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Walk in His Shoes

Photo by Hugh Williams

Convicted of Overbilling the L.A. DWP, Doug Dowie Shares His Experience

Posted: April 3, 2007

By DOUG DOWIE

The downtown headquarters of the Los Angeles Department of Water and Power, the nation’s largest municipal utility, is a relatively simple 15-story stack of glass and steel across the street from the Los Angeles Music Center and near the far more photographed confluence of freeway overpasses known as the “Four Level Interchange.”

The front of the building features large square pools and fountains symbolizing the importance of water to this arid region — water that was stolen from other parts of California in the early 20th Century by city fathers and real estate speculators who wanted to develop the sprawling San Fernando Valley.

Often the city fathers and the real estate speculators were one and the same, and their scheme became famous in the movie “Chinatown.”

Remember the famous line from Morty the coroner?

“Can you believe it? We’re in the middle of a drought, and the water commissioner drowns. Only in LA.”

You bet I believe it, Morty.

On a brilliant June morning in 2005 as I’m driven past the DWP building, handcuffed in the back seat of an FBI sedan, I’m struck by the pure irony of the scene. For years, the DWP was one of my largest and most important clients. Now I was on my way to a federal courtroom to be charged in a conspiracy to overbill the department for, of all things, public relations, a profession I never intended to practice when I planned my life 37 years earlier as a Marine in Vietnam.

I had been a reporter and editor for nearly 20 years before I was seduced by the much higher salaries in public relations, where my journalism experience and political contacts helped me succeed beyond my wildest expectations. I was a senior partner and senior vice president at the Los Angeles office of public relations giant Fleishman Hillard, which I had joined in 1991. I hired the best, most talented people in town — former reporters, editors and political staff. My public affairs practice grew, and I was promoted to general manager in 1999.

The firm, which had won several large contracts with public agencies, became politically active under my leadership. Just about anyone running for office or re-election in Los Angeles solicited contributions; and we gave, mostly to incumbents.

Open races created a problem. In 2000, many of Los Angeles’ most important power brokers urged me to support the mayoral candidacy of City Attorney James Hahn.

The firm and its employees — with the complete support of its corporate headquarters in St. Louis — contributed to Hahn. He was elected mayor. The race was barely over, however, when he faced an effort by activists in the San Fernando Valley to secede from the City of Los Angeles. We were the first to contribute money to defeat the secession ballot proposal. Hahn won again. Our bond with the Hahn administration was strengthened and our visibility skyrocketed.

In 2003, Los Angeles’ politically ambitious city controller, who had never met a TV camera she didn’t like, made a charge worthy of Joe McCarthy: She had “heard” accusations that the Hahn administration practiced “pay to play” with city contractors, trading city contracts and other favors for political contributions. She never named who was selling the contracts, who was buying them, or for how much.

The U.S. attorney’s office and the local district attorney opened a joint investigation. Fleishman Hillard, like other Hahn contributors who had contracts, came under suspicion. No one at the company was ever charged with criminal conduct tied to pay-to-play schemes, but Fleishman Hillard’s billing practices, which had been reviewed by the city controller’s office for years, suddenly came under intense scrutiny.

Now I was sitting in the back seat of the FBI sedan.

The agent behind the wheel had handcuffed me an hour earlier behind the federal building in West Los Angeles and supervised my booking, getting my mug shot and fingerprints and being sure to note that on my right forearm was a tattoo of my name, military service number and initials “USMC.” Now I was getting a new government number.

A second agent, a pleasant young woman, sat next to me in the back seat on the ride to the Roybal Federal Courthouse in downtown Los Angeles. She could have easily been one of my children’s teachers. As I stared out the car window at the DWP building, she asked me if I had ever had SARS or had recently returned from a foreign country with a cough.

That’s when it hit me: I was in a really bad movie. A stinkeroo. Who would ever believe this lousy plot? Except for smoking a little pot when Jefferson Airplane was still on the charts, I never intentionally broke a law in my life. I had taken a polygraph test five months earlier to prove I was never aware of any illegal billing and passed with flying colors. I volunteered to take an FBI polygraph. The prosecutors weren’t interested.

I prided myself on being the kind of guy who drove five miles back to the market if I discovered the clerk had given me too much change. I didn’t take two newspapers out of the box. I raised my kids that way and was extremely proud of it. I had been president of the local chapter of the Society of Professional Journalists, helping raise thousands of dollars to combat censorship and to open courtrooms to cameras. I also had served on the board of at least another dozen charitable and civic organizations.

A year earlier, the American Jewish Committee honored me with its first Civic Leadership Award for my efforts “to promote fairness and tolerance” in journalism and public affairs. At that event, I was praised by former California Gov. Gray Davis, Mayor Hahn, former California State Assembly Speaker Bob Hertzberg, former U.S. Commerce Secretary Mickey Kantor and former Clinton Chief of Staff Leon Panetta.

When most of my peers were doing anything to avoid Vietnam in 1966, I enlisted in the Marine Corps because, I believed then and now, it was the right thing to do.

Now I was accused of defrauding my best client — the client I thought about first thing in the morning and last thing at night — and not even profiting from the purported fraud.

But this is Hollywood. We make a lot of bombs here. I mean, my God, a federal agent is driving me past the alleged crime scene while another in the back seat who looks like a young Laura Bush is asking if I have an infectious disease. And if I look over my left shoulder I can actually see the H-O-L-L-Y-W-O-O-D sign on the hills!

Hold tight, I thought, you’ve been through worse — it can’t be as bad as Vietnam — and soon the last reel of this bomb will end.

I was wrong on both counts. I’d never seen worse, and I’m still waiting for the movie to end.

On May 17, 2006, after a monthlong trial, I was convicted of conspiracy and wire fraud for allegedly overbilling the Department of Water and Power and several other clients in the neighborhood of $529,000 over the last six years while I ran the Los Angeles office of Fleishman Hillard. During that period, the average annual revenue of the office was $10 million.

In his closing argument, one of my defense lawyers, Gibson, Dunn & Crutcher partner Nick Hanna, told the jurors I was innocent. He said cheating my clients by that much would have been tantamount to Tiger Woods knocking a golf ball into a hole with his foot.

The government, which conceded that I never reviewed, nor even signed, any of the bills in question, called 15 witnesses, most of them former colleagues and clients. Not a single witness testified that I had told them to falsify a bill. The bulk of the government’s case against me consisted of the testimony of a former senior vice president — a one-time Los Angeles deputy mayor — who admitted in a plea agreement to defrauding the Los Angeles DWP. He testified that although I never told him to falsify a bill, he thought that was what I wanted him to do. Why he never came to me and asked me what I meant, I’ll never know. He was sentenced to probation and community service.

The government also relied on some of the more than one million e-mails Fleishman Hillard eagerly supplied the government in its successful effort to avoid prosecution of itself and its St. Louis-based management. All of the ill-gotten gains from this alleged scheme — every penny — went to the company, not those eventually charged.

In a syntactical error I’ll regret for the rest of my life, I used the word “pad” as a synonym for “add” in an e-mail regarding a bill. Writers do it all the time. I had sent that e-mail, which I believe I tapped out on my Blackberry while crawling up the San Diego Freeway on Jan. 6, 2003, to every senior executive in the Los Angeles office — and three important executives at Fleishman Hillard’s corporate headquarters in St. Louis. If I intended to commit a crime, I was doing a really lousy job of keeping it secret.

My 17-year-old daughter and 20-year-old son left the courtroom following Hanna’s brilliant closing argument convinced their father would be acquitted. So did many other observers of the case. I told Nick at the time that no matter what happened I’d never forget what he did for my kids.

The jury deliberated for a week and a half. Convinced that the government hadn’t proved its case beyond a reasonable doubt, I was stunned by the verdict. I called my kids. I called my brother in New Jersey and broke the news. I asked him to tell my ailing, 85-year-old mother. I wasn’t afraid to go to Vietnam, but telling my mother that her eldest son had just been convicted of multiple felonies was something I just couldn’t handle.

I got a little drunk with my closest friends. Then I got up the next morning and vowed to continue to fight to clear my name.

I agreed to be interviewed by two reporters for the Los Angeles Daily News. After college, I was a reporter for United Press International and later became its Los Angeles bureau manager. In 1985, I was recruited by the Los Angeles Daily News to be business editor. A short time later I was promoted to metro editor, then managing editor of news.

Both Daily News reporters who met for lunch that day worked for me when I was at the newspaper. They were two of my best. I once edited their copy. Now I was their copy. One of them had covered the entire trial, bringing a cushion to every session to deal with the hard wooden benches. She asked if I was “sorry.” I responded that I had just finished fighting nearly two years to prove my innocence. The jury had seen it differently, and I respected its verdict, but I was still innocent. Even if I wanted to apologize, I said, I wouldn’t know what to apologize for.

The headlines that accompanied their article and Internet pickups of the story used adjectives like “defiant” and “unrepentant” to describe my attitude, which gave my legal team hives but bolstered my children’s confidence in their father’s innocence. If I had written the headlines atop the Daily News post-verdict interview, I would have used the word “confused.” As in, what do I do now? The Daily News ran an editorial cartoon the day after the verdict with one prisoner in a cell asking another what he was in for. The prisoner replies, “Public Relations.”

When I was an editor, I taught journalism at the University of Southern California on a part-time basis for five years. Now I’m qualified to teach “Scared Straight” classes. And the last two years have taught me there’s not a general manager at a PR firm, or a managing partner at a law firm, who wouldn’t benefit from it.

If I had a dime for every time someone has told me, “There but for the grace of God,” I’d probably have enough money to pay my legal team at Gibson Dunn. Led by senior partner Tom Holliday, the law firm has represented me since the spring of 2004. That’s when this nightmare began in earnest with an article about overbilling in the Los Angeles Times. The article was based almost entirely on anonymous sources.

That story fell into the laps of county and federal prosecutors already investigating the Hahn administration over the pay-to-play allegations made by the city controller. Less than a week after the story was published, a former Fleishman Hillard senior vice president, a talented and experienced PR professional I had specifically hired to run the DWP account — and who later testified she did the bulk of the overbilling — marched into the U.S. Attorney’s Office and made a deal for immunity.

Fleishman Hillard, my employer for 13 years, put me on administrative leave after the Times story and ordered me not to defend myself in the press. The company fired me in January 2005. I learned of my termination from a reporter.

Michael Faber, an extraordinarily talented and passionate employment attorney in Santa Monica, Calif., filed suits on my behalf against Fleishman Hillard, which stopped paying my legal bills after I was indicted. We learned in depositions of the firm’s top executives that nearly every decision they made during the investigation was based on the so-called Thompson Memorandum, the guidelines the Justice Department used to decide whether a corporation was cooperating sufficiently or should be charged criminally, as in the case of Arthur Andersen, which was destroyed by its indictment in the Enron scandal.

In my opinion, the memo’s guidelines, issued in 2003 by then-Deputy Attorney General Larry Thompson, turned Fleishman Hillard into co-prosecutors, with the firm’s attorneys helping the government in every way to convict me. In addition to waiving attorney-client privilege and supplying more than a million documents, Fleishman Hillard’s lawyers did research for the government, according to testimony. When the company’s lawyers informed the assistant U.S. attorney handling my prosecution that they were scheduled to depose me in my civil case, they got an e-mail from him requesting “orchestra seats.” My civil case was eventually dismissed, with the judge ruling that if I was fired to satisfy the requirements of the Thompson Memo or because of the bad publicity surrounding the investigation, that was just fine.

So extreme and so criticized was the Thompson Memo that, late last year, the Justice Department replaced it with the McNulty Memo, named after Deputy Attorney General Paul McNulty, who announced his resignation in May. Under the new guidelines, prosecutors can’t be as aggressive in pursuing attorney-client waivers. They also cannot consider a company’s decision to pay a targeted employee’s legal fees as a factor when deciding whether to indict the company as a whole. These reforms came too late for me.

For a minute, put yourself in my shoes. Ask yourself: Could you withstand that level of scrutiny? If you run a service or a law firm that bills hourly, are you positive none of your subordinates — even the most senior and trusted — are not overbilling clients to meet revenue projections, make more money or to simply make themselves look good? What are you doing to make sure that they do not inflate bills? Do you review every worksheet and bill? Do you regularly remind them not to commit felonies? If not, you’re vulnerable. If your employees were caught inflating timesheets or invoices, would they jeopardize their freedom and the security of their families by fighting the charges or jump at a deal with the prosecution to blame a superior? Have you ever sent an e-mail that could be misinterpreted? And would your firm stand up and protect you?

In the Marine Corps, I learned we never left our dead on the battlefield. At Fleishman Hillard, they shot their wounded.

The Daily News editorial cartoon was prophetic. I was sentenced to 3-1/2 years in a federal prison. In March, the judge overseeing the case denied my motion to remain free while my appeal was pending. Taking the lead for the Gibson Dunn team, Michael Farhang filed a brief citing a dozen points that would constitute my appeal to the 9th U.S. Circuit Court of Appeals.

On June 20, the 9th Circuit granted the motion and stated, “the appeal raises a ‘substantial question’ of law or fact that is likely to result in reversal, an order for a new trial, or a sentence that does not include a term of imprisonment, on all counts on which imprisonment has been imposed.”

The ruling makes me optimistic that I will eventually be cleared, but my sentence has already been severe. Employment has been virtually impossible. My home is gone, my savings and retirement accounts are depleted, and I’ll be in debt the rest of my life. My family has been trapped in a nightmare they never could have imagined. Some of my former friends have abandoned me, but many have remained loyal and supportive. The former general manager of the Los Angeles Department of Water of Power — the alleged victim of the scam — wrote the judge, saying he would hire me again if given the opportunity.

Like I said, you can’t this make stuff up.

One week after my sentencing, the Los Angeles Times ran a story that a major producer had optioned a screenplay I had written during my legal battle. It’s called “Anonymous Sources.”

I’m just hoping I can attend the premiere.

Page 1 of 1 pages for this article

nomdeplum

Doug, you were guilty, and found so by a group of your peers. Man-up and admit your wrong doings, you might actually get some self respect back. Right now I respect Madoff more than I respect you. The funny thing is, you actually believe this martyr bs. All the people that have worked for you however, know what you did, and did knowingly.
Suck it up.

posted on 07/23/2009

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