Douglas Dowie, former general manager of Fleishman-Hillard's Los Angeles office, and his right-hand man, John Stodder Jr., were convicted Tuesday on charges that they conspired to over-bill the city on a $3 million annual contract with the Los Angeles Department of Water & Power.
Dowie, 58, a former managing editor of the Los Angeles Daily News, was found guilty on all 14 counts of wire fraud and one count of conspiracy. Stodder, 50, a former Fleishman vice president, was found guilty on all 11 counts of wire fraud and one count of conspiracy.
The jury deliberated four days before issuing its verdict against Dowie and Stodder, neither of whom took the stand in their five-week trial. Each wire fraud charge carries a possible sentence of 20 years in federal prison, in addition to five years for the conspiracy charge. Under federal sentencing guidelines, however, the two men are likely to face substantially less time.
"We are deeply disappointed by the jury's verdict," said Jan L. Handzlik, Stoddard's attorney. "We continue to believe that John was a victim of Fleishman-Hillard's chaotic and haphazard billing practices, and that he never intended to cheat or defraud anyone."
Both Handzlik and Dowie's attorney, Thomas Holliday, said they plan to file for a motion for judgment of acquittal or to set a new trial, on the basis that the evidence did not support a finding of guilty. The court has set hearing on those motions for the end of July.
The case was an offshoot of a 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 allegations that city contractors were pressured to make political contributions in order to win contracts.
Steve Sugerman, a Dowie aide who earlier pleaded guilty to fraud charges, was among 15 witnesses in the trial. Prosecutors also cited numerous billing records and e-mails to build their case for a conspiracy to defraud the DWP, the Port of Los Angeles, the Gehry Partners LLP architectural firm and World Wide Church of God. The DWP alone was allegedly bilked out of more than $300,000.
In April, Fleishman apologized and agreed to pay $5.7 million to settle civil claims it over-billed several Los Angeles city department on public relations contracts, including the DWP. Fleishman has cooperated with the criminal investigation, which includes the FBI, the U.S. Department of Transportation and the Los Angeles County District Attorney's Office.
"Beginning in 2004, when questions were first raised about billings in our Los Angeles office, we have taken numerous steps to avoid the possibility of something like this ever occurring again," said Richard S. Kline, Fleishman-Hillard's current Los Angeles general manager, in response to the verdict.
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