FIRM INFLATED GEHRY BILLS, SAYS EX-VP BOSS STODDER ORDERED CHANGES, MUIR TESTIFIES.

Byline: BETH BARRETT Staff Writer

A former Fleishman-Hillard senior vice president testified Friday that he was asked to inflate bills for architect Frank Gehry's firm and other accounts by John Stodder, his former boss and defendant in the federal fraud case.

Fred Muir, a former Los Angeles Times editor, also testified how defendant Doug Dowie, the public relation firm's former general manager and a former editor at the Los Angeles Daily News, was a "pretty tough boss."

"He could be very abusive. He had an overbearing manner, would yell and get red in the face, and say demeaning things to employees."

Muir said sometimes when Stodder said there needed to be a higher bill, he did inflate the amount. He said he objected on the Gehry account because all the work had been accounted for.

In some instances hours were added to activities, while in others cases the activities themselves were invented, he testified.

Muir said he once saw repetitive billings for the same work and thought it was a computer "glitch," before he was told by Stodder not to "worry about it."

Muir previously said in an interview that when he resigned in October 2003, he told Dowie the reason he was leaving was over fraudulent billings to the Department of Water and Power.

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

Another former senior vice president, Hilary Norton Orozco, said in testimony that she heard the "heated" conversation between Dowie and Muir, including Muir saying he was taking parts of two accounts, including that of the Worldwide Church of God.

She said Muir - now with the firm Burson-Marsteller - told Dowie, "If you go after me, I'm going to tell people what's going on with the DWP.

"Orozco told the jury "Dowie was furious" and that he walked him out of the office, and Muir then was escorted from the building.

In previous testimony under immunity, Monique Moret, a former vice president who reported to Stodder, said that after the meeting with Muir, Dowie asked her, Stodder and Matt Middlebrook - a former spokesman for Mayor James Hahn - whether the DWP bills were being written-up, or inflated. Moret said Stodder said, "Yes," and that Dowie asked if Muir had any evidence.

Orozco testified that Dowie in late September 2003 held a staff meeting at which he said there was a $30,000 shortfall from the revenue projected and asked them to go through accounts to address it.

Orozco said she left that meeting with "a feeling of dread" as to what was being asked. She said she couldn't speculate how Dowie wanted the gap filled.

About that time, Orozco said an assistant came to her and said Stodder had asked her to inflate the Worldwide Church of God account for the month, and that she told her not to do it. The assistant broke down in tears, saying she was the sole support for her family, and had no power to overrule a superior's request.

Under cross examination by Jan Handzlik, one of Stodder's attorneys, Orozco said the church wasn't billed for administrative or travel costs because it wouldn't pay those charges, but disputed that it constituted underbilling.