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The Rainmaker 

Mayor Hahn and the first indictment in the PR-firm scandal

Thursday, Jan 20 2005
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"Remember the movie The Firm?" asked S. David Freeman on the eve of yet another mayoral debate last week, the day the first indictment was handed up in the Los Angeles Fleishman-Hillard billing scandal. "This is The Firm. I don’t know who Tom Cruise is."

Cruise played the hero in the screen adaptation of a John Grisham best-seller about a Tennessee law firm that helps its mafia clients launder money and escape justice. A young lawyer painted into a corner, Cruise uses his smarts to break clean and to help bring the crooked firm to justice. His brainstorm: make the firm’s use of the mail to send out inflated legal bills a basis for federal mail-fraud charges.

Freeman might have been able to pick a more apt movie comparison, but he does know Tennessee, and he certainly knows the L.A. Department of Water and Power, the agency he once headed that is now at the heart of the indictment charging Fleishman partner and Senior Vice President John Stodder with 11 felony counts of wire fraud.

Stodder was part of a scheme, according to the indictment, to pad the public relations firm’s bills to four clients: the architecture firm of Frank Gehry, the Pasadena-based World Wide Church of God, the Port of Los Angeles and the DWP. Both the port and the DWP are divisions of the city of L.A.

The U.S. Attorney’s Office said Stodder approved fake billing records that were then sent by wire to Fleishman’s main office in St. Louis, where they were processed and sent to clients in the form of invoices. That’s where the movie reference may ring true. Stodder and an unnamed female "co-schemer" faked more than $17,000 worth of bills two years ago, the indictment claims, then kept the scheme up over the next several months until they had sent in more than $250,000 in faked bills to the DWP.

Little is known so far of the identity of Stodder’s alleged co-schemers. Stodder, L.A. Fleishman chief Doug Dowie and firm employee Steve Getzug were fired by the firm earlier this month, and speculation is rampant that Dowie and Getzug are the other two. But the indictment refers to one of the co-schemers as "she." Besides, one or both of the co-schemers may already have worked out a deal with the U.S. attorney, who is probing other possible corrupt practices in City Hall, like the "pay-for-play" assertions that Hahn or his lieutenants demanded campaign contributions from any potential contractor for city business.

Freeman said we would know soon enough.

"This picture show ain’t over, my friend," he said as he strode into Temple Beth Am on La Cienega for the debate between Hahn and his four main challengers.

The drawling Chattanooga native wore a kind of Smokey the Bear hat, a variation on his trademark 10-gallon. It was actually a very large yarmulke, he joked, fit for the occasion.

Freeman claimed the DWP began to go wrong when Hahn appointed Troy Edwards, a campaign fund-raiser, as the mayor’s top person overseeing the department. A donor to Antonio Villaraigosa four years ago, Freeman said Hahn bore full responsibility for any wrongdoing at the department.

"In my view, he’s completely responsible," Freeman said. "I don’t think there’s any question about it. This is Jimmy Hahn’s problem, and I don’t think you need new laws to change it, you just need honest people. He inherited a DWP that could do no wrong . . . and I’m just heartbroken that this department, which was the shining light of L.A., is now the center of a scandal."

Freeman is just the kind of colorful character that critics of L.A.’s rather boring political establishment say the city needs. He says what he means, means what he says. It’s appropriate to point out, though, that Fleishman records suggest the firm did some work for Freeman when he was a candidate for the state Assembly several years ago.

At the debate, challenger Richard Alarcón opened his remarks with a statement of sorrow for the city in light of the indictment and what it says about how City Hall operates. But that was it. Not a single mayoral candidate mentioned the Fleishman indictment again, and no one in the synagogue audience mentioned it, until moderator Ana Garcia insisted on bringing it up. Garcia, by the way, an investigative reporter for KNBC, once worked in the office of City Attorney Rocky Delgadillo. Before and after her work for the city, she broke key aspects of the stories on the Entertainment Industry Development Corporation (arguably the first thrust into L.A. city corrupt practices) and Fleishman.

Hahn insisted then, and continues to insist, that Fleishman victimized the city and its taxpayers.

"I think anybody who ripped off the city ought to have the book thrown at them," Hahn said.

He noted that as city attorney he questioned countless bills from outside law firms on charges he believed were inappropriate. But just making things up? The mayor claimed he had never before seen that at City Hall.

"Somebody obviously must have done a much better job of scrutinizing those bills, and they weren’t doing it," the mayor said Tuesday.

Who?

"Well, the city controller’s name is on all those checks, and the DWP staff who were reviewing those contracts," he said. "That’s who should do the job."

Okay, sure. But the fact remains that the mayor is in charge. Freeman is likely correct when he says that there will be more indictments, that the "picture show ain’t over." The legal question is whether federal and county prosecutors can take their probe inside City Hall and find any wrongdoing by elected officials or bureaucrats. Maybe they can, maybe they can’t. But that’s just the legal question.

There’s also a political question: Can Hahn successfully continue to claim that overbilling on his watch is an evil perpetrated by a private contractor, and not something for which he must bear responsibility? How much will Los Angeles voters hold him responsible for the goings-on inside City Hall and the DWP headquarters, at a time when the city seems safer and cleaner than it has in years?

Voters will keep Hahn, or oust him, depending on how embarrassing or threatening the notion of corruption in City Hall becomes. So far, it registers only slightly on the political Richter scale. But most likely, the picture show ain’t over.

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