Stop LA City Attorney Fraud Recall Mike Feuer
Los Angeles, CA – Los Angeles City Attorney Mike Feuer supported a deceptive notice to ratepayers in a class action settlement over the transfer of hundreds of millions of dollars in what amounts to a City slush fund, according to attorneys for Consumer Watchdog. On Monday, Consumer Watchdog filed its final court papers in an appeal of a class action settlement in which the City Attorney’s office did not provide any notice to Angelenos or the court of the $242 million transfer. Though the $242 million transfer was not disclosed to consumers in time to exercise their right to opt-out or object to the settlement, the settlement barred consumers from challenging it in court. Read Consumer Watchdog’s opening brief here: https://www.consumerwatchdog.org/site... The Court of Appeals filing comes as scrutiny intensifies over public corruption at the City Attorney’s office involving the settlement of another DWP ratepayer case. Two City Attorney special counsels secretly represented both the ratepayer plaintiff and the City/DWP defendant. The City Attorney failed to inform the court, the public or ratepayers that attorneys he hired represented parties on both sides of the case. City Attorney Mike Feuer’s Number Three deputy, Thomas Peters, resigned over the weekend, the third resignation in two weeks in connection with the scandal. Consumer Watchdog called for all three resignations and that of top deputy Jim Clark at the beginning of March when it learned about the scandal. DWP billing errors have been a perennial problem for Angelenos, with outrageous examples, like a family being overcharged $60,000 for a leaky toilet.The special counsel quickly settled the action, with little scrutiny and no investigation and no real changes to DWP’s practices. The City Attorney’s special counsel Paul Paradis received $36 million no-bid contracts in the settlement from DWP. Read Consumer Watchdog’s letter calling upon Attorney General Xavier Becerra to take over a public corruption investigation at the City Attorney’s office: https://consumerwatchdog.org/sites/de...
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Anthony K1 year ago
Thank you Consumer Watchdog for taking action. The rate hikes with LADWP have been ridiculously high.
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Transcript
this Jamie Court I'm with consumer
watchdog a president consumer watchdog
and we're here at consumer watchdogs
offices in Carthay Circle in Los Angeles
and we're here today because there is a
public corruption scandal that has
embroiled the City Attorney's Office and
the DWP over billing issues and
disclosure and we've talked for weeks
now
about try not to hit it here try not to
we've talked for weeks about how city
attorney Mike furor and the City
Attorney's Office had attorneys
representing both the city as defense in
a DWP Mis billing case representing the
DWP and attorneys working for the city
also represented the plaintiff in that
case Antoine Jones unbeknownst to anyone
this was done in order to give a
settlement that didn't really resolve
the core billing issues a quiet quiet
burial and as a result the consumers in
LA
millions of DWP ratepayers today still
face big billing problems with their
water and power bills and we don't know
why and we don't have an end in sight
and that scandal has resulted in four
top attorneys being on the hot seat at
the at the City Attorney's office three
of them have actually been fired or have
resigned depending upon how you want to
look at it we're gonna talk a little bit
about what's happened in that case in a
minute and why Mike Feuer the city
attorney needs to submit to an outside
review and take more actions to fix this
problem but today we're here with
another troubling troubling example of
the failure of the city attorney and the
DWP to disclose
to the ratepayers of this city the costs
and the charges that they face and we
are here with two members of the
consumer watchdog staff who are really
important to this case they are a Carmen
barber who is the rate payer and the
executive director of consumer watchdog
who as you will see in this matter is
the plaintiff in the objection to an
LADWP settlement and Ben Powell who is
the attorney representing from super
watchdog and representing Carmen in this
challenge this is a case that has
nothing to do with the hundreds tens of
millions of dollars that consumers have
been Mis built this is a case that has
to do with a transfer of money that
happens every year from the coffers of
DWP to the coffers of the city the
general fund and that is a transfer that
should be disclosed to the public and
also should not happen in this case Ben
is going to talk about how a lawsuit
settlement that basically purported to
resolve this issue but allowed these
transfers to continue mislead the public
and the fact is the city attorney signed
off on a notice that failed to disclose
a quarter of a billion dollar transfer
from DWP ratepayers to the city he
failed to a lot to to adequately tell
the public of these costs and he failed
and he failed to live up to his
responsibilities to the courts we
believe which is why we're bringing this
action but also to the public to be
truthful and honest about the cost the
DWP ratepayers face so that when they
get a settlement notice in this
litigation they would have an honest
choice about whether the to be part of
the settlement or to objector to not be
part of this element because the city
attorney was not honest and we warned in
the head of time
DWP was not honest ratepayers didn't
have a chance to really understand that
they were losing a quarter of a billion
dollars a year and had nothing that they
really could do about it so I'm gonna
let Ben talk to this failure to disclose
where we are with this notice in the
case this is the notice that went out to
consumers that fail to mention the
quarter of a billion dollar transfer and
this is really fine print we rely on our
city attorney and DWP to actually get
that fine print right and not to try to
bury the lead
and so that Ben is going to tell you
where we are with this case and Carmen's
going to tell you why as a rate payer
she's offended by this practice and then
we'll talk just generally about where we
are with the entire DWP corruption
scandal and what needs to happen next
thanks Jamie so like you mentioned my
name is Ben Powell I am a staff attorney
with consumer watchdogs litigation
project so there's been a long history
of voter outrage over municipalities and
cities sort of using rate payers as an
ATM and taking rate payer money and
using it directly for city purposes
there's been multiple times over the
years where California voters have
actually passed ballot initiatives like
propositions 2 13 to 18 and 26 for
example to stop these kinds of transfers
but invariably the city attorney finds
ways around them the City Council or
maybe the mayor's office wants more
money so what do they do they go ahead
and raid the DWP coffers for that money
so yesterday consumer watchdog filed our
final papers in court and the appeal of
this class action settlement that Jamie
mentioned where the city attorney's
office failed to disclose this quarter
of a billion dollar transfer to class
members in that case so this is the
notice that the postcard notice that was
actually sent out to class members and
it's not indicated in there even though
this 242 million dollar transfer was
occurring and it was not disclosed the
settlement still barred these class
members ability to challenge that action
that's that transfer in court this
settlement was about these very types of
transfers once they start out as rate
payer funds earmark maybe for a specific
purpose like infrastructure or keeping
rates down and they're transferred and
co-opted for a completely different
purpose
here that was being sent to the city's
general funds for general purposes and
this money is desperately needed by the
LADWP for infrastructure repairs in
these types of situations you know see
the rolling blackouts that were planted
last year because of the overload on the
grid so these transfers are done even
when the Li DWP desperately needs this
money and the connection here and put
everything in context is that the city
attorney represented the city and the
LADWP in this settlement action and when
notice was sent out to advise consumers
about the settlement they specifically
did not mention this 242 million dollar
transfer this is a significant due
process violation because as a class
member when you receive notice you're
supposed to be told what you're giving
up and that wasn't done here what people
were left out of understanding was that
if they didn't opt out of the settlement
they would not be able to challenge this
in court you're asked to either stay in
and accept the benefits of the
settlement or to opt out or object and
if you're not given the proper
information you can't make an informed
decision to do that this is a pretty
basic concept in class actions where
when you receive a notice you're
supposed to be able to have enough
information to exercise your rights to
be heard as a class member and that
didn't happen here either the strategic
the sediment was strategically designed
by the parties in the City Attorney's
office so that any activity occurring
after notice was sent out was not
included and it all of that was released
and they didn't have the opportunity to
actually challenge that transfer in
court even though they knew the City
Attorney's Office knew that that
transfer would be occurring just a
couple of months later they actually
knew about it months in advance and
signed off on and but their mo just
seems to be protecting this established
system of using the LADWP as an ATM if
they were really operating as a city
attorney they should be ensuring that
the LADWP is aboveboard and is acting as
a good actor but instead what they're
doing is seem to be acting more like
defense attorneys for and defending
these otherwise bad actors these these
cases that come up or due process
concerns or sort of center stage don't
come up very often so when they do we
like to take a stand on behalf of
consumers the trial court unfortunately
in this case did approve this settlement
despite the problems with the notice and
the fact that the city attorney hid this
transfer from the court and from the
class so we objected we
Carman bulbar our executive director and
a DWP rate pair to uphold the basic
rights of class members and the
integrity of the class action system as
a whole if people deserve the truth
consumers deserve the truth and if
they're not being given the truth in
these types of major cases by the City
Attorney's Office then we can never
expect them to be fully informed to make
these informed decisions and they'll
lose these rights to transfer these
types to challenge these types of
transfers in court and we thought that
was important enough to get involved in
so my name is Carmen Bolivar as I said
I'm the executive director of consumer
watchdog and I'm a DWP rate payer I pay
my bill every month and as a rate payer
I expect the money that I sent to LADWP
to go to provide me electricity water
and trash services now I might think
this bill is too high but at least I
think that when I pay the DWP they're
using that money to provide me
electricity to fix the water pipes that
are spewing all over the city
to replace broken trash cans what I
don't expect is that a quarter of a
billion dollars every year of my rate
payer money is being funneled to a
secret slush fund at the city of Los
Angeles to use for any purpose other
than providing me electricity service
it's outrageous that's why as a rate
payer and consumer watchdogs executive
director I am the plaintiff in this case
because it's outrageous number one that
the secret tax is hidden in our bills to
begin with it's doubly outrageous that
when the ratepayers got together and
sued the city over it came to a
settlement over these outrageous
practices city attorney Mike fear and
the DWP again hid from the public
another 242 million dollar transfer
there is no way as a rape as the
executive director of a consumer
organization let alone as a rate payer I
could have figured out from this note
that that 242 million dollar transfer
was about to happen because it is
nowhere in that postcard when ratepayers
received that they would never know and
they lost their rights to object that's
why as a rate payer I objected to this
settlement if for example there's a
class action lawsuit against Toyota for
exploding airbags and the class
settlement offers a $5 coupon to every
consumer consumers have a right to know
that's coming so they can say wait a
second that's not enough that's not a
fair settlement of this I want to bring
action on my own that's exactly what
happened in this DWP case the city and
DWP hid a quarter of a billion dollars
that was being moved from my DWP bill
and
if in the city of Los Angeles to the
city without disclosing it to the public
and that's outrageous we deserve full
information and the ability to make an
informed choice that's why we filed this
objection to the settlement and are
finalizing this appeal today turn it
back over to Jamie to talk about the
broader endemic problems of ethics
violations at the City Attorney's Office
well this is a part of a much larger
picture this is the billing cover-up
scheme bulletin board and what you have
to know is the reason we're not hearing
the mayor or the City Council condemned
this DWP billing scandal despite the
fact that it involved a no-bid contract
for 36 million dollars to a company that
operates out of a three million dollar
oceanfront condo and is named after a
lamborghini aventador utilities the
reason we're not hearing more is because
the DWP every year gives tribute to the
city of about a quarter of a billion
dollars from rate payer funds and it's
blessed by Mike furor the city attorney
in this case it's not just blessed it's
hidden from ratepayers in the settlement
that was supposed to stop this but isn't
gonna stop these transfers these
transfers will go on they may be less
but they will go on that's why we're
objecting but mr. Fuhrer is caught in
the middle of the scandal and let me
explain what's recently happened of the
four attorneys involved in the city
attorney scandal the chief assistant
city attorney Tom Peters resigned on
Friday consumer watchdog had called for
the four top deputy two top deputies and
four special counsels to resign on March
6th because of this cover-up because of
the scandal to date three of these four
deputies are gone
Paul Cecil Paul
artists Tom Peters the top deputy Jim
Clark should resign immediately he knows
according to the deposition that these
city attorneys represented both the
plaintiff and the defense the DWP and
did tell the court didn't tell the
public didn't tell the ratepayers
so mr. Fuhrer needs to force mr. Clark
to do what the other attorneys have done
and leave the City Attorney's office and
frankly mr. Fuhrer needs to open himself
to scrutiny by the Attorney General on
outside authority cannot be reviewing
his own department which he's doing
right now
so these resignations are just part of a
larger larger shake-up that's needed at
DWP and
today we're hoping that as the court
goes forward and a quarter said there's
a prima facie case of fraud against the
public against the court that we're
going to see mr. Clark resign shortly as
the top deputy we're going to see mr.
Fuhrer agree to submit to an outside
review beyond his office walls of this
whole crisis that's got to happen
because what's at stake here is tens of
millions of dollars in rate payer money
which by the way is nothing compared to
the 240 million were challenging in
court so we're hoping for some
resolution the City Council by the way
has asked for a report back about this
36 million no-bid contract which was
awarded to one of the city's attorneys
special counsel who was also accused of
representing both the plaintiff and the
defense in this case they brought in a
guy from Ohio who made 15 million in
legal fees and took the Fifth Amendment
when asked if he gave these attorneys
kickbacks or referral fees one of them
claimed they didn't the other hasn't
testified this is this is a corruption
scandal worthy of a mafia sting
operation not the Department of Water
and Power in the City Attorney's Office
I mean we've got companies getting tens
of millions of dollars from rape
in no-bid contracts named after
Lamborghinis and operating out of ocean
Punk apartments we've got attorneys
taking the Fifth Amendment when they
said when they say what do we do with
that money the court gave us the judge
frankly needs to refer these guys to the
State Bar and he needs to tell mr. furor
that he needs to submit to some kind of
outside review here it's unacceptable
for ratepayers to lose this much money
every year I would say one other thing
just well we have folks here to open it
up with some questions in the line or
the room something separate and a part
happened today that we should notify
people about and there's going to be a
statement on our website it's on
consumer watchdog org 31 days ago the
Insurance Commissioner of California was
petitioned by ten public interest in
civil rights groups to begin a hearing
and rulemaking process to stop the use
of education and occupation and auto
insurance he's answered that petition
and saying he is going to do hearings
but he is not going to submit to a
timeline for rulemaking this is an
outrageous practice insurance companies
in this state engage in they today
charge you based on your college
education and based on your profession
and it's illegal it's not a rating
factor approved by voters the
Commissioner has said he will look at
this he will held hearings on it he will
see how this discriminates against
people he has not committed to a
timeline or a rulemaking Insurance
Commissioner Ricardo Lara needs to
commit to a timeline to deal with this
very fundamental problem we face which
is right now 18 percent of Latinos have
college degrees the other eighty-two
percent pay more for their auto
insurance because insurance discriminate
against them 25 percent of
african-americans have college degrees
the other 75% pay more for their auto
insurance because they're discriminated
against Ricardo Lara needs to stand up
for these people during the next year
year and a half these hearings need to
lead to rules these rules
need to have a timeline this cannot be
more talk with no action and we are
hoping the Insurance Commissioner is
resolute in a process that moves forward
to get an end to this discrimination and
we welcome participation in that process
we're glad that these hearings are
happening but we have to tell the
Insurance Commissioner that they need to
result in rules on a reasonable timeline
because this discrimination has gone on
too long so I just wanted to throw that
in there for anyone listening who cares
it's a big deal in California and it's a
big deal for the people who were voted
Ricardo Lara who was the first Latino
Insurance Commissioner in the history of
the state he needs and I know he does
take that very seriously
any questions from in the room or a lot
there are a plethora of different laws
and regulations and things about
according to the city charter or the
kosygin's Constitution and things like
that where they can sort of get around
any type of thing like that to say
you'll use it as a surplus even though
it may not actually be a surplus it's
just sort of a matter of funny
accounting at this point and that's sort
of consistent with all the rest of the
different things that you see going on
we might be inclined to agree with you
but due to some different kind of legal
gymnastics and things like that they've
been able to sort of kind of circumvent
all of those two types different types
of regulations successfully for years
with the help of the City Attorney's
Office I would had I mean the city
attorney should be representing the
public and the consumers not just DWP in
these cases and this surplus I think
we're looking at was an eight billion at
one point that they had built up a
surplus of eight billion you know that
has been used there to be a piggy bank
for the city of La until voters said
that's illegal then they settle another
class-action frankly for very little
money I mean if this is the notice that
went out to ratepayers look at this
fifty two million will be given back to
ratepayers the settlement fund 52
million dollars and will limit how much
we transfer each year to 8% of the
surplus 52 million is nothing when you
consider what's missing in this notice
is the 250 million if you had said the
settlement is currently estimated to be
52 million dollars by the way the city
is going to get another 250 million of
your money in December people might be a
little annoyed which is why it's not in
the notice
that's why hiding the ball and the facts
from the public result in these crazily
undervalued settlements where the
plaintiffs lawyers get paid and the city
attorney gets to smile at DWP and
everyone else and the city fathers don't
come down on the myth on the City
Attorney's Office when he's embroiled in
this crazy DWP billing scandal this is a
cozy relationship between the City
Council the mayor the DWP and the City
Attorney's Office at the expense of the
people of Los Angeles and you know why
it happens because there's one-party
rule in this city and I'm a Democrat but
these are all Democrats protecting
everybody else's but and the Attorney
General needs to come in he's also a
Democrat and look at this and report
back to the public because this is way
too cozy
the term billing scandal the excuse was
I believe oh it was a software problem
and benders well that's it that's a
great point and that's what this chart
actually shows is that there were two
lawsuits
there's the ratepayer lawsuit against
DWP for just over billing okay because
it's partly bureaucracy it's partly
people it's partly computer then the
city instead wanted to sue Price
Waterhouse Cooper the consult to the
software maker to say it's their fault
it's the software Consultants fault we
had the wrong software so when there was
legitimate cases filed against DWP by
ratepayers what happened was the city
got very nervous and they recruited
their own plaintiff a guy named Antoine
Jones who literally four months after
the first case filed his own case
against DWP over the same issue now
these attorneys who represented the
plaintiff while they were representing
the city defendant the DWP
basically said we can't be caught doing
that we're gonna find another guy this
guy from Ohio
Jaclyn's coder to represent Antoine
Jones in a new case so we don't have to
settle with these original rate payers
if we settle with these original rate
payers we might actually have to do
discovery and confess our sins and hire
some people but instead they said they
this guy filed the case in April one
four months after the original cases
then offered settlement the next day
they settled quickly because they
controlled both sides of the case then
they went to sue the software maker
because they said it's all the software
a consultant and software makers problem
not not our problem well that all got
tied up in a nice bow until when the
software maker started to defend the
case he found out that the two city
attorneys had recruited the plaintiff in
the case and they did something called a
reverse auction they found a lawyer who
would settle against the city sheep
quickly without discovery and without
any mess so they could sue someone else
and collect their money they got caught
red-handed and you know what outside of
deposition
and under oath where they did tell the
truth and they said they were all in on
it
Mike Fuhrer has yet to say he's sorry he
knew about it and it's wrong if he did
that and he'll never happen again we'd
have a better result here so bad jacket
of all I think viewers should resign but
secondly do we have fortunately since
I'm not a lawyer I don't know but it's
something that's that's worth looking
into he represented the city department
and the rate payers theoretically had
their own representation but I guess
there is a question as to whether he
abused his authority or trust it's very
hard to Sioux City entities it's called
sovereign immunity right so so it's a
big lift and that's my non lawyer lawyer
Lee answer to that question anybody on
the line have a question anybody left in
the room but I did hear Jack Humphrey
Vil saying that Mike Feuer should resign
which which is probably a bless of a
question than a commentary well and I
will tell you Mel Levine is part of this
problem he's very close with Paul key so
he's very close with Paul paradies the
two special councilor resign I don't
know where he stands with anyone else
but this is a cozy Club and what's
really interesting about we're talking
about today a little complicated is this
transfer that we're suing over this
transfer right here is how it is the
lubrication for that cosy Club you know
a 250 million dollar annual transfer
from DWP to the city sure makes it you
know feel like no one really wants to
ask too many questions
because the city does have a lot of
essential services
that should be funded that's true it
just shouldn't be funded with repair
money in this surreptitious way and so
you know III think that I think that
part of the problem is that we do have a
DWP Commission and Mello vine that
rubber-stamp
what DWP general manager wants to do the
classic case is there's no bid contract
that we talked about where when I've at
the doral the utility is one in a thirty
six million dollar no bid contract they
went to the DWP general manager who
pitched it to the Commission
Fred pickle the rate payer advocate said
absolutely let's do it we need it
quickly then they approved it the
company was you know didn't exist till
march of of 2017 after the contract was
was awarded I mean this is crazy
no one's double-checking the math of
anybody in DWP there's and and that's
partially goes to why is the controller
not doing it well his budgets controlled
by the city why did Maria Martinez who's
the chair of a committee that oversees
in the City Council the DWP was she's
starting to ask questions now about
aventador utilities no one even heard
the name and he spent 36 million on the
no bid contract to clean up customer
service and no one ever heard the name
of Paul Paradiso aventador utilities
that's just in crazy that's crazy
no picture of Paul parody doesn't exist
online in person here's a tip for any
enterprising reporter I went to the 1990
New York law school yearbook he
allegedly graduated from New York law
school in 1990 there's no picture or
name for Paul parodies maybe it was a
misprint maybe it's not online or maybe
he never graduated from New York law
school in 1990 just like you know he
didn't really do much of an obit
contract out of his oceanfront condo
well Price Waterhouse is doing a pretty
good job of exposing the city's foibles
as a defense this is all coming from
Price Waterhouse Cooper and a very good
attorney named Dan Tomas and if you go
to our last press release online you can
read his brief outlay laying out this
whole scheme the one that the judge says
is a prima facie case of fraud it's
detailed that's under oath it's this is
not surmise but fundamentally because of
the corruption in the City Attorney's
Office at DWP you can bet we're gonna
get a lot less from Price Waterhouse
Cooper if anything I mean they you know
they could get this case dismissed there
now is Mike fear I think in his own way
is so defensive because he's does not
want to give up this litigation against
Price Waterhouse Cooper and instead of
looking at the DWP and how outrageous
this whole issue is he's looking forward
to Price Waterhouse Cooper and saying we
got to go plow forward with that and I
think both things are true he's got to
find a way to clean up his house or he's
got to go and he's got to find a way by
doing that to still isolate what Price
Waterhouse Cooper probably did wrong
which is a part of the problem
the real problem is DWP is also part of
the problem and no one's acknowledging
this is a human customer service problem
a management problem a leadership
problem and it goes back decades and
it's and it's it's frankly on Eric
Garcetti said I think the reason the
Eric Garcetti will never be president
United States is partially because he's
got this DWP thing hanging around his
neck that when he starts running
anywhere doing anything all that's gonna
come out of closet he was he was
complicit and every one of these
decisions and and no one knows who he is
anyway so it's easy not to run for
president but if you ever do you better
better not have something like this in
your closet and he's gonna have it in
his closet unless he starts to get off
the on the ball and do something about
it okay thank you all take care
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Anthony K1 year ago
Thank you Consumer Watchdog for taking action. The rate hikes with LADWP have been ridiculously high.
REPLY
Transcript
this Jamie Court I'm with consumer
watchdog a president consumer watchdog
and we're here at consumer watchdogs
offices in Carthay Circle in Los Angeles
and we're here today because there is a
public corruption scandal that has
embroiled the City Attorney's Office and
the DWP over billing issues and
disclosure and we've talked for weeks
now
about try not to hit it here try not to
we've talked for weeks about how city
attorney Mike furor and the City
Attorney's Office had attorneys
representing both the city as defense in
a DWP Mis billing case representing the
DWP and attorneys working for the city
also represented the plaintiff in that
case Antoine Jones unbeknownst to anyone
this was done in order to give a
settlement that didn't really resolve
the core billing issues a quiet quiet
burial and as a result the consumers in
LA
millions of DWP ratepayers today still
face big billing problems with their
water and power bills and we don't know
why and we don't have an end in sight
and that scandal has resulted in four
top attorneys being on the hot seat at
the at the City Attorney's office three
of them have actually been fired or have
resigned depending upon how you want to
look at it we're gonna talk a little bit
about what's happened in that case in a
minute and why Mike Feuer the city
attorney needs to submit to an outside
review and take more actions to fix this
problem but today we're here with
another troubling troubling example of
the failure of the city attorney and the
DWP to disclose
to the ratepayers of this city the costs
and the charges that they face and we
are here with two members of the
consumer watchdog staff who are really
important to this case they are a Carmen
barber who is the rate payer and the
executive director of consumer watchdog
who as you will see in this matter is
the plaintiff in the objection to an
LADWP settlement and Ben Powell who is
the attorney representing from super
watchdog and representing Carmen in this
challenge this is a case that has
nothing to do with the hundreds tens of
millions of dollars that consumers have
been Mis built this is a case that has
to do with a transfer of money that
happens every year from the coffers of
DWP to the coffers of the city the
general fund and that is a transfer that
should be disclosed to the public and
also should not happen in this case Ben
is going to talk about how a lawsuit
settlement that basically purported to
resolve this issue but allowed these
transfers to continue mislead the public
and the fact is the city attorney signed
off on a notice that failed to disclose
a quarter of a billion dollar transfer
from DWP ratepayers to the city he
failed to a lot to to adequately tell
the public of these costs and he failed
and he failed to live up to his
responsibilities to the courts we
believe which is why we're bringing this
action but also to the public to be
truthful and honest about the cost the
DWP ratepayers face so that when they
get a settlement notice in this
litigation they would have an honest
choice about whether the to be part of
the settlement or to objector to not be
part of this element because the city
attorney was not honest and we warned in
the head of time
DWP was not honest ratepayers didn't
have a chance to really understand that
they were losing a quarter of a billion
dollars a year and had nothing that they
really could do about it so I'm gonna
let Ben talk to this failure to disclose
where we are with this notice in the
case this is the notice that went out to
consumers that fail to mention the
quarter of a billion dollar transfer and
this is really fine print we rely on our
city attorney and DWP to actually get
that fine print right and not to try to
bury the lead
and so that Ben is going to tell you
where we are with this case and Carmen's
going to tell you why as a rate payer
she's offended by this practice and then
we'll talk just generally about where we
are with the entire DWP corruption
scandal and what needs to happen next
thanks Jamie so like you mentioned my
name is Ben Powell I am a staff attorney
with consumer watchdogs litigation
project so there's been a long history
of voter outrage over municipalities and
cities sort of using rate payers as an
ATM and taking rate payer money and
using it directly for city purposes
there's been multiple times over the
years where California voters have
actually passed ballot initiatives like
propositions 2 13 to 18 and 26 for
example to stop these kinds of transfers
but invariably the city attorney finds
ways around them the City Council or
maybe the mayor's office wants more
money so what do they do they go ahead
and raid the DWP coffers for that money
so yesterday consumer watchdog filed our
final papers in court and the appeal of
this class action settlement that Jamie
mentioned where the city attorney's
office failed to disclose this quarter
of a billion dollar transfer to class
members in that case so this is the
notice that the postcard notice that was
actually sent out to class members and
it's not indicated in there even though
this 242 million dollar transfer was
occurring and it was not disclosed the
settlement still barred these class
members ability to challenge that action
that's that transfer in court this
settlement was about these very types of
transfers once they start out as rate
payer funds earmark maybe for a specific
purpose like infrastructure or keeping
rates down and they're transferred and
co-opted for a completely different
purpose
here that was being sent to the city's
general funds for general purposes and
this money is desperately needed by the
LADWP for infrastructure repairs in
these types of situations you know see
the rolling blackouts that were planted
last year because of the overload on the
grid so these transfers are done even
when the Li DWP desperately needs this
money and the connection here and put
everything in context is that the city
attorney represented the city and the
LADWP in this settlement action and when
notice was sent out to advise consumers
about the settlement they specifically
did not mention this 242 million dollar
transfer this is a significant due
process violation because as a class
member when you receive notice you're
supposed to be told what you're giving
up and that wasn't done here what people
were left out of understanding was that
if they didn't opt out of the settlement
they would not be able to challenge this
in court you're asked to either stay in
and accept the benefits of the
settlement or to opt out or object and
if you're not given the proper
information you can't make an informed
decision to do that this is a pretty
basic concept in class actions where
when you receive a notice you're
supposed to be able to have enough
information to exercise your rights to
be heard as a class member and that
didn't happen here either the strategic
the sediment was strategically designed
by the parties in the City Attorney's
office so that any activity occurring
after notice was sent out was not
included and it all of that was released
and they didn't have the opportunity to
actually challenge that transfer in
court even though they knew the City
Attorney's Office knew that that
transfer would be occurring just a
couple of months later they actually
knew about it months in advance and
signed off on and but their mo just
seems to be protecting this established
system of using the LADWP as an ATM if
they were really operating as a city
attorney they should be ensuring that
the LADWP is aboveboard and is acting as
a good actor but instead what they're
doing is seem to be acting more like
defense attorneys for and defending
these otherwise bad actors these these
cases that come up or due process
concerns or sort of center stage don't
come up very often so when they do we
like to take a stand on behalf of
consumers the trial court unfortunately
in this case did approve this settlement
despite the problems with the notice and
the fact that the city attorney hid this
transfer from the court and from the
class so we objected we
Carman bulbar our executive director and
a DWP rate pair to uphold the basic
rights of class members and the
integrity of the class action system as
a whole if people deserve the truth
consumers deserve the truth and if
they're not being given the truth in
these types of major cases by the City
Attorney's Office then we can never
expect them to be fully informed to make
these informed decisions and they'll
lose these rights to transfer these
types to challenge these types of
transfers in court and we thought that
was important enough to get involved in
so my name is Carmen Bolivar as I said
I'm the executive director of consumer
watchdog and I'm a DWP rate payer I pay
my bill every month and as a rate payer
I expect the money that I sent to LADWP
to go to provide me electricity water
and trash services now I might think
this bill is too high but at least I
think that when I pay the DWP they're
using that money to provide me
electricity to fix the water pipes that
are spewing all over the city
to replace broken trash cans what I
don't expect is that a quarter of a
billion dollars every year of my rate
payer money is being funneled to a
secret slush fund at the city of Los
Angeles to use for any purpose other
than providing me electricity service
it's outrageous that's why as a rate
payer and consumer watchdogs executive
director I am the plaintiff in this case
because it's outrageous number one that
the secret tax is hidden in our bills to
begin with it's doubly outrageous that
when the ratepayers got together and
sued the city over it came to a
settlement over these outrageous
practices city attorney Mike fear and
the DWP again hid from the public
another 242 million dollar transfer
there is no way as a rape as the
executive director of a consumer
organization let alone as a rate payer I
could have figured out from this note
that that 242 million dollar transfer
was about to happen because it is
nowhere in that postcard when ratepayers
received that they would never know and
they lost their rights to object that's
why as a rate payer I objected to this
settlement if for example there's a
class action lawsuit against Toyota for
exploding airbags and the class
settlement offers a $5 coupon to every
consumer consumers have a right to know
that's coming so they can say wait a
second that's not enough that's not a
fair settlement of this I want to bring
action on my own that's exactly what
happened in this DWP case the city and
DWP hid a quarter of a billion dollars
that was being moved from my DWP bill
and
if in the city of Los Angeles to the
city without disclosing it to the public
and that's outrageous we deserve full
information and the ability to make an
informed choice that's why we filed this
objection to the settlement and are
finalizing this appeal today turn it
back over to Jamie to talk about the
broader endemic problems of ethics
violations at the City Attorney's Office
well this is a part of a much larger
picture this is the billing cover-up
scheme bulletin board and what you have
to know is the reason we're not hearing
the mayor or the City Council condemned
this DWP billing scandal despite the
fact that it involved a no-bid contract
for 36 million dollars to a company that
operates out of a three million dollar
oceanfront condo and is named after a
lamborghini aventador utilities the
reason we're not hearing more is because
the DWP every year gives tribute to the
city of about a quarter of a billion
dollars from rate payer funds and it's
blessed by Mike furor the city attorney
in this case it's not just blessed it's
hidden from ratepayers in the settlement
that was supposed to stop this but isn't
gonna stop these transfers these
transfers will go on they may be less
but they will go on that's why we're
objecting but mr. Fuhrer is caught in
the middle of the scandal and let me
explain what's recently happened of the
four attorneys involved in the city
attorney scandal the chief assistant
city attorney Tom Peters resigned on
Friday consumer watchdog had called for
the four top deputy two top deputies and
four special counsels to resign on March
6th because of this cover-up because of
the scandal to date three of these four
deputies are gone
Paul Cecil Paul
artists Tom Peters the top deputy Jim
Clark should resign immediately he knows
according to the deposition that these
city attorneys represented both the
plaintiff and the defense the DWP and
did tell the court didn't tell the
public didn't tell the ratepayers
so mr. Fuhrer needs to force mr. Clark
to do what the other attorneys have done
and leave the City Attorney's office and
frankly mr. Fuhrer needs to open himself
to scrutiny by the Attorney General on
outside authority cannot be reviewing
his own department which he's doing
right now
so these resignations are just part of a
larger larger shake-up that's needed at
DWP and
today we're hoping that as the court
goes forward and a quarter said there's
a prima facie case of fraud against the
public against the court that we're
going to see mr. Clark resign shortly as
the top deputy we're going to see mr.
Fuhrer agree to submit to an outside
review beyond his office walls of this
whole crisis that's got to happen
because what's at stake here is tens of
millions of dollars in rate payer money
which by the way is nothing compared to
the 240 million were challenging in
court so we're hoping for some
resolution the City Council by the way
has asked for a report back about this
36 million no-bid contract which was
awarded to one of the city's attorneys
special counsel who was also accused of
representing both the plaintiff and the
defense in this case they brought in a
guy from Ohio who made 15 million in
legal fees and took the Fifth Amendment
when asked if he gave these attorneys
kickbacks or referral fees one of them
claimed they didn't the other hasn't
testified this is this is a corruption
scandal worthy of a mafia sting
operation not the Department of Water
and Power in the City Attorney's Office
I mean we've got companies getting tens
of millions of dollars from rape
in no-bid contracts named after
Lamborghinis and operating out of ocean
Punk apartments we've got attorneys
taking the Fifth Amendment when they
said when they say what do we do with
that money the court gave us the judge
frankly needs to refer these guys to the
State Bar and he needs to tell mr. furor
that he needs to submit to some kind of
outside review here it's unacceptable
for ratepayers to lose this much money
every year I would say one other thing
just well we have folks here to open it
up with some questions in the line or
the room something separate and a part
happened today that we should notify
people about and there's going to be a
statement on our website it's on
consumer watchdog org 31 days ago the
Insurance Commissioner of California was
petitioned by ten public interest in
civil rights groups to begin a hearing
and rulemaking process to stop the use
of education and occupation and auto
insurance he's answered that petition
and saying he is going to do hearings
but he is not going to submit to a
timeline for rulemaking this is an
outrageous practice insurance companies
in this state engage in they today
charge you based on your college
education and based on your profession
and it's illegal it's not a rating
factor approved by voters the
Commissioner has said he will look at
this he will held hearings on it he will
see how this discriminates against
people he has not committed to a
timeline or a rulemaking Insurance
Commissioner Ricardo Lara needs to
commit to a timeline to deal with this
very fundamental problem we face which
is right now 18 percent of Latinos have
college degrees the other eighty-two
percent pay more for their auto
insurance because insurance discriminate
against them 25 percent of
african-americans have college degrees
the other 75% pay more for their auto
insurance because they're discriminated
against Ricardo Lara needs to stand up
for these people during the next year
year and a half these hearings need to
lead to rules these rules
need to have a timeline this cannot be
more talk with no action and we are
hoping the Insurance Commissioner is
resolute in a process that moves forward
to get an end to this discrimination and
we welcome participation in that process
we're glad that these hearings are
happening but we have to tell the
Insurance Commissioner that they need to
result in rules on a reasonable timeline
because this discrimination has gone on
too long so I just wanted to throw that
in there for anyone listening who cares
it's a big deal in California and it's a
big deal for the people who were voted
Ricardo Lara who was the first Latino
Insurance Commissioner in the history of
the state he needs and I know he does
take that very seriously
any questions from in the room or a lot
there are a plethora of different laws
and regulations and things about
according to the city charter or the
kosygin's Constitution and things like
that where they can sort of get around
any type of thing like that to say
you'll use it as a surplus even though
it may not actually be a surplus it's
just sort of a matter of funny
accounting at this point and that's sort
of consistent with all the rest of the
different things that you see going on
we might be inclined to agree with you
but due to some different kind of legal
gymnastics and things like that they've
been able to sort of kind of circumvent
all of those two types different types
of regulations successfully for years
with the help of the City Attorney's
Office I would had I mean the city
attorney should be representing the
public and the consumers not just DWP in
these cases and this surplus I think
we're looking at was an eight billion at
one point that they had built up a
surplus of eight billion you know that
has been used there to be a piggy bank
for the city of La until voters said
that's illegal then they settle another
class-action frankly for very little
money I mean if this is the notice that
went out to ratepayers look at this
fifty two million will be given back to
ratepayers the settlement fund 52
million dollars and will limit how much
we transfer each year to 8% of the
surplus 52 million is nothing when you
consider what's missing in this notice
is the 250 million if you had said the
settlement is currently estimated to be
52 million dollars by the way the city
is going to get another 250 million of
your money in December people might be a
little annoyed which is why it's not in
the notice
that's why hiding the ball and the facts
from the public result in these crazily
undervalued settlements where the
plaintiffs lawyers get paid and the city
attorney gets to smile at DWP and
everyone else and the city fathers don't
come down on the myth on the City
Attorney's Office when he's embroiled in
this crazy DWP billing scandal this is a
cozy relationship between the City
Council the mayor the DWP and the City
Attorney's Office at the expense of the
people of Los Angeles and you know why
it happens because there's one-party
rule in this city and I'm a Democrat but
these are all Democrats protecting
everybody else's but and the Attorney
General needs to come in he's also a
Democrat and look at this and report
back to the public because this is way
too cozy
the term billing scandal the excuse was
I believe oh it was a software problem
and benders well that's it that's a
great point and that's what this chart
actually shows is that there were two
lawsuits
there's the ratepayer lawsuit against
DWP for just over billing okay because
it's partly bureaucracy it's partly
people it's partly computer then the
city instead wanted to sue Price
Waterhouse Cooper the consult to the
software maker to say it's their fault
it's the software Consultants fault we
had the wrong software so when there was
legitimate cases filed against DWP by
ratepayers what happened was the city
got very nervous and they recruited
their own plaintiff a guy named Antoine
Jones who literally four months after
the first case filed his own case
against DWP over the same issue now
these attorneys who represented the
plaintiff while they were representing
the city defendant the DWP
basically said we can't be caught doing
that we're gonna find another guy this
guy from Ohio
Jaclyn's coder to represent Antoine
Jones in a new case so we don't have to
settle with these original rate payers
if we settle with these original rate
payers we might actually have to do
discovery and confess our sins and hire
some people but instead they said they
this guy filed the case in April one
four months after the original cases
then offered settlement the next day
they settled quickly because they
controlled both sides of the case then
they went to sue the software maker
because they said it's all the software
a consultant and software makers problem
not not our problem well that all got
tied up in a nice bow until when the
software maker started to defend the
case he found out that the two city
attorneys had recruited the plaintiff in
the case and they did something called a
reverse auction they found a lawyer who
would settle against the city sheep
quickly without discovery and without
any mess so they could sue someone else
and collect their money they got caught
red-handed and you know what outside of
deposition
and under oath where they did tell the
truth and they said they were all in on
it
Mike Fuhrer has yet to say he's sorry he
knew about it and it's wrong if he did
that and he'll never happen again we'd
have a better result here so bad jacket
of all I think viewers should resign but
secondly do we have fortunately since
I'm not a lawyer I don't know but it's
something that's that's worth looking
into he represented the city department
and the rate payers theoretically had
their own representation but I guess
there is a question as to whether he
abused his authority or trust it's very
hard to Sioux City entities it's called
sovereign immunity right so so it's a
big lift and that's my non lawyer lawyer
Lee answer to that question anybody on
the line have a question anybody left in
the room but I did hear Jack Humphrey
Vil saying that Mike Feuer should resign
which which is probably a bless of a
question than a commentary well and I
will tell you Mel Levine is part of this
problem he's very close with Paul key so
he's very close with Paul paradies the
two special councilor resign I don't
know where he stands with anyone else
but this is a cozy Club and what's
really interesting about we're talking
about today a little complicated is this
transfer that we're suing over this
transfer right here is how it is the
lubrication for that cosy Club you know
a 250 million dollar annual transfer
from DWP to the city sure makes it you
know feel like no one really wants to
ask too many questions
because the city does have a lot of
essential services
that should be funded that's true it
just shouldn't be funded with repair
money in this surreptitious way and so
you know III think that I think that
part of the problem is that we do have a
DWP Commission and Mello vine that
rubber-stamp
what DWP general manager wants to do the
classic case is there's no bid contract
that we talked about where when I've at
the doral the utility is one in a thirty
six million dollar no bid contract they
went to the DWP general manager who
pitched it to the Commission
Fred pickle the rate payer advocate said
absolutely let's do it we need it
quickly then they approved it the
company was you know didn't exist till
march of of 2017 after the contract was
was awarded I mean this is crazy
no one's double-checking the math of
anybody in DWP there's and and that's
partially goes to why is the controller
not doing it well his budgets controlled
by the city why did Maria Martinez who's
the chair of a committee that oversees
in the City Council the DWP was she's
starting to ask questions now about
aventador utilities no one even heard
the name and he spent 36 million on the
no bid contract to clean up customer
service and no one ever heard the name
of Paul Paradiso aventador utilities
that's just in crazy that's crazy
no picture of Paul parody doesn't exist
online in person here's a tip for any
enterprising reporter I went to the 1990
New York law school yearbook he
allegedly graduated from New York law
school in 1990 there's no picture or
name for Paul parodies maybe it was a
misprint maybe it's not online or maybe
he never graduated from New York law
school in 1990 just like you know he
didn't really do much of an obit
contract out of his oceanfront condo
well Price Waterhouse is doing a pretty
good job of exposing the city's foibles
as a defense this is all coming from
Price Waterhouse Cooper and a very good
attorney named Dan Tomas and if you go
to our last press release online you can
read his brief outlay laying out this
whole scheme the one that the judge says
is a prima facie case of fraud it's
detailed that's under oath it's this is
not surmise but fundamentally because of
the corruption in the City Attorney's
Office at DWP you can bet we're gonna
get a lot less from Price Waterhouse
Cooper if anything I mean they you know
they could get this case dismissed there
now is Mike fear I think in his own way
is so defensive because he's does not
want to give up this litigation against
Price Waterhouse Cooper and instead of
looking at the DWP and how outrageous
this whole issue is he's looking forward
to Price Waterhouse Cooper and saying we
got to go plow forward with that and I
think both things are true he's got to
find a way to clean up his house or he's
got to go and he's got to find a way by
doing that to still isolate what Price
Waterhouse Cooper probably did wrong
which is a part of the problem
the real problem is DWP is also part of
the problem and no one's acknowledging
this is a human customer service problem
a management problem a leadership
problem and it goes back decades and
it's and it's it's frankly on Eric
Garcetti said I think the reason the
Eric Garcetti will never be president
United States is partially because he's
got this DWP thing hanging around his
neck that when he starts running
anywhere doing anything all that's gonna
come out of closet he was he was
complicit and every one of these
decisions and and no one knows who he is
anyway so it's easy not to run for
president but if you ever do you better
better not have something like this in
your closet and he's gonna have it in
his closet unless he starts to get off
the on the ball and do something about
it okay thank you all take care
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