PR Exec Pleads Guilty

Times Staff Writer

In a cooperation deal with federal prosecutors, a former executive at public relations giant Fleishman-Hillard pleaded guilty Monday to taking part in a scheme to bilk the city of Los Angeles out of thousands of dollars by padding bills to the Department of Water and Power.

Steve Sugerman, 41, is expected to testify against his former boss at a trial set for November.

Sugerman, who previously served as communications director for former Mayor Richard Riordan, had no comment after entering his plea to three fraud counts before U.S. District Judge Gary A. Feess.


Sugerman faces a maximum sentence of 15 years in prison and a $750,000 fine, but could receive probation because of his cooperation.

The case grew out of a Times investigation, published last year, in which former employees of the nationwide public relations firm told of being ordered to inflate hours they had spent servicing a $3-million-a-year contract with the DWP.

Douglas R. Dowie, who headed Fleishman-Hillard’s Los Angeles office, was subsequently charged with directing Sugerman and Sugerman’s successor, John Stodder Jr., to inflate bills when revenues to be collected fell short of monthly projections submitted to the firm’s headquarters in St. Louis.

Dowie, a fundraiser and unofficial advisor to former Mayor James K. Hahn, is accused of orchestrating about $325,000 in overcharges.

He and Stodder have pleaded not guilty to federal fraud charges.

Fleishman-Hillard was not indicted but acknowledged the overbilling and agreed to pay the city nearly $6 million to settle a civil suit brought by the city.

In his plea agreement, Sugerman acknowledged being involved in overcharging the DWP more than $120,000 over a two-year period.

Assistant U.S. Atty. Adam Kamenstein said Monday that Sugerman probably would not be required to make restitution payments since Fleishman-Hillard has agreed to compensate the city for the overcharges.

Sugerman is to be sentenced in March.