LOS ANGELES: Former Fleishman-Hillard SVP Steve Sugerman agreed to plead guilty last week on charges stemming from the investigation of the Omnicom agency for overbilling on city contracts.
Earlier in the week, former LA GM Doug Dowie pleaded not guilty to charges that he directed a conspiracy to defraud public and private clients by padding bills.
On Thursday, the US District Attorney's Office (USDAO) announced that Sugerman, who left Fleishman to start his own firm in 2002, had been charged with three counts of wire fraud, and entered a plea agreement. The charges carry a maximum penalty of 15 years in prison. However, USDAO public affairs officer Thom Mrozek said that Sugerman is aiding investigators, and a sentencing recommendation will reflect his degree of cooperation.
Sugerman will appear in court on July 5 for sentencing, and has admitted to helping the agency fraudulently overcharge the LA Department of Water and Power (DWP) by $120,000, while working "at Dowie's direction," according to the USDAO.
Dowie's trial date has been set for August 2. He is currently free on $75,000 bail after surrendering his passport.
The charges against Dowie are part of an amended complaint issued earlier this year against former Fleishman employee John Stodder Jr., who took over Fleishman's LA public affairs practice after Sugerman left. Dowie was indicted on one count of felony conspiracy and 15 counts of felony wire fraud last week. The conspiracy charge carries a maximum of five years.
In February, Stodder was indicted on 11 counts of wire fraud, and pleaded not guilty. Stodder and Dowie are expected to face trial together.
The indictment alleges that Dowie and Stodder, along with another co-conspirator - now said to be a woman - identified as "C-2," added more than $300,000 to billings for the DWP between January 2000 and January 2004. The overcharges pre-date Stodder's time at the firm, and some of the padding was done without his aid.
The indictment against Sugerman is separate due to his plea agreement.
Specifically, the Dowie/Stodder indictment charges that when actual billings failed to meet forecasted revenues, Dowie, Stodder, and C-2 could add "write-ups," or extra hours to timesheets. These padded hours ranged from about $6,000 in some months, to as much as $46,277 in August 2003.
Sugerman's lawyer, Ellyn Garofalo, did not immediately return calls for comment.