Posted on 01/24/2005 8:38:57 AM PST by NormsRevenge
Public relations bills submitted to the Port of Los Angeles by a Fleishman-Hillard executive who is now Mayor James Hahn's press secretary were marked up by more than $1,700 in 2003 without documentation that extra work was done, according to records and interviews. Shannon Murphy, who left the firm less than two months later to replace Matt Middlebrook, who joined Fleishman-Hillard, declined to be interviewed but said in a statement that the handwritten additions to her billing statements were "outrageous."
A company official said the "write-ups" lacked supporting documentation that the extra work was ever performed. The paperwork appears to be similar to dozens of Fleishman-Hillard pre-billing statements for the Harbor and Water and Power departments that are at the heart of a federal fraud indictment of John Stodder, who was the firm's senior vice president in charge of the more than $3 million a year in city work, the official said.
"I am outraged if any time sheets I submitted while employed by Fleishman-Hillard were changed or altered," Murphy said. "Every time sheet I submitted accurately reflected the work I performed and any changes or alterations were done without my knowledge or permission.
"I am deeply troubled by the allegations that have surfaced recently in the press and hope that all facts come to light as soon as possible and I will cooperate fully with any inquiries."
The 13 Murphy "write-ups" and dozens of others for other executives on the port account were outside the indictment's time frame of June to September 2002, which involved eight write-ups on various other accounts under the more than $500,000 in port contracts that the firm got.
Three of Murphy's bills had a computer entry for work involving Hahn's office, including conversations with the mayor's staff, and researching mayoral media opportunities. They were then marked up by hand without documentation for the additional time, billing records show.
Richard S. Kline, Fleishman-Hillard's regional president and senior partner, said the write-ups on Murphy's billings appear to be the same type as those in the time frame that Stodder is accused of fraudulently billing the port.
"If the hours were added inappropriately, it's flat-out wrong, and Fleishman-Hillard would never accept or condone any inappropriate billing," Kline said.
In addition to the port allegations, the indictment alleges Stodder, 49, participated in a scheme over two years to defraud the DWP out of $250,000. He's also accused of overbilling architect Frank Gehry's firm and the World Wide Church of God.
Stodder, through his attorney Jan Handzlik, has denied doing anything wrong.
"My only response is, when all the facts are known, it will be shown that John acted in a manner that was proper and consistent with company policy," Handzlik said Friday.
While Stodder's initials are on the pre-billing summary pages, sources said it is unclear who actually added all the hours to the bills by hand.
The indictment also lists two "co-schemers" identified as "CS-1" and "CS-2." Co-schemers can be given immunity, though not necessarily.
Assistant U.S. Attorney Adam D. Kamenstein declined comment.
Murphy left the public relations firm in September 2003 to join Hahn, with whom the public relations firm's Los Angeles executives had close ties, doing extensive pro bono work as well as getting paid hundreds of thousands of dollars under the DWP contract for services that directly benefited Hahn politically.
At the same time the firm's executives were contributing thousands of dollars to Hahn's campaign and political causes, including his fight against San Fernando Valley secession.
The firm is accused of overbilling the city $4.2 million on the $24 million it was paid over six years. Company officials have denied a wide-ranging conspiracy to inflate bills to the DWP, but have acknowledged that they could not account for about $650,000 in billings to the municipal utility.
About the same time that Murphy joined Hahn's office, Middlebrook quit as deputy mayor and went to work in Fleishman-Hillard's San Francisco office. Middlebrook left the public relations firm recently to work for developer Rick Caruso, a Los Angeles police commissioner and close Hahn ally, and is now spearheading efforts to get the mayor's proposal for a tax hike for public safety on the May 17 mayoral runoff ballot.
Kline, who was brought into the Los Angeles office after the scandal broke, said he could not get more details because the top managers involved are no longer with the firm. But he said the hand-written notations, without supporting documentation, don't conform to company standards -- even if the work was done.
The write-ups weren't caught because at the time pre-billing changes were recorded by a clerk in the company's St. Louis headquarters without having to be reviewed by both the account director and another senior partner, as is now standard before the final bill is approved.
Individual employees are paid a salary and don't get a monthly accounting of billed hours, so they would have no formal way of knowing if their hours had been padded by someone else, Kline said.
Billing records for the port show there were at least 72 handwritten increases of billings, for a total of nearly $17,000 in write-ups. The 11-count indictment of Stodder lists about $250,000 in allegedly fraudulent write-ups at the DWP.
More than half of the port billing increases, totaling nearly $10,000, were on Stodder's accounts, the records show. A few of those included scrawled notes, including some involving meetings or conversations with then Deputy Mayor Troy Edwards, a key Hahn fund-raiser who was put in charge of overseeing the port, DWP and airport. He resigned under a cloud last year.
The billing increases included an additional 5.5 hours for Doug Dowie, the former head of the L.A. office, for about $2,000 -- all outside the period referenced in the indictment.
Dowie's billing statement includes a computer entry for two hours totaling $880 on June 27, 2003, for "strategic counsel" to the port. The bill was doubled in handwriting, without any description of what the work was for, to $1,760.
On June 24, 2003, Dowie's billing statement included one hour at $440 to provide "strategic counsel to the internal team." In handwriting, another 3.5 hours were added at $332 an hour, with notations the work was for strategic counsel, to discuss a shipping firm with Stodder and Edwards as well as to work on strategy for dealing with City Controller Laura Chick, who was scrutinizing the firm's contract.
Tom Holliday, Dowie's attorney, said his client was never involved in the preparation of any bills, including his own, though he was aware of how the L.A. office was performing financially in the "aggregate."
"Mr. Dowie did not review the bills, and was not involved in their preparations, including his own time entries," said Holliday, with the firm Gibson, Dunn & Crutcher. "That was not a function of which he took primary responsibility; (it was done) by others in the office.
"Doug denies any wrongdoing and is very proud of the work performed by Fleishman-Hillard for the city of Los Angeles. He believes a quality service was provided, and is not aware of any false billings."
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