L.A. City Attorney Mike Feuer, a mayoral candidate, is in a difficult position after a former attorney in his office, Paul Paradis, pleaded guilty in federal court.
Paradis, a lawyer who represented the City of Los Angeles while simultaneously representing DWP customer Antwon Jones, in order to get the City a better deal, has agreed to plead guilty to a single federal count of bribery.
According to the U.S. Attorney’s office, Paradis is now cooperating with the federal criminal investigation, which is ongoing.
THIS WHOLE CASE started when the DWP instituted a new billing system that was devised by Pricewaterhouse Coopers (PwC) and implemented in 2013, at a cost of $70 million. Almost immediately, customers received inflated bills and an outcry ensued. Several class-action lawsuits were filed.
In December 2014, the City Attorney’s office, under Feuer, retained Paradis and Beverly Hills lawyer Paul Kiesel (who is not charged with any wrongdoing, but is now cooperating with federal investigators).
Paradis and Kiesel, in a February 2015 meeting with at least one unnamed senior member of the City Attorney’s Office, were directed to find counsel that would be friendly to the City in order to settle the numerous lawsuits.
According to federal investigators, Paradis, unknown to ratepayer Antwon Jones, was working both ends of the deal. A kickback was arranged between Paradis, who would do most of the work, with an Ohio lawyer as the front.
That deal might have gone unnoticed, but Feuer sued Pricewaterhouse Cooper in March 2015 for $11.7 million. He alleged that the accounting firm was responsible for the financial loss suffered by the City over the billing.
PwC denied the charge and they were supported by California’s state auditor, who blamed the City for rolling out the system too soon.
PwC hired the law firm Gibson, Dunn & Crutcher, which uncovered the fact that the City had hired the same lawyer to represent it and the ratepayers suing the City.
The FBI raided the DWP offices and the City Attorney’s Office in July 2019, looking for documents that may have evidenced criminal conduct.
Once the investigation was underway, the City dropped the lawsuit against PwC.
Daniel Thomasch, of Gibson, Dunn and Crutcher, who was defending PwC, wrote at that time, “Notwithstanding the city’s dismissal of its claims, this case is not over. PwC intends to pursue monetary scenarios against the city for its litigation misconduct, which reached the highest levels of the city attorney’s office.”
Gibson, Dunn & Crutcher continued depositions.
After the FBI raid, two of Feuer’s top deputies resigned, and he denied knowing what was going on.
When asked by Superior Court Judge Elihu Berle to provide information, the City Attorney’s Office delayed producing documents and witnesses for deposition. When deposed, Feuer simply refused to answer many questions or could not recall what had happened.
Other attorneys in Feuer’s office took the Fifth Amendment and refused to answer questions.
Kiesel in a deposition testimony said, “A decision was made by the city to use the same plaintiff who was going to sue Pricewaterhouse Coopers to then file suit against the City of Los Angeles with all of the causes of action that have been asserted in the other (class action) claims, to have one complete lawsuit that would then be the vehicle to resolve the Department of Water and Power’s CC&B [billing] issues.”
The City felt it had a lawsuit it could control. A quick settlement would fully reimburse ratepayers and dismiss other pending suits against the city. (https://www.dailyjournal.com/articles/353145-how-la-s-water-bill-suit-became-mired-in-controversy)
The City settled with Antwon Jones (a class-action lawsuit) for $67 million, with about $19 million going for attorney fees.
The Ohio lawyer received $10.3 million and paid Paradis $2.1 million, covering the payment as a real estate investment.
As part of the Federal plea deal on November 29, Paradis admitted giving bribes to DWP officials, in exchange for their help in securing a three-year, $30-million, no-bid contract with the utility in June 2017 for Paradis’ cyber-services company Aventador Utility Solutions.
The City Attorney, in a November 30 statement to Courthouse News Service, said: “I am beyond outraged that anyone would breach their duties to the public we serve, as this plea agreement reflects.” In a later email, his spokesman, Rob Wilcox, added: “The City Attorney had no knowledge of any impropriety.”
(Editor’s note: the Jones Settlement came under scrutiny, and a new class-action counsel attorney, Brian Kabateck, was chosen by the Court. In a 2019 Courthouse News Service story [“Overcharged LA Utility Customers Say They Deserve Millions More”], Kabateck said, “It is our preliminary conclusion that the customers and ratepayers of the LADWP were in some manner victimized by the city’s and/or outside counsel’s actions. It is also our opinion that there is additional money owed to the ratepayers , and other claims were likely waived or eliminated because there was little or no likelihood the city could recover from PricewaterhouseCoopers on those claims.”)
(The L.A. Times weighed in yesterday with Steve Lopez column, “DWP Scandal a Black Mark on L.A. Executives” https://goodwordnews.com/column-dwp-scandal-a-black-mark-on-la-executives/ additional stories about DWP conduct can be found on Circling the News, including one detailing rate-payer advocate Dr. Frederick Pickel.)