Another Indictment Is Expected in PR Billing Probe

A federal prosecutor said Monday he expects another indictment this month or next in an ongoing investigation of a public relations firm that allegedly submitted false bills to the Los Angeles Department of Water and Power.

Assistant U.S. Atty. Adam D. Kamenstein made the remark in federal court at a status hearing for John Stodder Jr., the only former Fleishman-Hillard executive charged to date in a case involving at least $250,000 in allegedly phony bills submitted for work never performed.

Stodder, a former partner and senior vice president who ran the firm’s public affairs practice in Los Angeles, was accused in an indictment in January of participating with “others known and unknown” in the over-billing scheme.

Kamenstein explained that he expects a grand jury to return a superceding indictment against Stodder and an additional defendant in April or May. His comment came after a judge asked why the government wanted to postpone Stodder’s August trial. Kamenstein did not indicate who he expects the other defendant to be.

In addition to the Fleishman-Hillard case, Kamenstein is also directing a broader probe involving the FBI, the Los Angeles County district attorney’s office and the U.S. Department of Transportation into possible public corruption in Los Angeles city contracting. The broader investigation has produced no indictments.

The alleged fraud case involving Fleishman-Hillard has attracted interest among those watching the pay-to-play investigation because Fleishman-Hillard performed extensive work for Mayor James K. Hahn as part of its contract with the DWP.

Hahn is now locked in a reelection battle with City Councilman Antonio Villaraigosa in which alleged corruption at City Hall has become a major issue. They face off in a runoff May 17.

Fleishman-Hillard, a St. Louis-based firm that had cultivated extensive political connections in Los Angeles, wrote speeches, letters, media plans and news releases for Mayor Hahn. Many of the news releases were written on Hahn’s letterhead and made minimal or no mention of the utility.

Records indicate that the firm was in almost daily contact with the mayor’s office, work for which it billed the DWP.

Stodder’s attorney, Jan Handzlik, said Monday that the government was out of bounds in indicting Stodder.

“We continue to believe that going after a mid-level employee like John Stodder, someone who did his job in an honorable fashion and who did not make one red cent as a result of these billings, is inappropriate,” Handzlik said. “We look forward to seeing if the grand jury will turn its attention to someone responsible for making a policy rather than executing it.”

The government launched its Fleishman-Hillard probe after The Times quoted numerous former employees in July as saying that the firm’s overbilling of the Department of Water and Power was routine.

Times staff writer David Rosenzweig contributed to this report.