State Bar action is overdue in city attorney corruption scandal

The name Thomas Girardi, who is suspected of stealing tens of millions of dollars from his clients, has become synonymous with a failed California State Bar, the administrative body charged with overseeing lawyers.

Girardi, now disbarred, lavished gifts on State Bar staff while hundreds of complaints against him were ignored. In the wake of the scandal, the Bar promised reform.

Now, the Bar faces its biggest challenge yet to show it has indeed reformed: whether it will revoke the law license of former Los Angeles City Attorney Mike Feuer and sanction more than a dozen other attorneys currently under investigation for covering up corruption at the City Attorney’s Office and the Department of Water and Power (DWP).

According to court documents newly unsealed in a legal action brought by Consumer Watchdog and the Los Angeles Times, the FBI believed Feuer lied to government investigators when he denied knowledge of a hush money payment to conceal a collusive litigation scandal in his office five years ago. Government prosecutors shared that evidence with the State Bar last September.

The United States Attorney’s Office’s now-closed investigation came in the wake of the DWP’s botched launch of a new billing system in 2013.

In an attempt to take control of the ever-worsening DWP billing debacle, the City Attorney’s Office hatched a scheme to sue itself through a collusive “white knight” lawsuit, in which the City Attorney’s Office controlled the litigation nominally brought on behalf of DWP customers against the City.

Then, an employee of former Special Counsel Paul Kiesel threatened to expose the City’s misconduct unless she was paid off. Mr. Kiesel made the payment on behalf of the City, according to government prosecutors.

The scandal, called an “incredibly sordid affair” by federal Judge Stanley Blumenfeld, resulted in four people, including three top city employees, pleading guilty to bribery, extortion, and other crimes.

Incredibly, the politically connected Feuer was not charged by government prosecutors. Some observers have noted that collusive litigation is not a federal crime (though aiding and abetting extortion and obstruction of justice certainly are).

However, the State Business and Provisions Code applying to attorneys and enforced by the State Bar explicitly bars such collusive litigation, while aiding and abetting extortion, obstruction of justice, and perjury are also state crimes.

A 600-page Special Master’s Report published in April of 2021 details ethical violations by numerous lawyers under investigation by the Bar related to the scandal. The Special Master found all such attorneys violated the California Rules of Professional Conduct by engaging in deceit and moral turpitude, for which the presumptive sanctions include disbarment.

Last June, State Bar trial counsel Charles Calix told Judge Blumenfeld the agency would act as to some of the attorneys within three to five months, and within six to eight months for the remainder. A year later, the State Bar has only charged a single low-level conspirator but has failed to make public any actions related to Feuer, who was intimately involved in the misconduct, according to the FBI documents.

At the sentencing of the City’s former Chief of Civil Litigation Thomas Peters, Judge Blumenfeld emphasized the importance of “the State Bar [looking] carefully at all people who were involved, big or small . … [T]he Court ... is concerned about public trust … [and] making sure the Bar understands this type of behavior is not going to be tolerated. You’ll lose your license if you engage in this kind of conduct.”

The State Bar’s investigation must conclude swiftly and transparently, since several of those attorneys under investigation continue to work for the City and purport to represent the people’s interests.

As for Feuer, he is still licensed to practice law in California even though there is a mountain of evidence that he engaged in illegal activity.

According to the newly public FBI documents, the evidence suggests Feuer not only knew about the collusive litigation scheme earlier than he claimed, but he also “impliedly directed” Peters to ensure the extortion payment demand was “confidentially settle[d].” The FBI also believed Feuer directed the City Attorney’s Office to withhold documents from a California court that would have revealed the collusive litigation scheme, and that Feuer lied to government prosecutors and gave false or misleading testimony in a civil deposition.

Though the publicly released FBI documents were redacted to protect the confidentiality of grand jury–related information, in November former Special Counsel Paul Paradis told Judge Blumenfeld that an unredacted version of the documents provided to Paradis as part of his sentencing revealed that the FBI also believed Feuer had perjured himself to the grand jury.

The newly released documents also place Feuer in the room when the extortion payment was discussed and indicate he approved it, something Feuer has long denied. “Peters proffered that on Friday, December 1, 2017, Peters participated in a scheduled meeting with Feuer, [Chief of Staff Leela] Kapur, and [Joseph] Brajevich (called in) to provide an update on the Salgueiro situation,” according to an FBI affidavit.

The FBI believed Julissa Salgueiro, a former employee of then–Special Counsel Paul Kiesel, demanded $800,000 in exchange for not going public with information revealing the City’s involvement in the collusive litigation.

“Feuer stated that Kiesel needed to do whatever needed to be done to take care of the situation,” according to the documents.

“The evidence provides probable cause to believe that at Feuer’s direction, Peters ordered Kiesel to confidentially settle Salgueiro’s demands or face termination of his Special Counsel contract,” according to the warrant materials.

Feuer previously called such accusations “absurd” and “malicious.”

Now we know the truth. What will the State Bar do about it?

The State Bar was created to assist the California Supreme Court in enforcing rules applying to lawyers, but the Supreme Court retains the power to act independently if the State Bar fails in its duty.

If the State Bar doesn’t act by Independence Day, the California Supreme Court should step in protect the integrity of our judicial system.