Editor's note: This is the third in a series of articles on the "tangled web" involving the Los Angeles Department of Water & Power and Riverside Public Utilities.
One warm summer day in August 2014, Antwon Jones was in his early 20s and living in a small apartment in Van Nuys when he opened his Los Angeles Department of Water & Power electric bill and got an unpleasant surprise. Since he had no washer, dryer or dishwasher, his bill was normally $25 to $30 per month. But this time, he was shocked to see his bill was $1,374, which worked out to about $340 per month.
When Jones went online to complain about the bill, he set in motion a series of events that is unfolding to this day and has resulted in multiple lawsuits, Federal Bureau of Investigation raids and allegations of wider corruption, and that has swept up current and former LADWP officials, attorneys and others. Jones was one of more than 1 million LADWP customers who received erroneous bills in 2014, but it was the actions of LADWP officials and others in the wake of the billing scandal that has led to so much trouble.
The situation boils down to "some really unethical attorneys trying to turn the situation around so they can make a killing," Jamie Court, president of the Consumer Watchdog group, told California Energy Markets in a phone interview. "This is a scandal that goes all the way to the top."
Concurrent with the LADWP billing scandal and its fallout, the City of Riverside Board of Public Utilities is in the midst of an audit of contracts it signed through the Southern California Public Power Authority from 2008 to 2018 (see CEM No. 1594). That audit and its own tangled history is relevant here because one of the principal figures in it, former LADWP General Manager David Wright, is also involved with the LADWP billing scandal (see CEM No. 1568) and is mentioned in Jones' December 2020 lawsuit, though not as a defendant.
In many ways, the saga begins with Antwon Jones and his $1,374 electric bill. After he received it, he logged onto a website to complain and checked a box saying he wanted to be contacted by an attorney to file a lawsuit against LADWP.
The billing scandal had already taken many legal twists and turns before Jones filed his latest lawsuit in December against the City of Los Angeles; current LA City Attorney and mayoral candidate Michael Feuer; Feuer's chief deputy, Michael Clark; and Civil Litigation Branch Chief Thomas Peters. Parties not named as defendants, but described as participants in the alleged misconduct, include Wright, who was general manager of LADWP from 2015 to 2019; LADWP itself; attorneys Paul Paradis, Gina Tufaro, Paul Kiesel, Michael Libman, Richard Tom, Eskel Solomon, Deborah Dorney and Jack Landskroner; former Aventador Utility Solutions President Ryan Clarke; and former Board of Water and Power Commissioners President Mel Levine.
In July 2019, FBI agents raided LADWP headquarters as well as Feuer's office at City Hall and several local law offices, including Kiesel's, according to press reports.
Jones' December 2020 complaint seeks financial compensation for violation of civil rights, violations of the city's tax code, and a long list of other alleged iniquities including fraud, professional negligence, government cover-up, conspiracy, and aiding and abetting of fraud.
Clark, Feuer and Peters on March 15 filed separate motions to dismiss the case, citing lack of standing and alleging that Jones has not pled facts necessary to establish municipal liability and a constitutional violation.
According to Jones' suit, LADWP hired PricewaterhouseCoopers to implement a new billing system. In September 2013, LADWP decided to go live with the system even though it wasn't ready, the suit alleges, leading to overbilling amounting to $100 million, incorrect late charges and withheld solar energy refunds. According to the suit, LADWP demanded full payment of the charges even though the agency was aware of the errors. Four class-action suits were filed in 2014 and 2015, and Clark, LADWP's chief deputy attorney, had responsibility for defending the city against the allegations.
In December 2014, Paradis contacted Jones to represent him in a class-action lawsuit against PwC, emailing him a retainer agreement. Paradis told Jones there would be up to 100,000 other people in the class. Jones told Paradis it was LADWP he wanted to sue, according to the document. The lawsuit named PwC and "other defendants," but it was Jones' intention to sue LADWP, the lawsuit says. Jones signed the retainer agreement with Paradis that month.
After Kiesel introduced Paradis to Peters, the city's civil litigation branch chief, Paradis was hired to represent the city on a contingency basis. This represented a conflict of interest because Paradis was now representing both sides in civil litigation, the suit says. Jones was not aware of this until 2019, it says, but his suit alleges Clark and Peters were aware that Paradis was representing both sides. The city dropped Jones' class-action lawsuit against PwC after other attorneys expressed concern about a conflict of interest, the December suit says.
Other allegations in Jones' recent suit:
- That Jones authorized Paradis to file a lawsuit against PwC, but the complaint was not filed and Jones was not told.
- That the city attorneys and Paradis planned to use Jones to file a suit against the city, settle it on terms friendly to the city, and insulate the city against further class-action lawsuits.
- That Paradis transferred Jones' case to another lawyer, Landskroner, at the end of March 2015, but did not tell Jones.
- That Jones' electricity was cut off in April 2015 with no notice or cause, which Jones suspected was in retaliation for the lawsuit filed in his name against the city eight days earlier.
- That in August 2015, the parties entered into a settlement that excluded refunds for back billing before Sept. 11, 2015, in exchange for an agreement to pay higher fees to Landskroner and Libman.
- That the settlement of Jones' case against the city was misrepresented as arm's-length negotiations, when they were not.
- That between Dec. 30, 2015, and Oct. 3, 2017, LADWP paid $6 million to Paradis Law Group.
- That in 2017, Paradis formed the Aventador consulting group, named after a Lamborghini automobile that sells for $400,000, and that LADWP awarded a $30-million no-bid contract to the firm to perform services formerly provided by Paradis as well as remediation efforts around the billing scandal.
- That after the court in 2017 approved a settlement in Jones' suit against the city, the city paid $10.3 million to Landskroner and $1.6 million to Libman, even though they filed no motions, conducted no discovery and engaged in no litigation, and even though the settlement was highly advantageous to the city and not particularly favorable to many members of the settling class.
- That around November 2017, Jones was paid $5,000 for the time he had devoted to serving as class representative in the class-action lawsuit.
- That the settlement in Jones' class-action lawsuit was a product of collusion and a fraud on the court involving, among others, Paradis, Landskroner, Libman and a number of high-level city officials, including Feuer, Clark, Peters and Wright.
Feuer did not return a request from California Energy Markets for comment on the lawsuit. He has filed papers to run for mayor of Los Angeles in 2022.
Meanwhile, the RPU board earlier this month voted to approve an extension of the city's contract with consulting firm Eide Bailly to collect public comment on the audit of contracts in past years, including during the time Wright was general manager of RPU. All concerns must be mailed via the U.S. Postal Service directly to Eide Bailly via typed/word-processed letter and Eide Bailly will document the concerns and provide a summary to the city manager, according to RPU records.
Wright had been audited in connection with complaints from a terminated RPU employee, Jason Hunter, who alleged that RPU was involved in illegal spending of funds through SCPPA. An audit of RPU expenditures had been authorized, but later investigation found a conflict of interest because the audit of Wright was performed by someone Wright was in a personal relationship with—City Auditor Vincent Price.
The results of that audit, approved in June 2020 by the board, are sure to be interesting, and perhaps lead down another thread of the tangled web of intrigue around Southern California municipal utilities.