By Sharon McNary, LAIST.COM

July 22, 2019

https://laist.com/2019/07/22/ladwp_overbilling_scandal_the_fbi_just_rai…

FBI agents searched the downtown offices of the Los Angeles Department of Water and Power and City Attorney Mike Feuer on Monday.

While spokespeople for both the FBI and U.S. attorney's office declined to describe the subject of the investigation, the city attorney's office acknowledged Monday it is linked to the aftermath of the utility's 2013 overbilling scandal.

City Attorney spokesman Rob Wilcox released the following statement:

"As has been reported, the FBI served search warrants for documents on several City employees at both CHE [City Hall East] and DWP offices, including some of our staff members. The warrants served on our staff relate to issues that have arisen over the class action litigation and settlement surrounding the DWP billing system, and the City's lawsuit against PwC. We have and will continue to cooperate fully with the expectation that the investigation will be completed expeditiously."

Thousands of ratepayers were overcharged when a new billing system rolled out through late 2016. The DWP and the city attorney's office later tried to recover millions of dollars from the maker of the billing software. It's those and possibly other actions which are now at the center of a federal investigation.

Jamie Court, who heads up the advocacy group Consumer Watchdog, said Monday he believes the FBI is looking for evidence of conflicts of interest and no-bid contracts.

The group has long criticized the legal tactics LADWP and the city attorney's office used in response to the botched rollout of the billing system, and it says the public was deprived of a higher payout and that government funds were misspent.

In April, Court held a news conference calling on the state attorney general to step in and take the overbilling litigation away from the city attorney's office.

Court said Feuer and his staffers created conflicts of interest when they quickly settled one plaintiff's lawsuit over the DWP overbilling and then worked with an outside attorney to find a different plaintiff whose allegations and settlement would be more favorable to Los Angeles. Feuer may have known about the dual representation, according to court documents cited by the Daily Journal, which has covered the case closely.

Court described the new plaintiff as a "White Knight Plaintiff." A white knight is a plaintiff whose case would lead to a less expensive settlement for DWP ratepayers who were overbilled and would allow the city to target the designer of the billing system, Pricewaterhouse Coopers, for massive damages.

Court also pointed to contracts awarded by the DWP without competitive bidding as potential wrongdoing.

The lawsuit over the overbilling received final approval from the court in July 2017, but Consumer Watchdog opposed it.

Mayor Eric Garcetti's office issued a terse statement encouraging city employees to cooperate with investigators but offered no additional information. The DWP did not respond immediately to requests for comment about Monday's search warrants.

Representatives of Pricewaterhouse Coopers also declined to comment.

UPDATES:

5:21 p.m.: This article was updated with a statement from city attorney spokesman Rob Wilcox.

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