State attorney general reviewing issues surrounding LA water billing settlement

The California attorney general is looking into allegations of fraud involving the $67 million Los Angeles incorrect water billing settlement.

The office addressed the issue in a letter responding to concerns by Consumer Watchdog President Jamie Court, who in March raised allegations of defrauding a class of ratepayers in a lawsuit against the Department of Water & Power.

"The matters you describe understandably raise concerns for ratepayers, as well as members of the public, given the seriousness of the alleged fraud and the backdrop of past billing problems at DWP. We are carefully reviewing the issues raised in your letter. Beyond that, please understand that we cannot confirm or comment on investigations," Sean McCluskie, chief deputy to Attorney General Xavier Becerra, wrote on April 3.

In his letter, Court urged the attorney general to investigate allegations of collusion between private outside counsel hired by the Los Angeles city attorney's office and opposing counsel in the handling of the ratepayer settlement.

Since allegations surfaced last month, the city's private counsel resigned, as did the head of the city attorney's civil division, Thomas Peters.

Los Angeles County Superior Court Judge Elihu Berle

City Attorney Michael N. Feuer, who said he was not aware of any wrongdoing, opened up an ethics investigation and vowed swift action. Jones v. City of Los Angeles, BC577267 (L.A. Super. Ct., filed April 1, 2015).

Court however said the city could not be in charge of cleaning up its own mess and called on Becerra's office to step in.

"The city attorney cannot be trusted to investigate his own agency," Court wrote in March.

"Unrefuted evidence and testimony before LA Superior Court Judge Elihu Berle show that two law firms hired by the city attorney's office as 'special counsel' represented both the plaintiff in the DWP mis-billing case and the defendant, the city of LA and DWP. The court, the public, plaintiff Antwon Jones and ratepayers were not advised of any of this," Court wrote.

The Jones case, as well as the city's pending lawsuit against the billing company, Pricewaterhouse Coopers, are up in the air. Los Angeles v. Pricewaterhouse Coopers LLP, BC574690 (L.A. Super Ct., filed March 6, 2015).

The Jones class now has no counsel representing its interests.

During a hearing Wednesday, Berle granted class attorney Jack Landskroner's motion to withdraw as counsel.

"Mr. Landskroner is also not in a position to defend himself against the charges that are being leveled against him here," said his attorney, Mark T. Drooks of Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow PC.

Los Angeles City Attorney Michael N. Feuer

Berle ordered Landskroner to provide accounting of all sums received in connection with the Jones matter, as well as disbursements, including all expenses incurred, and attorney-client agreements with anyone in the matter.

"Mr. Landskroner has continuing fiduciary obligations to the class. However, the court intends to appoint new class counsel," said Berle.

Those in the running to become class counsel include Timothy Blood of Blood, Hurst & O'Reardon LLP -- the first to sue the city over the billing issues -- as well as Brian Kabateck of Kabateck LLP and Greenberg Gross LLP.

A hearing is set for April 17.

Berle is also weighing whom to select as special master to audit the Jones settlement.

Those candidates range from retired judges to tax attorneys to firms specializing in public corruption matters.

Paul Paradis, one of the city's private counsel, and class counsel Landskroner, who was asked by Berle if any of his $15 million in fees was paid to Paradis, have since pleaded the Fifth Amendment against self-incrimination during their depositions.

In addition, no-bid contracts awarded to a company controlled by Paradis to remediate the billing issues have been canceled by the city, although not before almost $20 million was paid.