Posted by an Honored Guest Thursday, April 26, 2007
PREDICTION: This particular article will be the single-most read of any we've ever posted here, bar none. It's timely and poignant. IT'S HUGE!
Why? Because if you are thinking of a career in PR, this is a essential read before you make that decision; if you are a junior or mid-level practitioner and have had second thoughts in the last year or so, this might shed a little light as to why; if you're a VP or better and have amassed a nice little nest egg but have a growing sense that you could lose it all... this article could save your life.
The infamous Doug Dowie needs little introduction in our business. He's the former head of Fleishman Hillard’s LA office wrongly convicted last fall of masterminding an over-billing scheme with L.A.'s Department of Water and Power. Who better to counsel the industry on how to avoid getting indicted?
Well, after a few months of begging and pleading, Doug agreed. We are thrilled to have this exclusive.
Without further ado...
How Not to Get Indicted
By Doug Dowie
In late January of 2004 I got a call from Doug Michelman. Until he left Fleishman Hillard to take a senior position at Visa USA, he had been my boss. He had been president of the western region and I had run one of his most profitable offices.
We had remained good friends – colleagues referred to us as “The Dougs” -- and he knew I needed some support.
“You’re untouchable now,” Michelman said.
“What are you talking about?” I asked.
“I’m standing in the lobby of our ad agency and I’m looking at the new edition of Los Angeles magazine,” he said. “You’re bullet proof.”
Michelman is a smart guy, but he was wrong. My bullet-riddled body is proof that he was dead wrong.
The profile of me in the magazine, which I hadn’t seen when Michelman called, was indeed complimentary. According to the story, the Los Angeles office of Fleishman Hillard was the most successful, politically connected PR operation in the city. A couple weeks later, 300 people – including some of California’s most powerful politicians – gathered at the Beverly Wilshire Hotel when The American Jewish Committee honored me with its Civic Leadership Award for 30 years in journalism, politics and public affairs. And I’m not even Jewish.
But the political winds in the nation’s second largest city were shifting and FH was caught in a cross current that over the next few months became a hurricane. By the end of the following year, it was a Category 5.
The facts of my case are well known by now: after passing a private polygraph and volunteering to take an FBI polygraph test, I was charged, tried and convicted of running a scheme to overbill the L.A. Department of Water and Power and several other clients. I pled not guilty, maintain my innocence and will appeal the verdict. The amount of the alleged over billing is still in contention as I move forward with my appeal, but even the government concedes it was never more than a tiny fraction of the approximate $60 million the office billed during the six years in question.
For the record, I was ever accused of making a dime in the scheme.
I’ve been asked countless times how this could have happened? Three years ago, I would have asked the same question. Not any more. Last week, after Joe Nacchio, the former CEO of Qwest, became the latest senior executive convicted in a high-profile, white-collar trial, the following comment, signed by someone calling himself Kafka, appeared on the Wall Street Journal’s Law Blog:
“The so-called justice allows for the DOJ to lie all they want (as long as it can’t be proved with an unattainable certitude); the grand jury is a figment of the judge’s imagination; the DOJ is allowed to bribe their own witnesses and intimidate the defendant’s witnesses, family and friends; and the jury of your peers is a bunch of people who can miss work for an excessive amount of time (if they even have jobs). The only surprise is anyone in this country pursued by the DOJ has the audacity to go to trial or of course as the DOJ sees it, the money. It took the Supreme Court to clear Arthur Andersen of any wrongdoing but of course that was after the DOJ bankrupted the firm and forced 100,000 people from their jobs. Give me the power of the DOJ and I could convict you of fraud on any matter.”
Who am I to argue with Kafka?
But there are ways to protect yourself. I’ve learned a lot over the last three years. If I were to be cleared tomorrow and magically returned to my office at Fleishman Hillard, I would do a lot differently. I’m happy to share these lessons with other managers in the public relations business. Call it:
How Not to Get Indicted
Get Off the Public Teat – Those public contracts can be huge. Sometimes they’re profitable. They are all time bombs. Every clause in those dense, complicated contracts can put you in jail. If you’re doing work for a public agency, ask your assistant to get you the contract. I’ll bet you $10 bucks that she can’t find it. After you track it down, assemble the account team in a conference room, slowly read it out loud and ask everyone if they understand every detail. Since this exercise will understandably cause you to break out in a cold sweat, adjourn the meeting, go out for a drink and think about this: IN THE EYES OF THE GOVERNMENT, YOU ARE RESPONSIBLE FOR EVERYTHING THEY DO! If they are rounding out hours on an hourly contract, or billing an hour for an incredibly successful 15-minute phone call to the editor of The New York Times, that’s fraud – and it’s your neck if you don’t know it’s going on, even if the public agency client believes you are doing a superb job. Remember, the general manager of the LA DWP wrote the judge in my behalf during sentencing, telling him that if given the opportunity, he would hire me again. He also attended the sentencing hearing. His opinion was apparently ignored.
Stop Sending Email – If you haven’t figured it out by now, email never goes away. Never. You can delete it, be assured by your company that it’s gone after a certain amount of time and just when you’re lulled into believing some moronic, racist, sexist, ambiguous, or incriminating email you mindlessly banged out on your Blackberry four years earlier while rushing down 57 Street in the rain comes back to destroy your life. Fleishman Hillard somehow found and gave the government more than a million emails during the investigation. I read tens of thousands of them before the trial. (More on that later.) Throw your Blackberry away today and start using the phone. Your colleagues will enjoy hearing from you for a change. If I hadn’t gotten hooked on the technology and was forced to defend every word in every email I sent or received during a six-year period, I wouldn’t be in this mess.
Never Delegate – I ran an office that billed about $10 million a year. During my tenure, the headcount reached about 60-65 people. While I was GM, my senior staff included dozens of senior partners, partners, senior vice presidents and vice presidents. Those senior executives reviewed billing work sheets, drafted invoices and signed the bills, while I devoted most of my time to client relations and developing new business. I hired the best and the brightest and never for a second believed anyone on my staff would commit a crime to satisfy me or our supervisors in St. Louis. During my sentencing the judge said that delegating the billing process was a cynical move to insulate myself from wrongdoing. In a plea bargain with the government, a former SVP testified he “thought” I wanted him to inflate bills when I told him to hit the financial projections he had given me just 30 days earlier. If you don’t have time to carefully scrutinize every worksheet and bill, tell your bosses you need more help. If they refuse, quit.
Buy a Stopwatch and Clipboard – If you think you don’t need to keep careful track of your time when you become a GM, forget it. If your assistant enters your time, you’re vulnerable. If you provide thousands of hours of billable time to a client without charging, it will get you nowhere if the FBI challenges the bills. Same thing for writing off bad debt. Nothing counts except the tens of thousands of individual time entries by hundreds of account executives, even if it’s impossible to determine which are legitimate and which are not. Remember, the government is not interested in charging some account supervisor. They want YOU! There was any number of FH employees who clearly inflated time who were never charged. All they had to do was blame it on someone else.
Spy on Your Staff – Once a month, review all the email sent and received by your staff. It’s the company’s property and you’re entitled to it. You’ll be horrified. As I said earlier, Fleishman Hillard gladly provided the government more than a million emails to the government before the trial and we got all of them during discovery. I spent the summer of 2005 in a conference room of my law firm reliving six years in the life of the Los Angeles office of Fleishman Hillard. Think all those employees who smile and chat with you every day in the kitchen while you get coffee like you? Forget it. Think those employees who get big raises appreciate it? Forget it. Think those employees who seem to work so well together like each other? Forget it. Think you learn about your staff’s opinions during annual reviews and anonymous staff surveys? Forget it. You will discover many of your most trusted employees hate each other and their supervisors and have no hesitation to express their opinions – about everything from office love affairs to drug use to the bathroom habits of SVPs! – in emails to each other and their friends. Remember, if your office comes under the same kind of scrutiny that was directed at mine, these are the employees who will jump to cooperate with the government to save their own skins. Get rid of the most vicious and malicious of them now. (I also learned that two mid-level account executives carried on a torrid email affair for months in messages that described in explicit detail what they hoped to do to each other once they got out of the office that day. I never knew either of them could write so well.)
Ignore Your Financial Targets – When you’re told after the second quarter that your profit target is being increased to $2 million from $1.3 million – despite that fact you’re not even sure you’re going to hit the original number – tell your boss that you’re afraid that if you communicate that information to your overworked staff that you run the risk that they’ll “think” you want them inflate hours. Tell your bosses that you prefer that they explain to staff why it’s necessary to boost the financial targets halfway through the year. If they demur and order you to do it, call the FBI. (It might not be a bad idea to wear a wire to that meeting with your bosses. See next rule.)
Never Trust Your Boss – This is the most important rule. First off, if you work for an agency that’s owned by one of the massive holding companies, your bosses aren’t really your bosses. The holding company will be calling all the shots. And when a crisis hits, they have only one goal: the preservation of the company. No matter how many years of loyal service you’ve provided, how much money you’ve made for the company or how much your clients love you, you are dispensable. You’re the guy in the lifeboat with the gangrene leg. It’s just a matter of time before you swim with the fishes for the good of the group. Testimony taken during my wrongful termination suit revealed that from Day One lawyers were advising the executives I had worked beside for 13 years that if I wasn’t thrown overboard the company faced indictment. That means you’re fired, publicly humiliated before you’re even charged and the company stops paying your legal bills, even if they originally promised to pick up the tab, which in my case is an astounding $3 million! It also means your company’s attorneys enter an unholy alliance with the prosecutors to demonstrate the firm’s sincerity. Information is shared and side deals are negotiated. If you don’t believe me, print this out and attach it to a letter to your CEO asking him or her if the firm would support you if one of your subordinates – maybe a senior vice president – told the government in a plea bargain that they inflated bills without complaint for years because of pressure from you. Ask for a reply in writing and see what you get.
Think I’m cynical? You bet I am. I was in the in Marine Corps and served in Vietnam, then spent 20 years in hard news and politics before I ever moved to PR. I was cynical before I ever heard of Fleishman Hillard. But I wasn’t prepared for what I’ve experienced in the last three years. You can ignore my advice, or just write it off as sour grapes. Think it can’t happen to you? Think again. It can happen to anyone.
Last month the judge who presided at my trial denied my motion to remain free pending appeal. We’ve appealed that decision to the Ninth Circuit and should know sometime next month whether I will begin serving my 42-month sentence. Meanwhile, I’ve sued both Fleishman Hillard and Omnicom to recover my legal fees. The first hearing in that case is next week.
DISCLAIMER: The picture above is a representation and not of Mr. Dowie.
A total of 614 blog sites were chosen at random for analysis. By employing real-time traffic filtering, the company was able to glean some pretty unsavory stuff. Scansafe concluded that blog sites have become overgrown with a variety of unpleasant content, including porn, offensive language, hate posting, and malware.
"There were as many blogs with the 'F-word' as the word 'China'", said ScanSafe's Dan Nadir. "Bottom line, employees visiting these sites can unknowingly expose corporate networks to legal liability, viruses and loss of proprietary information."
It is Scansafe's position that this is indicative of the extent to which the Internet has become a channel for the "long tail of minority interests that encompass interests others would deem 'offensive".
So... the lesson? Keep fucking talking you idiots but listen at your own risk.
On Thursday, March 8, 2007 at 7:41 AM, Ronn Torossian, President and CEO of 5WPR, emphatically promised that he was going to sue us. No real reason, he was just irritated by our teasing him about getting in bed with pornographer Joe Francis. Anyway, Ronn gave his obscenity-laced word that we'd see the complaint in 72 hours. It's now late by
Kathleen Durazo about A Measly $2.8 Million Goes Missing, Lawsuit Results Fri, Jul 31, 10:58:34 AM Ray Durazo (the founder) sold the company to Dan in 1999. He was not involved in any of this. He (and I) found out about the lawsuit in the LA Times. In addition to embezzling this m [...]