Dowie, who both left the firm earlier this year, have pleaded not guilty to all charges. They are expected to receive a trial date on Monday. Dowie, the former managing editor for news of the L.A. Daily News, has filed a wrongful termination suit against Fleishman-Hillard, claiming the firm owes him up to $6 million in lost wages after it fired him Jan. 5 because it needed a "scapegoat" and had to "curry favor" with federal investigators.
In his plea agreement, Sugerman, who worked at the firm from 1997 until he left in January 2002, said he inflated bills on the DWP contract by $120,000, while under the direction of Dowie.
Sugerman's attorney, Ellyn Garofalo, a partner at Liner Yankelevitz Sunshine & Regenstreif LLP, said Sugerman has been cooperating with the government for the past six months.
"Steve is and has been fully cooperating with the government, intends to continue his cooperation and regrets what occurred at Fleishman-Hillard," she said. "Steve is acknowledging responsibility for what happened at Fleishman Hillard. And simply put, he's just doing what he believes in the right thing."
In a statement, Richard Kline, Fleishman-Hillard's regional president, senior partner and Los Angeles general manager, said, "Steve left our firm more than three years ago, but we deeply regret any improper actions that occurred in our Los Angeles office at any time. We've taken full responsibility for any improper actions that occurred, but no organization is immune from someone violating its policies."
Sugerman, who is scheduled to appear in court on July 5, faces a maximum penalty of 15 years in federal prison, but an actual sentence has yet to be determined.
The U.S. Attorney's Office in Los Angeles and the Los Angeles County District Attorney's Office prosecuted the case. The investigation also includes the FBI and the U.S. Department of Transportation.
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