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Consumer Law,
Class Action

May 16, 2024

FBI believed Feuer 'obstructed justice' in litigation investigation, documents show

A trove of investigative materials from the U.S. Attorney's Office relating to the LADWP billing scandal were released Wednesday.

Former Los Angeles City Attorney Michael Feuer

Former Los Angeles City Attorney Michael Feuer "obstructed justice" when he denied knowledge of a scheme to settle litigation against the city over faulty utility billing software without any discovery, according to an affidavit filed by an FBI agent in the case.

"Multiple sources of evidence provided probable cause to believe that Feuer obstructed justice, made materially misleading statements to the FBI, [redacted] relating to the timing of Feuer's knowledge that his Special Counsel (Paul) Paradis and (Paul) Kiesel) had collaborated with opposing counsel in a collusive lawsuit that allowed the city to settle multiple class actions on the city's preferred terms," Special Agent Andrew Civetti wrote.

The FBI agent also dismisses as untruthful a press release Feuer's office sent out in April 2019 in which Kiesel is called unethical and blamed almost entirely for the scandal.

"I believe that Feuer was motivated to provide such misleading statements in order to distance himself as far as possible for the, at minimum, unethical conduct engaged in by attorneys in his office and working on behalf of his office because of the resulting political damage to his reputation and that of the city attorney's office," the FBI agent wrote.

The affidavit was among more than 1,400 pages of investigative materials the U.S. Attorney's Office released Wednesday after Consumer Watchdog and the Los Angeles Times sued to try to learn why Feuer was never charged criminally even though several other players involved in the scheme were charged and convicted.

Feuer released a statement Thursday that said: "I cooperated fully with the U.S Attorney's staff and am glad they ultimately obtained all the actual facts. After they did, and assessed each witness's credibility, they prosecuted the wrongdoers --including the criminal on whom the agent drew so heavily -- and issued a letter in 2022 stating there was no ongoing investigation into me."

It is not uncommon for prosecutors to disagree with investigators about the strength of their evidence and decline to file charges. And Feuer strongly pushed back on Civetti's conclusions. He insisted, as he always has, that he knew nothing about the scheme until April 2019, long after the allegations had been reported in the media. 

"Agents trying to establish probable cause routinely depend on limited information as they seek permission to look for more. Here, before all the facts were known, the agent mistakenly relied on lies from a now convicted criminal seeking leniency from the government. I, too, was misled," Feuer wrote.

In a statement, Consumer Watchdog Litigation Director Jerry Flanagan, the lead attorney who moved to unseal the FBI documents in February, said: "The government documents show that Feuer lied early and lied often. The government documents paint a disturbing picture of Feuer conspiring to obstruct justice and ordering an extortion payment to cover up illegal and unethical activity in order to protect his political career. The only question now is: why hasn't he been disbarred and why isn't he in jail?" In re: Application of Consumer Watchdog and Los Angeles Times Communications LLC to Unseal Court Records, 2:24-cv-01650 (C.D. Cal., filed Feb. 21, 2024).

Civetti's affidavit, made in support of a search warrant for the cellular accounts of Feuer and others in the city attorney's office and Los Angeles Department of Water and Power, runs 105 pages and paints a confident and deceitful picture of Feuer who told the FBI that he planned to run for mayor of Los Angeles and thought he could win. "[I]t appears Feuer was attempting to personally distance himself from this scandal likely for political gain (or to avoid political fallout)," Civetti wrote.

Feuer did run for mayor but did not win. He ran unsuccessfully this year for a seat in Congress.

The issue stemmed from software PricewaterhouseCoopers sold to LADWP that overbilled some consumers. Paradis and Kiesel came up with a plan for the city to settle consumer claims against LADWP without any discovery. They would then turn around and join consumers in a suit against PwC. This scheme is sometimes called a "reverse auction," and can be legal in some circumstances. But the plan began to unravel after Julissa Salgueiro, a disgruntled former paralegal, stole documents from Kiesel's office with the details and threatened to release them if she wasn't paid $1.5 million.

As detailed by Civetti, what ensued was a tragicomedy as Kiesel tried to negotiate Salgueiro to a smaller payout and ended with Paradis acting as a "mediator" between Kiesel and Salgueiro and holding settlement talks in October 2017 inside LADWP headquarters where Salgueiro showed up with her "guru" named "Mama Rosa".

"Good job. Be sure there is a confidentiality agreement of the sort that would make Marty Singer envious," Thomas Peters, then head of litigation at the city attorney's office, texted Kiesel after learning an $800,000 settlement was reached. Singer, a lawyer to many Hollywood A-listers, is well known for his take-no-prisoners negotiation style.

Peters pleaded guilty to aiding the scheme and was sentenced last year to home detention and fined $50,000. He acknowledged that he threatened to fire Kiesel and Paradis if Kiesel didn't pay Salgueiro the money she was demanding for silence.

Civetti writes he believes Feuer was apprised far earlier of the reverse action plan and Salgueiro's extortion attempt than the former city attorney acknowledged publicly and under oath in a deposition and interviews with the FBI. Feuer instructed his lieutenants to make Kiesel pay whatever was necessary to keep Salgueiro quiet, the FBI agent writes.

And while he does rely on the testimony of Peters, he drew heavily from testimony and evidence provided by Kiesel, who was never charged with a crime.

The FBI agent describes Kiesel as being forthcoming throughout the federal investigation, voluntarily sharing emails and texts and his diary entries that seem to show that city attorney officials were far more involved in the plan than they were acknowledging. Those documents also showed the Kiesel had not wanted to pay for the return of stolen work product because he didn't think they had done anything illegal.

In January 2019, as the issue is being widely reported in the media, Kiesel is quoted as telling Peters: "I'm thrilled that we're getting transparency. Light is what will disinfect this situation."

Yet, in April 2019, as political problems grew for Feuer, the city attorney's office filed a court document and released a statement to the media in which it said that it had just "discovered" Kiesel's emails that laid out details of the plan and the coverup.

As reported in the Daily Journal, the city attorney claimed no prior knowledge of the scheme and accused Kiesel of a "reprehensible breach of ethics." "The conduct of outside counsel now coming to light was outrageous and inexcusable," the press release said.

Civetti writes in his affidavit that he believes those statements and statements Feuer gave to the FBI after the city attorney's office was raided in July 2019 "were material and misleading."

The U.S. attorney never charged Feuer with a crime. In August 2022, his lawyer, Richard Drooyan, sought assurances that the city attorney was no longer a target of the investigation. Mack Jenkins, who was chief of the U.S. Attorney's Public Corruption and Civil Rights Section, wrote back that prosecutors did not "as of the date of this letter, have an ongoing investigation into your client, City Attorney Mike Feuer, related to the Los Angeles City Attorney's Office and Los Angeles Department of Water and Power collusive litigation scandal."

The U.S. attorney's office fought earlier this year against the release of the documents that included Civetti's declaration. But U.S. District Judge Stanley Blumenfeld Jr. ordered them released with some redactions.

On Thursday, Ciaran McEvoy, a spokesperson for the U.S. Attorney's Office, declined to comment on the contents of the documents.

"However, our office has a strong history -- especially in recent years -- of charging, prosecuting, and convicting officials who break the public trust and violate federal law. As we have stated before, where the evidence did not establish every element of a federal crime beyond reasonable doubt, we have not pursued charges," he wrote.


David Houston

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