Firm says L.A. did not pursue reimbursement for overcharged cell service

Former City Controller Wendy Greuel, pictured last year, pushed for greater review of the city's cellphone bills.

Former City Controller Wendy Greuel, pictured last year, pushed for greater review of the city’s cellphone bills.

(Anne Cusack / Los Angeles Times)

A consulting company hired by the city to audit its cellphone records has accused Los Angeles Mayor Eric Garcetti and other political leaders of showing little interest in pursuing claims that they were being overcharged by their providers.

Cost/Benefit Corp., which specializes in telecommunications issues, says that neither Garcetti nor City Atty. Mike Feuer took serious action on its findings that the city had been overcharged on cell service by about $12 million.

The Calabasas company sent letters to Garcetti and Feuer last year, which said officials had the potential to recover $17 million, including interest and taxes. The firm also raised the possibility that the city could go after $39 million in legal damages resulting from those charges.

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“As far as we know, no action has ever been taken by the city to act upon the findings of our audit,” said James S. Cooper, the company’s lawyer.


Cost/Benefit Corp. sent the letters as part of a larger effort to collect on what it says are $11.6 million in unpaid city bills. In a lawsuit filed last week, the company said it was not compensated for thousands of hours of work and associated costs.

A Garcetti spokeswoman declined to comment, referring questions to Feuer’s office. Feuer spokesman Rob Wilcox said in a statement that the lawsuit has “no merit.”

“In fact, it is [Cost/Benefit Corp.] that did not fulfill their obligations and damaged the city,” Wilcox said.

The city intends to file a countersuit against Cost/Benefit Corp. and will spell out its claims at that time, Wilcox added.

The legal dispute comes four years after former City Controller Wendy Greuel said her office had found $1-million worth of “unnecessary spending” on cellphone usage. Greuel pushed for greater review of those bills, saying they were not being properly tracked.

The following year, Greuel signed a contract with Cost/Benefit Corp. to conduct a forensic audit of invoices sent to the city by AT&T, Verizon Wireless and Sprint over a seven-year period. The contract called for the company to receive 20% of any refunds obtained by the city from its cellphone providers. The city never took action to recoup the money it was owed, the lawsuit said.

Cost/Benefit Corp. said it encountered resistance inside and outside City Hall as it sought to review cellphone records. More than a third of the city’s 36 departments declined to participate in the audit, and only three of the council’s 15 members agreed to take part, the lawsuit says. By 2013, Greuel had accused the phone companies of using “stall tactics” to avoid handing over billing records.

At the end of its work, Cost/Benefit Corp. obtained only 14 months’ worth of billing data for Sprint, 17 months for AT&T and 56 months for Verizon Wireless, according to the complaint.

Cost/Benefit Corp. also contends that a city lawyer specifically forbade it from seeking the cellphone data of council members. That order directly contradicted Greuel’s push for a citywide review of cellphone costs, the company said in its lawsuit.