LOS ANGELES (AP) - Steven Sugerman, a one-time senior vice president at public relations giant Fleishman-Hillard, told federal jurors Thursday that he inflated billings and instructed his subordinates to do likewise on orders from Douglas Dowie, who headed the firm's Los Angeles office. Fleishman-Hillard is based in St. Louis.
Sugerman is scheduled to return to the witness stand Friday, after which the government expects to rest following the testimony of the FBI agent who assembled the case.
Dowie and John Stodder Jr., another former Fleishman-Hillard executive, are on trial for an alleged scheme to over bill the Department of Water and Power, the Port of Los Angeles, the city's airport agency and several private businesses. The firm has refunded more than $6 million to the city.
Stodder and Dowie, a former managing editor of the Los Angeles Daily News, have pleaded not guilty.
Sugerman said Fleishman-Hillard treated the DWP as a "cash cow" to make up monthly revenue shortfalls for the firm's Los Angeles office. He has pleaded guilty to three counts of wire fraud in the case and faces a maximum sentence of 15 years in prison and a $750,000 fine.
Sugerman acknowledged that Dowie never specifically told him to inflate billings. But he said his boss ordered him to "figure it out" when billings fell short of monthly projections on its $3 million-a-year public-relations contract and it was too late to generate revenue with legitimate work.
Reminiscent of a scene from Casablanca:
Rick: How can you close me up? On what grounds?
Captain Renault: I'm shocked, shocked to find that gambling is going on in here!
Croupier: Your winnings, sir. [a croupier hands Renault a pile of money]
Captain Renault: Oh, thank you very much.
Captain Renault: Everybody out at once!
That's very naughty and illegal and gives a profession a bad name. Have you heard about all the problems our lads are having in the UK at the moment, not PR but politicians, pretty similar in many ways?
I've suggested on my blog that they should bond by hugging, there's a global hug taking place in the UK this weekend, it may be winging its way over to the pond pretty soon.
And there I was thinking that US PR was all about command and control. It didn't occur to me that some enterprising PRs might actually draw inspiration from execs in other companies - perhaps even other clients? I thought it was supposed to be the other way around. I'm all confused now. Doh. Back to Lay and Skilling - a lot simpler.