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DWP Scandal Plea Bargain Exposes Bribes, Graft and Deceit In "Chinatown"

Fri, 12/03/2021 - 08:37
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Which Heads Will Roll Next and What Will Clean DWP Up?

LADWP

Six years ago, at a press conference on the court house steps, I got into a pushing match with an Ohio attorney who I called out for a sweet heart settlement in the LA DWP billing error case that yielded his firm $13 million for a few weeks work.
 
An LA Times journalist captured the unusual scene on video.  Something stunk.  As it turns out, it was a lot worse than I or anyone could imagine.
 
With the plea bargain announced by the Justice Department, I feel more than vindicated.   
 
Turns out the Ohio attorney and his firm were fronts for the very city attorneys who were defending the DWP case.  They engaged not only in a collusive sham lawsuit (where the City essentially sued itself to settle cheap) but also paid a $2 million kickback to one of the city attorneys for giving them the case. 
 
The details and more are outlined in a stunning plea bargain announced this week by the US Justice Department.
 
The plea deal showed the same city attorney, Paul Paradis, got a $30 million no-bid DWP contract to fix billing errors after bribing the DWP General manager with a promise of a $1 million CEO job after he retired and a Mercedes. The company getting the no-bid contract, Aventador, was named after a Lamborghini and run out of an ocean front condo.
 
You can’t make this shit up. 
 
The greed, graft and gall of it all makes me ashamed to be an Angeleno. 
 
The bribing of the DWP chief and ease with which a few corrupt men took LA for ride all over again makes it look like we never made it out of Chinatown – the infamous Jack Nicholson noir movie about the secrets in DWP’s corner of LA.

DWP has been crookeder than Jake Gittes's nose forever and the only thing to potentially bring us out of the dark era is a new Mayor with an anti-corruption plan to start from scratch.  
 
Consumers and taxpayers have paid hundreds of millions of dollars too much because a few crooks were allowed to bribe, defraud and bilk with near impunity. So far the city officials who were complicit have not paid a price.
 
This scandal proves again that a few clever thieves can bilk the ratepayers because there are no checks and balances on DWP.
 
The ratepayer advocate, Fred Pickel, was in on it --- he endorsed the no-bid contract to Aventador. The City Council and Mayor, despite warnings from Consumer Watchdog about Pickel, reappointed him nonetheless.
 
City Attorney Mike Feuer, despite his protestations to the contrary, was part of the scheme.
 
Feuer has recently gone off the deep end feigning outrage over Paradis’s plea bargain and trying to claim he handled himself with the utmost integrity.
 
At best he was asleep at the switch. At worst he knew what was going on.
 
In fact, Feuer’s chief deputy Jim Clark testified at his deposition that Feuer was informed of the collusive lawsuit, only later to change his testimony. 
 
The evidence from the report by the Special Master Ed Robbins, a former US attorney tapped by the judge to chronicle the collusion in the case, shows a lot of circumstantial evidence that Feuer knew what was going on. (For clarity:  Paul Kiesel is the other attorney complicit in Paradis's scheme and cooperating with the Justice Department but is uncharged.)
 
Among the Special Master's conclusions:

“Lawyers in the Los Angeles City Attorney’s Office (“LACA”), along with retained Special Counsel for the City of Los Angeles (“City”), hatched a three-part plan beginning in December 2014, to take control of the ever-worsening DWP billing debacle by: (1) shifting blame in the press from DWP to its billing-system consultant PwC; (2) suing PwC for damages (City v. PwC); and (3) getting rid of the other class action suits filed against the City through orchestrating a competing class action suit to become the lead suit, filed by a ratepayer client who had unknowingly retained the City’s Special Counsel (Jones v. PwC).
 
“By mid-February 2015, Michael Feuer, James Clark, Thomas Peters (the City Attorney and his two top deputies), Richard Brown, Eskel Solomon, Richard Tom, Deborah Dorny (LACA attorneys specifically assigned to represent the DWP), and DWP Board President Meldon Levine all knew most or all of this three-part plan.” (p4 -5)
 
“The evidence establishes, from December 2014 through March 2015, Mr. Feuer’s intimate involvement and the overall clear understanding of the need for his approval with all matters related to City v. PwC. Mr. Feuer knew of the role of Mr. Paradis and Mr. Kiesel in acting on the City’s behalf in the tolling agreement/dismissal plan for the pending ratepayer actions. The evidence also establishes that Mr. Feuer had some connections with Jones v. City. In June 2015, Mr. Feuer was told that something was amiss in Jones by Mr. Blood’s phone call and letter to Mr. Feuer and Mr. Clark alerting them to Mr. Blood’s belief that the settlement in Jones v. City was the product of collusion. Mr. Feuer needed to make a recommendation to the DWP Board for formal approval of the Jones settlement, which included almost $40 million in attorney fees and remediation costs. Mr. Feuer knew of the direct connection between the damages pursued in City v. PwC and the costs incurred by the City under the Jones settlement. Mr. Feuer’s testified that he assigned Mr. Peters with the supervision of City v. PwC and of Special Counsel, he had charged Mr. Peters with reviewing any claim of privilege asserted, and he had determined that Mr. Peters “had satisfied the requirements of the Santa Clara[1] opinion.” The evidence produced by the City, however, was almost void of any communications reflecting Mr. Feuer’s knowledge of, or involvement in, Jones v. City other than being advised b Mr. Clark of the settlement.”(p 38)
 
“The Special Master’s ability to reach a firm conclusion about the extent of Mr. Feuer’s knowledge or participation in Jones v. City was hampered by the lackof evidence, which arguably was a direct result of the fact that Mr. Clark was tasked by Mr. Feuer with overseeing the ratepayer class actions, which included the Jones v. City case. Mr. Clark who was the principal person who would apprise Mr. Feuer of activities in the ratepayer cases testified that he destroyed and/or kept no notes of his briefings of Mr. Feuer about “significant” matters and did not recall if he spoke about the Jones settlement with Mr. Feuer. At his deposition, Mr. Feuer confirmed the lack of a paper trail on his discussions with Mr. Clark and testified that he had little recollection regarding the details of his knowledge of the Jones cases.”  (p 38)
 

In other words, the destruction of top deputy Jim Clark’s notes and Feuer’s inability to recall anything in his deposition (he said he couldn’t recall more than 60 times) is the only reason the Special Master cannot say Feuer knew of the collusive lawsuit.
 
Feuer’s recent conduct – doth protesting too much – and his inaccurate statements about his response to the scandal, contradicting the evidence, suggests he has something to cover up.

For example, on November 13, 2021, mayoral candidate Mike Feuer was asked about why voters should trust him after his office was raided by the FBI: “I handled that the way you would want a leader to handle that: decisively and transparently. I actually found the evidence that outside lawyers had helped our opponents sue the city. And I gave it to the court and the press the next day because I wanted the public to see that.”

This is delusional. Feuer and his minions in the City Attorney’s office held onto key evidence – emails showing the nature of the collusive settlement – for three months before being forced to turn it over.

From the Special Counsel’s report: “These emails highlight that the City frequently sought to delay discovery for no reason other than to deter the opposing party from obtaining evidence related to the case. It also shows that Mr. Paradis and Mr. Kiesel, as Special Counsel were aware of the need for, and would only take certain action with, Mr. Feuer’s approval. As discussed below, the Court most recently imposed a $2.5 million attorneys’ fee award against the City based on its repeated obstructionist tactics employed against PwC to prevent PwC from uncovering the collusive and sham nature of Jones v. City.” (p369)
 

Feuer was on notice years earlier of the potential self-dealing when attorney Tim Blood, whose legitimate class action against the DWP was big-footed by the sham case, wrote and told Feuer in a phone call what was going on.
 

The Special Master: “Mr. Blood’s letter put Mr. Feuer on notice of the problematic nature of the settlement. Mr. Blood’s instincts were good given his limited information. Understandably he gave too much substance to the Jones v. City case in describing it as a reverse auction. Jones v. City was not a reverse auction; it was a collusive suit masquerading as a reverse auction.” (p 241)
 

Feuer knew there were big problems with the case and chose to proceed, even if he didn’t know of the actual criminal conduct. 
 
Transparent? Hard to see how someone who claims he cannot recall 60 times in a deposition when presented with evidence is transparent or decisive.
 

To wit, the Special Counsel notes: “See Feuer Dep 41-45 (When asked regarding this email “Does that refresh your recollection that at some point he you came to learn of a plan to seek to have lawyers in the pending class actions dismiss their cases in return for the City signing a tolling agreement?”  Mr. Feuer responded “No.” The phrase “Mike is completely on board” does not make him recall anything on the subject. He has “no recollection with regard to this issue.” (p57)

At the word of the plea bargain, Feuer responded: “I am beyond outraged that anyone would breach their duties to the public we serve, as this plea agreement reflects. As public servants, integrity must be our watchword, our guiding principle. At the end of the day, that’s all we have. We can have no tolerance for betraying the public trust.”

WTF?
 
Feuer may get his in the end. The plea bargain with Paradis says that Paul Kiesel is also a cooperating witness uncharged with crimes. Kiesel and Paradis both state that Feuer was in on it.
 

Here’s a text message from the Special Master’s report between Kiesel and Paradis: “ Maybe they have forgotten that Jim Clark directed the entire strategy after clearing it with Mike Feuer, Mel Levine and Bill Funderbunk [sic]? Maybe they have forgotten that we have numerous emails demonstrating that they are lying when they deny knowledge and participation in all of this?”  (P.420 Paradis text)
 

Paradis and Kiesel have every incentive to tell the whole truth and turn over any and all documents to back it up lest they threaten their deals with the feds.  If I was Mike Feuer, I wouldn’t be sleeping too well knowing Rosencrantz and Guildenstern are out there with potential evidence.
 
As an Angeleno, it’s hard for me to sleep knowing the corruption that goes on at DWP and City Hall. The only hope is a new mayor and one with a plan to clean up DWP.
 
Consumer Watchdog has long-recommended a citizen utility board -- which they have in Chicago, Wisconsin, Oregon, New York –  as a countervailing power on the DWP.  DWP would insert in every bill and mailed notice an opportunity to join a nonprofit group for $5 per year or so and the group then would represent ratepayers interests to make sure there is no fraud or other malfeasance. 
 
It’s a simple idea with the power to cleanse Chinatown and permanently police it with a non-self-interested party.  An idea rejected consistently by the past DWP leadership. All the more reason for the next Mayor to become its biggest advocate if they are serious about changing things.