'VALUE' BILLED WHEN PROJECTIONS WEREN'T MET, EX-VP TESTIFIES.

Byline: BETH BARRETT Staff Writer

A former Fleishman-Hillard vice president testified Wednesday she was told to inflate bills to reflect "value" by her old boss, who's since pleaded guilty to wire fraud.

In the conspiracy and wire fraud trial of former executives Doug Dowie and John Stodder, Hilary Norton Orozco testified she was told by Senior Vice President Steve Sugarman that clients could be billed for the "value" they received, which was a dollar amount higher than the hours actually worked.

Dowie and Stodder were indicted by a federal grand jury on charges of conspiracy and wire fraud for allegedly bilking the Department of Water and Power out of more than $300,000, as well as overcharging other clients. Both have pleaded not guilty.

Orozco said when billings didn't meet projections between October 2001 and the end of January 2002, Sugarman would want accounts written up - which meant adding hours beyond those worked - to meet the target.

She told the jury she asked Sugarman what to do when the hours worked were insufficient to meet the dollar projections for the month.

"He explained the concept of `value billing'," she said. "We provided the value, regardless of the time.

"He had to go over it a couple of times. I'd never billed for a client and it was not an easy concept for me to understand. It was an explanation he provided in open-door meetings."

Orozco said she looked to add hours to "creative time," such as time spent brainstorming press releases or media plans where the time was "most easily imprecise."

In pleading guilty to three counts of wire fraud, Sugarman agreed to cooperate with prosecutors in the criminal case. He left Fleishman-Hillard in early February 2002 before Stodder joined the firm.

Orozco is to continue her testimony today amid questioning about the Worldwide Church of God, an account she oversaw and that prosecutors also say was overbilled.

In cross-examination of another witness, former account executive Eric Moses said Dowie never told him to "value bill," adding he only "heard him talk about it." On Tuesday he testified he may have increased a bill in that manner, but felt "uncomfortable."

He then told Asst. U.S. Attorney Cheryl O'Connor Murphy that he "got the impression it was a form of billing."

U.S. District Judge Gary Allen Feess has allowed the "value billing" line of questioning, saying Tuesday outside the jury's presence that it goes to the government's theory it was used as a rationalization for fraud.

On questioning by defense attorney Michael Resch, one of Stodder's attorneys, Moses also said he did have a Jan. 10, 2003, phone conversation with Stodder while on vacation in New York, but that it was brief and there was no discussion of China Shipping or other port business. Port of Los Angeles bills show one hour billed on that date for a conversation between Moses and Stodder.

Resch also reminded Moses of a Feb. 9, 2005, interview with government investigators where Moses initially said he never talked to anyone about write-ups, but under repeated questioning by the government said Stodder might have asked him to add hours, but that he said there weren't any.

Under pointed questioning by Nicola Hanna, one of Dowie's attorneys, Moses - a former reporter at City News Service and the Los Angeles Daily News, as well as a former assistant deputy mayor to Richard Riordan - was asked whether he could have alerted his former colleagues, or his later boss City Attorney Rocky Delgadillo, to any billing improprieties at Fleishman-Hillard.

Moses said he could have but had nothing to report.

In other testimony, billing managers from the firm's headquarters in St. Louis said that while they noticed there were more hand-written write-ups in the Los Angeles office, they assumed it was the result of late time entries, and not any improprieties.

They said the issue wasn't raised with Dowie, but instead training was held on the proper way to bill.

beth.barrett(at)dailynews.com

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