Still in the Dark About the DWP Scandal? Here’s a Primer

The Los Angeles Department of Water and Power corruption saga has been in the news again recently. Let us help you get caught up.
471

If you’ve read about the Los Angeles Department of Water and Power corruption saga that’s been in the news again recently and came away from it feeling stoned and confused, it’s OK. Only lawyers can make something so serious seem so convoluted and boring.

But think of it this way: Imagine hiring an attorney and realizing later your attorney never really represented you. Now imagine that attorney actually represented your opponent, the City of Los Angeles, in order to favorably and quickly settle your lawsuit to make a public relations disaster for the city go away.

Now imagine finding out one day you had more attorneys whom you’ve never even met. And it wasn’t just you who the city overcharged but thousands of others too. From another perspective, imagine the city suing itself, recruiting a favorable plaintiff in order to drop other billing suits against it, and handpicking that guy’s attorneys.

That’s the gist of what went on in a lawsuit filed by incorrectly billed utility customers against LADWP and the city of Los Angeles—but there’s a lot more to it.

The LADWP saga is a legal black hole that has sucked away loads of taxpayer money, spawned no-bid contracts for shell companies no one needed, high attorney fees, and multiple resignations and investigations, including one by the FBI. It has revealed cracks in the largest court, as well as the largest public utility (LADWP) and law firm in the country (the Los Angeles City Attorney’s Office). And members of Los Angeles’ elite legal community, which have mingled for years in the same social circles, are at the center of it.

Water has been a big subject in California, and the DWP has an infamous history of corruption dating back a century, when Los Angeles basically stole its water supply from poor farmers. This story is about public and private interests coming together against those of ordinary people. It’s about so-called consumer lawyers teaming up with the city government to help bury its mistakes on a back road. It’s about how Los Angeles loudly proclaims itself a bastion of progressivism while whispering against the interests of its constituents.

A PR Mess and an Ideas Guy from New York

In 2013, the City of L.A. was catching a lot of heat for the botched rollout of its new billing system, which erroneously overbilled 50,000 LADWP customers. Lawsuits were piling up, and they landed on the desk of City Attorney Mike Feuer. A guy named Paul Paradis and prominent Beverly Hills consumer attorney Paul Kiesel—let’s refer to them as the Pauls—were hired by Feuer’s office on a contingency fee basis to litigate the billing problem.

Kiesel, an eager guy with a shock of white hair, is well known in the L.A. legal community. He is the former president of the Los Angeles County Bar, who has donated several thousand dollars to Feuer campaigns over the past decade. One of Kiesel’s former law partners, Thomas Peters, ended up working for Feuer and was involved in the LADWP litigation before resigning.

Van Nuys resident Antwon Jones was one of the customers who was overcharged. Jones was billed $1,374 over a period of four months, while he says his bill was usually around $30 a month. He wanted to sue the city. Like many people, Jones turned to Google, and he found a website that was looking for those who were incorrectly billed to sue LADWP. He ended up connecting with Paradis. Paradis looks utterly normal, giving off the impression that he gets off on filing his taxes four months early. But the things he’s accused of doing are not normal. Jones hired Paradis, but Paradis never told Jones he was also representing the city, according to Jones.

A plan within the city attorney’s office was hatched: To shift blame for the billing mess to global consulting firm Pricewaterhouse Coopers (PwC), which had helped with the rollout of the billing system. This would be done by getting the other lawyers suing LADWP to drop their cases and all join in to sue PwC with Jones as the plaintiff. But it was called off, because that would be pretty weird and shady.

The city was now in a bind, although according to court records, Paradis got creative: He pitched an idea using his client Jones as the plaintiff in a new lawsuit he’d draft, directed at the city, which would become the lead suit, thus blocking out the other pending suits. He would then hand it off to another attorney he had control over, who would file it and “represent” Jones. It was a fake lawsuit, made to look adversarial on paper while actually serving as a broad release of claims for all the customers suing. Attorneys for the city and LADWP referred to the Jones lawsuit as the “White Knight” complaint.

When it came time to file Jones’s lawsuit, the Pauls brought in a basic personal injury attorney from Ohio named Jack Landskroner. He was introduced over email to Jones by Paradis. Meanwhile, Jones thought Landskroner was just being added to his team, not replacing it. Jones’s other new lawyer, who went and filed the lawsuit, was San Fernando Valley attorney Michael Libman. To this day, Jones has never met Libman, but the guy made $1.6 million for essentially running an errand. Jones said he didn’t meet Kiesel until a few years later during a deposition.

A settlement offer was made the next day. Landskroner made $10 million for basically executing a $67 million settlement in which the work was done by the city. Although ratepayers received their money in the settlement, the settlement released any potential claims of customers in the other lawsuits. No discovery was taken. Landskroner billed for hours prior to entering the case, according to PwC lawyers. Then, he shut his mouth.

In one of the weirdest scenes I’ve seen covering court, Landskroner repeatedly pleaded the Fifth Amendment against self-incrimination when asked by a judge whether any of the fees he received were kicked back to Paradis or anyone else. Despite appearing to two-time his Black client, Landskroner also made Facebook posts pledging to fight institutional racism during the George Floyd protests. This summer he died of cancer.

For Jones, what unfolded was a Gogol-esque nightmare of bureaucratic legalese. It was a disappearing act. Paradis’s name wasn’t on Jones’s lawsuit, nor was it on declarations and other court documents. In retrospect, Paradis seemed to not exist.

Meanwhile, Paradis Scores Big

From a sheerly logistical standpoint, you sort of have to admire what Paradis pulled off. As a relatively unknown New York personal injury lawyer, he got the City of Los Angeles to work on a high-profile breach of contract case. Then, starting in 2015, while he was working on the LADWP case, he got the first part of $36 million in no-bid contracts to fix those very same billing issues. So Paradis formed a company, Aventador Cyber Utility Solutions, named after an apparent Lamborghini fetish. It had been a company for only three months when it scored a multimillion-dollar city contract. He had no project management experience. It’s like he formed a business before really figuring out how he was going to run it. The company’s business office was listed as an oceanfront Santa Monica condo. Those contracts were eventually canceled when made public, but not before most of the money was already paid out. Paradis also pleaded the Fifth, and is now living in Arizona while going through bankruptcy proceedings.

So, Did Feuer Know?

The billing case was something the Democratic mayoral hopeful wanted off his desk. Soon after I reported on the dual representation in 2019, Feuer’s office said it wasn’t aware of it and ordered an internal investigation, which absolved his office of any wrongdoing. His office blamed the Pauls for going “rogue.” The Pauls said they were just taking orders from the city. Kiesel said he never represented Jones. They stood to make almost 20 percent of any damages the city was to get from PwC, but both resigned when the story broke. The city would go on to drop that lawsuit against PwC, citing a lack of witnesses (many pleaded the Fifth), and a superior court judge sanctioned the city $2.5 million for discovery abuses related to the cases.

During the summer of 2019, the FBI searched the city attorney’s office, as well as the offices of DWP and Kiesel Law, looking for evidence of bribery, kickbacks, and extortion. In the span of a few wild hours, David Wright, then the head of DWP, pleaded the Fifth while being deposed about his involvement in the lawsuit, then literally quit his job.

On the surface Feuer seems like a chill politician who makes anti-vaping videos and all the right social media posts. Underneath, I’m told he’s a pretty hands-on manager. Which makes you wonder: Can we believe him when he said he didn’t know about this? During his own deposition, Feuer said “I do not recall” over 60 times when asked about the progress of the litigation.

A court-appointed investigation into the saga, released in July, found no direct evidence that Feuer knew about the collusion. The report instead implicates his right-hand men, Jim Clark and Peters, who have both since left the city attorney’s office. A largely circumstantial case is detailed against Feuer, saying Feuer and others “all knew most or all of this three-part plan.” We do know that Feuer approved of the original plan to sue PWC with Jones as the plaintiff, according to Clark. It’s in an email. After that, the fingerprints are gone.

It’s been almost eight years since the billing mess-up. One of the things the recent court investigation stayed away from was the paper trail. We’ll see what happens with federal prosecutors, who have been investigating this for over two years. By my count, the DWP problem has so far cost taxpayers almost $50 million. It’s a mess.

Anyway, I’m sorry if this has made you want to smoke a cigarette.

Justin Kloczko is a reporter in Los Angeles. He writes The Debaser, a newsletter about L.A. power. He’s on Twitter @justinkloczko.


Stay on top of the latest in L.A. news, food, and culture. Sign up for our newsletters today.