FBI raids at DWP, L.A. City Hall related to fallout from billing debacle
FBI agents fanned across the Los Angeles area on Monday, serving search warrants at multiple government offices, including the Department of Water and Power, as part of an investigation into how the city responded to the disastrous rollout of a new customer billing system.
Investigators searched the DWP headquarters on Hope Street and the offices of City Atty. Mike Feuer a few blocks away at City Hall. Search warrants were also served in two other locations — one in Beverly Hills, the other in an office tower that houses multiple city agencies.
An FBI representative would not describe the nature of the investigation. Feuer’s spokesman Rob Wilcox, however, said the warrants served at the city attorney’s office were connected to the city’s settlement of a class-action lawsuit filed over the inaccurate DWP bills that resulted from the launch of the new billing system in 2013.
Wilcox also said the warrants were related to a separate lawsuit filed by the DWP and city against PricewaterhouseCoopers, the global consulting firm that oversaw the launch of the new billing software.
“We have and will continue to cooperate fully with the expectation that the investigation will be completed expeditiously,” Wilcox said in an emailed statement.
The FBI raid was the second to occur at City Hall in less than a year. In November, agents hauled out boxes and bags of materials from two of Councilman Jose Huizar’s offices as well as his Boyle Heights home.
Since then, a search warrant indicated that federal investigators were looking into the activities of several other city officials.
“It looks bad,” said Jaime Regalado, professor emeritus of political science at Cal State Los Angeles. “Nobody wants to believe that their city is going down a dark path. There is a point where the voting public will start to wonder, ‘What else will these investigations turn up?’ ”
No arrests have been made, a law enforcement source said.
Mayor Eric Garcetti, who selects the DWP’s top executive and chooses the panel that oversees the utility, said in a statement that he had “zero tolerance for any behavior that violates the public trust.”
“My message to city employees is that if you are asked to assist with the investigation, be prepared to help,” Garcetti said. “And if you’ve done anything to cross the line, be prepared to pay the price.”
Garcetti’s statement did not identify the information sought by the FBI.
However, an excerpt of a federal search warrant reviewed by The Times showed that investigators were seeking information about DWP contracts — awarded or proposed — with companies affiliated with New York attorney Paul Paradis, who was retained by Feuer’s office.
Paradis was hired by Feuer to help the city’s legal team as it sued PricewaterhouseCoopers in the wake of the billing debacle. The companies mentioned in the warrant, which was filed last week, include Paradis Law Group, Aventador and Ardent.
The warrant excerpt reviewed by The Times said investigators were seeking information from several locations, including the offices of the DWP’s top executive, General Manager David Wright, and the DWP’s Board of Commissioners, the five-member panel appointed by Garcetti.
Investigators are seeking evidence of a wide array of possible crimes, including bribery, kickbacks, extortion, mail fraud and money laundering, according to the warrant.
Attorneys for Paradis did not respond to multiple requests for comment. An attorney for PricewaterhouseCoopers said he was still reviewing Monday’s events and declined to comment.
Federal agents also searched the Beverly Hills law office of attorney Paul Kiesel, an FBI spokesperson said. Kiesel, along with Paradis, was hired by Feuer’s office to work on the city’s lawsuit against PricewaterhouseCoopers over incorrect utility bills.
Kiesel confirmed in an interview Monday that his office was searched. “I gladly provided access to all the information that was requested,” Kiesel said.
FBI agents showed up at the DWP headquarters at about 9:30 a.m. and left after 5 p.m. with several backpacks and rolling storage carts. Investigators also descended on Figueroa Plaza, a pair of downtown office towers that house several city agencies.
More than 10 agents arrived on the ninth floor, in an area shared by DWP employees and contractors for Ardent, a firm hired by the utility to provide cybersecurity services, according to a person familiar with the proceedings who was not authorized to speak publicly.
The FBI investigators asked the dozens of employees working on the floor to grab their personal belongings and go to the conference room, the person said. Workers for the DWP were sent back to their desks less than an hour after the search began, but Ardent employees were kept in the conference room much longer.
The agents escorted Ardent employees to their desks one at a time, the person said. The employees logged into their computers using biometric information so the FBI could search them, and then were sent home.
The footage of FBI agents striding into the offices of the city’s water and electrical utility could deal a serious political blow to Garcetti, who promised when he took office in 2013 to reform the DWP, an agency frequently criticized over its billing practices and customer service.
Instead, he and his appointees have found themselves mired in a controversy stemming from the launch of its billing system six years ago. At the time, hundreds of thousands of DWP customers received inaccurate bills, some of them wildly inflated.
Outraged customers sued, culminating in a $67-million legal settlement between the utility and its ratepayers. Separately, the city filed a lawsuit against PricewaterhouseCoopers, seeking financial damages for the botched rollout of the billing system.
As that case progressed, lawyers for PricewaterhouseCoopers alleged they had uncovered an arrangement at City Hall that constituted a massive conflict of interest.
Paradis, hired by Feuer’s office to assist with the city’s case against PricewaterhouseCoopers, had also served at one point as the lawyer for the Van Nuys ratepayer who filed a class-action lawsuit against the DWP, according to testimony in the case.
Paradis also secured lucrative no-bid contracts from the DWP to help the city comply with the terms of the settlement of the class-action lawsuit filed by ratepayers. The utility ultimately approved more than $36 million in contracts with companies connected to Paradis, in part to address problems stemming from the overbilling debacle.
Paradis, through his attorney, has previously denied wrongdoing. During a deposition in the PricewaterhouseCoopers lawsuit, he invoked his 5th Amendment right against self-incrimination in response to nearly every question.
The FBI conducted a search early Monday of the downtown headquarters of the Los Angeles Department of Water and Power.
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