DEBRA W. YANG
United States Attorney
Central District of California
Thom Mrozek, Public Affairs Officer
January 13, 2005
FORMER PUBLIC RELATIONS EXECUTIVE INDICTED ON FEDERAL FRAUD CHARGES FOR ALLEGEDLY OVERBILLING THE LOS ANGELES DEPARTMENT OF WATER AND POWER
A former senior vice president at the Los Angeles office of the Fleishman-Hillard public relations firm was indicted today on federal fraud charges that allege he participated in a scheme that resulted in fraudulent bills being submitted to the Los Angeles Department of Water and Power.
John Stodder, a 49-year-old resident of Palos Verdes Estates, was charged with 11 felony counts of wire fraud. Stodder, who was a partner at Fleishman-Hillard, was in charge of the Los Angeles office's "public affairs" practice group from May 2002 until he left the firm last week.
The indictment specifically alleges that Stodder was responsible for nearly $250,000 in fraudulent bills that were submitted to the DWP. The indictment also alleges that several other Fleishman-Hillard clients were overbilled as part of the scheme. Those clients are the Port of Los Angeles, Gehry Partners LLP and the World Wide Church of God.
The indictment outlines a scheme to defraud the DWP and the other clients. After monthly billing records were compiled for certain clients, Stodder and others reviewed the bills to see if they met billing forecasts for the month. "On those occasions when the legitimate billings were less than that which had been forecast, defendant Stodder and other unindicted co-schemers...fraudulently increased and caused others to increase [Fleishman-Hillard Los Angeles] billings by altering the billing worksheets to reflect a greater number of hours than [Fleishman-Hillard Los Angeles] employees actually had worked and recorded...," according to the indictment. "These increases in the [Fleishman-Hillard Los Angeles] billings were known as ‘write-ups.'"
The indictment details communications in early 2003 in which a co-schemer asks Stodder to "pad" the DWP bill by $30,000. In response, Stodder allegedly informed the co-schemer that $30,000 was "more than the system could bear," but that another co-schemer had informed him that they could "slip through another $15k without incurring too much more scrutiny."
The indictment accuses Stodder of 11 counts of wire fraud. Each count carries a maximum possible penalty of 20 years in federal prison.
After surrendering to federal authorities tomorrow, Stodder is expected to make his first court appearance in United States District Court Friday afternoon.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
The case is the product of an ongoing, joint investigation by the Federal Bureau of Investigation, the United States Department of Transportation and the Los Angeles County District Attorney's Office Bureau of Investigation. The prosecution is a collaborative effort between the United States Attorney's Office and the Los Angeles County District Attorney's Office. Fleishman-Hillard, Inc. has cooperated in the investigation.
Release No. 05-008
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