VP WARNED HE'D REVEAL OVERBILLING MUIR DENIES 'BLACKMAILING'.

Byline: BETH BARRETT Staff Writer

In October 2003, outgoing Fleishman-Hillard Senior Vice President Fred Muir told his boss, Doug Dowie, he'd reveal fraudulent billing practices at the public relations firm if Dowie tried to retaliate against him for taking business from the company.

On the stand Wednesday in the conspiracy and wire fraud trial of Dowie and former executive John Stodder, Muir testified about that talk with Dowie.

On cross-examination, he agreed with defense attorney Nicola Hanna's characterization as "dishonest" Muir's solicitation of the Hearst Corp., Worldwide Church of God and architect Frank Gehry's firm before he had left Fleishman-Hillard, though he said he was unaware of a company policy against it.

Muir also told the jury he lied to his bosses on a May 2003 employee self-appraisal in which he wrote he thought his peers were ethical.

"I was telling them what they wanted to hear," he said.

But Muir, a former Los Angeles Times editor, continued to assert that, at Stodder's direction, he inflated bills for hours not worked, and that while initially he thought in "ignorance" the write-ups might be OK, he eventually was convinced they were fraudulent.

Muir was unable to provide specifics of any fraudulent bills he wrote up at Stodder's urging, but said it happened more than once.

Muir, who was paid $170,000 a year at Fleishman-Hillard, said Dowie initially was surprised but "gracious" the day Muir resigned to start his own public relations company. But he became livid when Muir told him Hearst Corp. had indicated it would be going with him.

"He became furious ... threatening," Muir said. "He said I'd be sued, prosecuted (for having) done bad things."

In previous testimony under immunity, Monique Moret, a former vice president who reported to Stodder, said later that day Dowie asked her, Stodder and Matt Middlebrook - a former spokesman for Mayor James Hahn - whether Department of Water and Power bills were being written-up, and that Stodder said, "Yes."

Dowie, a former managing editor at the Los Angeles Daily News, and Stodder have pleaded not guilty to bilking the DWP of more than $300,000, and overbilling other clients.

On cross-examination, Muir said he didn't go to the Times, or to state or federal prosecutors, with the allegations of overbilling, but was a source that confirmed information for a Times story in July 2004.

When Hanna asked him if he were "blackmailing" Dowie, Muir responded that he just didn't want any more trouble with Dowie - who he called a "very scary person."

The trial continues today.

beth.barrett(at)dailynews.com

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