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Second Ex-Fleishman Exec Indicted

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BOSTON Doug Dowie, the former general manager at Fleishman-Hillard's Los Angeles office who was indicted last week on federal conspiracy and fraud charges, today pleaded not guilty, according to the U.S. Attorney's Office for the Central District of California.

The charges stem from an alleged scheme to overbill the Los Angeles Department of Water and Power for public relations services.

Dowie, 57, served as FH general manager during the outpost's tenure on the account from 1998-2004. FH is a unit of Omnicom Group.

Dowie was named in a 16-count superseding indictment returned yesterday by a federal grand jury. Also named in the indictment was John Stodder, 49, a former FH svp, who ran the shop's public affairs practice.

Yesterday's indictment supersedes and replaces a January indictment in which Stodder was the sole defendant.

Dowie and Stodder were dismissed by FH in January.

The new indictment accuses Dowie and Stodder of conspiracy. Additionally, Dowie is charged with 15 counts of wire fraud, while Stodder faces 11 counts of wire fraud. The conspiracy charge carries a maximum possible penalty of five years in federal prison, and each count of fraud carries a maximum penalty of 20 years in prison.

Stodder had already pleaded not guilty to 11 counts of wire fraud and his trial was set to begin in August. Stodder will be in court on June 13 and is expected to enter a plea at that time.

The indictment specifically alleges that FH submitted over $300,000 in fradulent bills to the DWP from January 2000 through January 2004. The indictment also alleges that several other FH clients were overbilled as part of the scheme. Those clients are the Port of Los Angeles, Gehry Partners and the World Wide Church of God.

Last July, the DPW accused FH of overbilling the utility more than $4.2 million. In April, FH said it would pay $4.5 million to settle all civil claims. F-H at that time also waived payment of approximately $1.3 million the utility owed from 2003-04.

Yesterday's indictment details communications in January 2003 in which Dowie asked Stodder if they could "pad" the DWP's bill by $30,000. In response, Stodder allegedly informed Dowie that $30,000 was "more than the system could bear," but that another FH employee believed that they could "slip through another $15K without incurring too much scrutiny."

Later that month, Dowie and Stodder instructed that other FH employee, who is not named, to increase the number of hours billed to DWP to fraudulently overcharge the client $6,855, according to the indictment.

"We deeply regret any improper actions that occurred in our Los Angeles office," said Richard Kline, the current general manager and senior partner of FH in Los Angeles, in a statement. "We have been cooperating fully with the investigating authorities since this inquiry began and we will continue to do so. ... Other than these recent problems in our Los Angeles office, we have never had an issue of this type in the almost 60-year history of our firm."

This story updates an item posted on June 3 with the news that Dowie pleaded not guilty.