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An attorney hired by the city attorney’s office pleaded guilty Friday to a federal bribery charge in a scheme involving $2.2 million in bribes and kickbacks to the top Department of Los Angeles water and electricity in exchange for a lucrative contract.
Paul O. Paradis, who represented the city of Los Angeles following the botched launch of a DWP billing system in 2013 – but simultaneously represented a DWP ratepayer suing the city over the system – took a bribe $2.2 million from another attorney under the scheme, according to the U.S. Attorney’s Office.
Sentencing was set for July 19 in what was the first criminal charge filed following a federal investigation into the city’s handling of the flawed DWP system and resulting litigation. The failing system has led to many customers receiving extremely inflated bills.
Paradis, 58, of Scottsdale, Arizona, is cooperating with the ongoing investigation, federal prosecutors said.
After the faulty billing system went live, the city and utilities faced multiple ratepayer class action lawsuits. In December 2014, the City Attorney’s Office retained Paradis and Beverly Hills attorney Paul R. Kiesel as special counsel to represent the city in a lawsuit intended to be used to settle all claims related to the terms desired by the city, according to federal prosecutors.
Kiesel is also cooperating with the investigation and is not charged with any wrongdoing.
Prosecutors argue that when Paradis began representing the city as special counsel in the litigation against PricewaterhouseCoopers over the company’s handling of the rollout of the DWP billing system, city prosecutors knew he was already representing Antwon. Jones, the ratepayer who had a claim against the utility arising from billing overcharges.
Jones was unaware that his attorney, Paradis, was also representing his intended opponent, according to court documents.
In a February 2015 meeting with at least one senior member of the city attorney’s office, Paradis and Kiesel were authorized and directed to find an attorney who would be friendly with the city to supposedly represent Jones, documents show. judicial.
After the meeting, Paradis hired an outside attorney to supposedly represent Jones in a lawsuit against the city. Paradis told the attorney that the city wanted the lawsuit to be “pre-settled” on terms desired by the city, and that Paradis would do all or most of the background work on the case, they said. the prosecutors.
In exchange, Paradis and the outside attorney agreed that Paradis would receive 20% of that attorney’s fees in the Jones v. City case as a covert bribe, prosecutors said.
In March 2015, the city sued PwC in a lawsuit alleging the accounting firm was responsible for DWP’s billing debacle, claiming the firm caused the city hundreds of millions of dollars in damages. Paradis and Kiesel represented the city in this lawsuit, which the city ultimately dismissed.
Also in March 2015, Paradis used nonpublic information provided to him by members of the City Attorney’s Office and the DWP to draft a detailed complaint for a class action lawsuit against the city with Jones as the named class representative.
Later that month, Paradis provided the draft Jones v. City complaint to outside counsel for filing. This attorney filed the lawsuit written by Paradis the following month.
In June and July 2015, Paradis and others working on behalf of the city in the Jones lawsuit participated in four confidential mediation sessions with outside counsel, who would have represented Jones, prosecutors said.
In July 2017, a Los Angeles Superior Court judge issued final approval of the $67 million settlement agreed to by the parties in Jones v. City, including approximately $19 million in plaintiffs’ attorney fees.
Pursuant to the settlement agreement, the city sent a check to outside counsel for over $19.2 million. After disbursing a portion of those funds pursuant to the terms of the settlement agreement, the outside attorney and his firm withheld approximately $10.3 million in fees.
The outside lawyer then secretly paid $2.1 million to Paradis, disguising the bribe as a real estate investment and funneling it through shell companies that Paradis and the lawyer had created exclusively for the purpose of to transmit and conceal the wrongful payment, according to Paradis’ court agreement.
As part of his plea, Paradis admitted to paying bribes to several DWP officials, including a DWP chief executive and a DWP board member, in exchange for their help securing a contract. untendered $30 million over three years with the utility in June 2017. for Paradise’s downtown Los Angeles-based cyber services company, Aventador Utility Solutions.
At the time it approved the contract without a tender, the DWP board was not told that Paradis had written a May 2017 independent monitoring report into the Jones v. City settlement on which the utility based his decision, prosecutors said.
The report authored by Paradis claimed that DWP could not meet its obligations under the Jones v. City unless he signs a contract with Aventador.
The DWP board was also unaware that the then DWP chief executive who was advocating for the awarding of the $30 million no-tender contract to Paradis’ company had secretly agreed to become its CEO with an annual salary of $1 million and a luxury company car, prosecutors say.
Earlier this week David H. Wright, 62, of Riverside, a former top DWP leader, pleaded guilty to a federal bribery charge stemming from the investigation. He is expected to be sentenced on April 26.
Thomas H. Peters, 55, of Pacific Palisades, a former senior official in the city attorney’s office, has agreed to plead guilty to a federal extortion charge and is cooperating with the investigation.
Federal prosecutors also secured a plea deal from David F. Alexander, 54, of Arcadia, a former senior public service cybersecurity official. He is expected to officially plead guilty on February 8.
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