FBI probing $30M no-bid LA water billing contract

The FBI and Department of Justice are investigating how a $30 million, no-bid contract was approved by the Los Angeles Department of Water and Power now that its former general manager has pleaded guilty to accepting bribes and kickbacks to push the deal through, the DOJ said Tuesday.

Former general manager David H. Wright pleaded guilty to one count of bribery, for colluding with former special counsel to the city Paul O. Paradis, a New York attorney, to push a dubious contract supposedly to fix the utility's faulty billing system. Wright could face up to 10 years in prison, according to the DOJ.

"By early 2017, Wright and Paradis agreed that -- in exchange for Wright's support of a 'no-bid' $30 million contract for Paradis' downtown Los Angeles-based company Aventador Utility Services LLC -- Paradis would give Wright a million-dollar-per-year job as Aventador's CEO and a luxury company car once Wright retired from LADWP," the DOJ statement read.

Paradis, of the New York law firm Paradis Law Group, admitted last week to bribing Wright and, while representing the city of LA, engaging in a related litigation scheme "with at least one senior member of the [LA] city attorney's office," according to a statement issued by the DOJ.

Aventador -- named after a Lamborghini sports car -- is the now-defunct company Paradis created to fix the faulty billing system that issued millions of incorrect water bills in 2013 and was at the center of a number of lawsuits.

In exchange for the kickbacks, Wright said he lobbied members of the utility's board of directors to persuade them to vote in favor of the contract, according to the DOJ.

Wright is expected to make his first court appearance Dec. 10, and Paradis is expected in court on Dec 16, a DOJ spokesman confirmed. When asked if anyone else will be charged in connection with the scheme, DOJ Public Information Officer Ciaran McEvoy said in an email, "We have no comment."

When asked how the no-bid contract was approved, McEvoy wrote, "The investigation is ongoing."

However, many attorneys who are familiar with the scheme say others were either involved or negligently allowed it to happen.

San Diego attorney Timothy Blood of Blood Hurst & O'Reardon LLP, one of the first to sue the city on behalf of ratepayers over the billing debacle, has repeatedly raised red flags since 2015 and objected to a settlement the city reached with ratepayers without conducting any discovery.

"The DWP commissioners, and senior members of the LA City Attorney's Office, including Mike Feuer, are either corrupt or incompetent, and maybe both," Blood said Tuesday. "I think when you read the two plea agreements for Paradis and Wright, what becomes vividly clear, is you have two people who are both incompetent and corrupt."

Despite the city attorney's office publicly stating its outside counsel -- Paradis and Beverly Hills attorney Paul Kiesel -- without the knowledge of anyone in the city went "rogue" in handing off a phony lawsuit to hand-picked opposing counsel, the DOJ's statement and Paradis' plea agreement say at least one high-ranking official was at least aware of the scheme.

The ratepayer lawsuit, filed in 2015, was one of several proposed class actions resulting from the water billing system. Configured and implemented by PricewaterhouseCoopers LLP (PwC) in 2013, the system allegedly overbilled more than 1 million ratepayers. Antwon Jones v. City of Los Angeles, BC577267 (L.A. Sup. Ct., April 1, 2015).

After originally representing Jones, Paradis jumped ship and began representing the city in a lawsuit seeking to blame PwC for the billing fiasco. Without Jones' knowledge, Paradis then recruited Ohio attorney Jack Landskroner to represent Jones and sue his new client - the city.

With Paradis acting as the city's go-between, the Jones suit was then used as a vehicle to settle all existing water billing-related claims against the city on it's desired terms, according to the DOJ.

"Having seen the internal documents that are now a matter of public record, there were many, many, many internal emails where a whole host of lawyers inside and outside of the city of LA both at the DWP, senior members of the city attorney's office, and outside counsel, who are on all these emails, and at least knew a fake lawsuit was manufactured, then settled where there was no one on the other side of the negotiating table," Blood said.

Jamie Court of Consumer Watchdog, who has followed the alleged litigation scheme since suspicions arose in 2019, said the DWP board of directors should not have approved the contract.

"The DWP board is following blindly and not fulfilling their duty to oversee contracts that are clearly very problematic," Court said Tuesday. "This shows that the Department of Water and Power Commission is a sham agency that doesn't provide a real check and balance on the power of DWP and its managers. This really shows me as a clarion cry to structurally redo the DWP and hold it accountable."

Wright's Los Angeles attorney Anthony Pacheco of Vedder Price, did not respond to a Tuesday request for comment.