Who Knew What And When In LADWP Scandal?

Opinion Column By Susan Shelley, THE DAILY NEWS OF Los Angeles

December 3, 3021

Who knew what and when in LADWP scandal?

Remember back in July 2019 when the FBI raided City Attorney Mike Feuer’s office and the offices of the Los Angeles Department of Water and Power?

The case has produced its first guilty plea. Attorney Paul Paradis, of Scottsdale, has agreed to plead guilty to one federal count of bribery for accepting a nearly $2.2 million kickback from another attorney.

As part of the plea deal, prosecutors said, Paradis admitted to other bribery involving high-level LADWP officials. The federal investigation is ongoing, and Paradis is cooperating.

So this is only the beginning.

The case stems from the disastrous new billing system that LADWP implemented in 2013, the same year Eric Garcetti was sworn in as mayor. Hundreds of thousands of customers of the city-owned utility were overcharged and there was utter chaos, followed by litigation.

Ratepayers filed a class-action suit against the DWP that led to a $67 million settlement. Then the city sued PricewaterhouseCoopers, the consulting firm that implemented the new billing software.

During the “discovery” process, entities that are being sued have the opportunity to collect evidence to use in their defense. PricewaterhouseCoopers discovered that Paul Paradis, who had been hired by Mike Feuer’s office as a “special counsel” in the city’s lawsuit against PwC, also represented the ratepayer who was the lead plaintiff in the class-action lawsuit. This relationship was never disclosed to the court during settlement proceedings, according to PwC attorneys, who called it a massive conflict of interest.

PwC alleged in court documents that the city chose to settle that particular class-action suit so it could control the settlement and limit disclosures about the DWP billing system. The lead plaintiff testified that he thought Paradis was representing him, but at the same time, Paradis had been hired by the city attorney’s office to represent the city.

Federal prosecutors now allege that in February 2015, Paradis and one other attorney met with an unnamed senior official in the City Attorney’s office and were directed to find a city-friendly lawyer to represent the lead plaintiff in the class-action suit against the city-owned utility. According to prosecutors, Paradis recruited an attorney in Ohio to settle the case on the city’s preferred terms; Paradis would do most or all of the Ohio attorney’s work, and then receive 20% of the Ohio attorney’s fees in a secret kickback.

In March 2015, the city sued PwC, and Paradis and the other attorney (who is not accused of wrongdoing) represented the city in that lawsuit. Paradis had access to non-public information as he represented the lead plaintiff in the ratepayers’ lawsuit. When the $67 million settlement was reached in that case, $19 million of it was plaintiffs’ attorney fees.

The city sent a check to the Ohio attorney for $19,241,003. The Ohio attorney secretly sent more than $2 million to Paradis.

Around the same time, Paradis also set up a consulting company called Aventador Utility Solutions and DWP commissioners approved a $30 million no-bid contract to work on fixing the billing system. The contract was eventually canceled, but not until $20 million had been paid out.

What did Mike Feuer know, and when did he know it?

Finding the answers to those questions is important, because in addition to being the Los Angeles City Attorney, Feuer is a candidate for mayor.

Finding the answers, however, is complicated by the fact that the City Attorney’s office chose to drop the lawsuit against PwC in September 2019. There will be no more “discovery” coming from that case.

Feuer did give a deposition to PwC lawyers, however. According to the advocacy group Consumer Watchdog, which has called for the public release of the videotaped deposition, Feuer “recited ‘I don’t recall’ over 60 times.”

In October 2020, a court fined Feuer’s office $2.5 million for “serious abuse of discovery by the city and its counsel” in the PwC lawsuit, court-speak for stonewalling and hiding evidence.

Feuer is personally under investigation by the state bar for his role in the DWP billing scandal, according to Consumer Watchdog, which obtained a redacted copy of a May 11, 2021, letter on state bar letterhead regarding complaint # 190-0-13014 against Michael Nelson Feuer.

The ratepayers, taxpayers and voters of Los Angeles deserve answers. Unredacted.

Write Susan Shelley: S[email protected] and follow her on Twitter: @Susan_Shelley.

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