A lawyer hired by the City Attorney’s Office pleaded guilty Friday to a federal bribery charge in a scheme involving $2.2 million in kickbacks and bribes to the top executive at the Los Angeles Department of Water and Power 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 was simultaneously representing a DWP ratepayer suing the city over the system — received a $2.2 million kickback from another attorney as part of the scheme, according to the U.S. Attorney’s Office.
Sentencing was set for July 19 in what was the first criminal charge filed arising out of a federal investigation into the city’s handling of the flawed DWP system and resulting litigation. The failed system led to many customers receiving wildly inflated bills.
Paradis, 58, of Scottsdale, Arizona, is cooperating in the ongoing investigation, federal prosecutors said.
After the faulty billing system went into use, the city and utility faced multiple class-action lawsuits filed by ratepayers. In December 2014, the City Attorney’s Office retained Paradis and Beverly Hills lawyer Paul R. Kiesel as special counsel to represent the city in a lawsuit meant to be used to settle all related claims on the city’s desired terms, according to federal prosecutors.
Kiesel is also cooperating with the investigation and is not charged with any wrongdoing.
Prosecutors contend that when Paradis began representing the city as special counsel in the litigation against PricewaterhouseCoopers over the company’s handling of the DWP billing system rollout, city prosecutors were aware that he was already representing Antwon Jones, the ratepayer who had a claim against the utility arising from billing overcharges.
Jones was unaware that his lawyer, Paradis, also represented his intended adversary, according to court filings.
At 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 that would be friendly to the city to supposedly represent Jones, according to court papers.
After the meeting, Paradis recruited an outside lawyer to supposedly represent Jones in a lawsuit against the city. Paradis told the lawyer that the city wanted the lawsuit to be “pre-settled” on the city’s desired terms, and that Paradis would do all or most of the substantive work on the case, prosecutors said.
In exchange, Paradis and the outside lawyer agreed that Paradis would receive 20% of that lawyer’s fees in the Jones v. City case as a secret kickback, prosecutors stated.
In March 2015, the city sued PwC in a lawsuit that alleged the accounting firm was responsible for DWP’s billing debacle, claiming that the firm had caused the city hundreds of millions of dollars in damages. Paradis and Kiesel represented the city in that lawsuit, which the city eventually dismissed.
Also in March 2015, Paradis used nonpublic information provided to him by members of the City Attorney’s Office and 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 the outside lawyer for filing. That attorney filed the Paradis-drafted lawsuit the following month.
In June and July of 2015, Paradis and others working on the city’s behalf in the Jones lawsuit participated in four confidential mediation sessions with the outside lawyer, who purportedly represented Jones, prosecutors said.
In July 2017, a Los Angeles Superior Court judge issued a final approval of the $67 million settlement agreed to by the parties in Jones v. City, including about $19 million in plaintiffs’ attorney fees.
Pursuant to the settlement agreement, the city sent a check to the outside attorney in the amount of more than $19.2 million. After disbursing some of those funds in accordance with the terms of the settlement agreement, the outside lawyer and his firm retained about $10.3 million in fees.
The outside attorney then secretly paid $2.1 million to Paradis, disguising the kickback as a real estate investment, and funneling it through shell companies that Paradis and the lawyer had set up exclusively for the purpose of transmitting and concealing the illicit payment, according to Paradis’ plea agreement.
As part of his plea, Paradis admitted giving bribes to multiple DWP officials, including a DWP general manager and an DWP Board member, in exchange for their help in securing a three-year, $30 million no-bid contract with the utility in June 2017 for Paradis’ downtown Los Angeles-based cyber-services company, Aventador Utility Solutions.
At the time it approved the no-bid contract, the DWP Board was not informed that Paradis had ghostwritten a May 2017 independent monitor report on the Jones v. City settlement on which the utility based its decision, prosecutors said.
The Paradis-written report claimed that DWP could not meet its obligations under the Jones v. City settlement agreement unless it contracted with Aventador.
The DWP Board also was unaware that the then-DWP general manager advocating for the award of the $30 million no-bid 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 executive pleaded guilty to a federal bribery charge stemming from the probe. He is expected to be sentenced April 26.
Thomas H. Peters, 55, of Pacific Palisades, a former senior official at the City Attorney’s Office, has agreed to plead guilty to a federal extortion charge and is cooperating in the probe.
Federal prosecutors have also obtained a plea agreement from David F. Alexander, 54, of Arcadia, a former senior cyber official at the utility. He is expected to formally plead guilty on Feb. 8.