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Ex-L.A. Special Counsel Agrees to Plead Guilty to Accepting Nearly $2.2 Million Kickback for Arranging Collusive Lawsuit Against LADWP

 
by: Ciaran McEvoy
Posted: November 30, 2021

 

LOS ANGELES...A New York City lawyer, who simultaneously represented the Los Angeles Department of Water and Power (LADWP) and a ratepayer suing it in the wake of the department’s billing debacle, has agreed to plead guilty to a bribery charge for accepting an illegal payment of nearly $2.2 million for getting another attorney to purportedly represent his ratepayer client in a collusive lawsuit against LADWP, the Justice Department announced today. 

          Paul O. Paradis, 58, of Scottsdale, Arizona, who ran the Manhattan-based Paradis Law Group, agreed to plead guilty to a single-count information charging him with bribery. In his plea agreement, Paradis also admitted to additional bribery schemes involving high-level LADWP officials. Both the information and the plea agreement were filed today in United States District Court. Paradis is cooperating with the federal criminal investigation, which is ongoing.

          According to the court documents, LADWP in 2013 implemented a new billing system that it had procured from an outside vendor, PricewaterhouseCoopers (PwC). After LADWP implemented the new system, hundreds of thousands of LADWP ratepayers received massively inflated and otherwise inaccurate utility bills. Soon afterward, the city and LADWP faced multiple class-action lawsuits filed by ratepayers alleging harm resulting from the faulty billing system.

          In December 2014, the Los Angeles City Attorney’s Office retained Paradis and Paul R. Kiesel, a Beverly Hills-based lawyer, as special counsel to represent the city in an affirmative lawsuit against PwC. Kiesel is cooperating with the investigation and is not charged with any wrongdoing.

          When Paradis began representing the city as special counsel in the PwC litigation, the Los Angeles City Attorney’s Office was aware that he was already representing Antwon Jones, a ratepayer who had a claim against LADWP arising from billing overcharges. Jones was unaware that his lawyer, Paradis, also represented his intended adversary.

          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 counsel that would be friendly to the city to supposedly represent Jones in a class-action lawsuit against the city. Pursuant to this strategy, the forthcoming Jones v. City of Los Angeles lawsuit would be used as a vehicle to settle all existing LADWP-billing-related claims against the city on the city’s desired terms.

          Soon thereafter, Paradis recruited a lawyer identified in court documents as “Ohio Attorney” to supposedly represent Jones in a lawsuit against the city. Paradis told Ohio Attorney 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 Ohio Attorney’s substantive work on the case. In exchange, Paradis and Ohio Attorney agreed that Paradis would receive 20 percent of Ohio Attorney’s fees in the Jones v. City case as a secret kickback.

          In March 2015, the city sued PwC in a lawsuit that generally alleged that PwC was responsible for LADWP’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 until March 2019. The city in September 2019 dismissed its lawsuit against PwC.

          Also in March 2015, Paradis used nonpublic information provided to him by members of the City Attorney’s Office and LADWP 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 Ohio Attorney for filing. Ohio Attorney filed the Paradis-drafted lawsuit in April 2015.

          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 Ohio Attorney, who purportedly represented Jones. At the close of the final mediation session, the mediator issued a proposal that would cap plaintiff attorneys’ fees at $13 million – a figure that raised an objection from another lawyer representing the city, who complained in an internal email that the amount was unjustifiably high because, in part, Ohio Attorney had done “little demonstrative work to advance the interests of the class.” Notwithstanding that objection, the city agreed to the fee proposal.

          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 approximately $19 million in plaintiffs’ attorney fees.

          Pursuant to the settlement agreement, the city sent a check to Ohio Attorney in the amount of approximately $19,241,003. After disbursing some of those funds in accordance with the terms of the settlement agreement, Ohio Attorney and his law firm retained approximately $10.3 million in attorney fees.

          Ohio Attorney then secretly paid $2,175,000 to Paradis, disguising the kickback as a real estate investment, and funneling it through shell companies that Paradis and Ohio Attorney had set up exclusively for the purpose of transmitting and concealing the illicit payment.

          As part of his plea agreement, Paradis also admitted to giving bribes to multiple LADWP officials, including an LADWP general manager and an LADWP Board member, in exchange for their help in securing a three-year, $30 million no-bid contract with LADWP in June 2017 for Paradis’s downtown Los Angeles-based cyber-services company, Aventador Utility Solutions.

          At the time it approved the no-bid contract, the LADWP Board was not informed that Paradis had ghostwritten a May 2017 independent monitor report on the Jones v. City settlement on which LADWP based its decision. The Paradis-written report claimed that LADWP could not meet its obligations under the Jones v. City settlement agreement unless it contracted with Aventador. The LADWP Board also was unaware that the then-LADWP general manager advocating for the award of the $30 million no-bid contract to Paradis’s company had secretly agreed to become its CEO with an annual salary of $1 million and a luxury company car.

          Paradis is expected to make his initial court appearance in the coming weeks.

          The FBI is investigating this matter.

          Assistant United States Attorneys Melissa Mills, Jamari Buxton and Susan Har of the Public Corruption and Civil Rights Section are prosecuting this case.

 

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