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FBI raids at utility, LA City Hall related to fallout from billing debacle

Los Angeles Times logo Los Angeles Times 7/23/2019 By Dakota Smith, David Zahniser, Alene Tchekmedyian and Laura J. Nelson, Los Angeles Times
a person standing in front of a mirror posing for the camera: In this file photo, on Nov. 7, 2018, FBI agents leave the office of Los Angeles City Councilman Jose Huizar after collecting evidence from his office at City Hall in downtown Los Angeles, Calif. The FBI conducted a search of the downtown headquarters of the Los Angeles Department of Water and Power and City Hall, officials said Monday. © Genaro Molina/Los Angeles Times/TNS In this file photo, on Nov. 7, 2018, FBI agents leave the office of Los Angeles City Councilman Jose Huizar after collecting evidence from his office at City Hall in downtown Los Angeles, Calif. The FBI conducted a search of the downtown headquarters of the Los Angeles Department of Water and Power and City Hall, officials said Monday.

LOS ANGELES — FBI agents searched the offices of the Los Angeles Department of Water and Power and City Attorney Mike Feuer on Monday, as part of an investigation into the city’s handling of lawsuits filed over the disastrous 2013 rollout of a new billing system at the utility — and the inaccurate customer bills that resulted from it.

An FBI representative confirmed that warrants had been served at multiple locations, including the headquarters of the DWP, the city’s water and power utility.

The FBI would not characterize the investigation. But Rob Wilcox, Feuer’s spokesman, said the warrants issued to employees in the city attorney’s office are connected to the city’s settlement of a class action lawsuit that was filed over the inaccurate DWP bills.

Feuer also said the warrants are related to a separate lawsuit filed by the DWP and city against PricewaterhouseCoopers, the consulting firm that implemented the new billing software at the utility.

“We have and will continue to cooperate fully with the expectation that the investigation will be completed expeditiously,” Wilcox said in an emailed statement.

Joseph Ramallo, a DWP spokesman, did not respond to repeated requests for comment. But Alex Comisar, spokesman for Los Angeles Mayor Eric Garcetti, said the mayor believes “any criminal wrongdoing should be investigated and prosecuted.”

“His expectation is that any city employee asked to cooperate will do so fully and immediately,” Comisar said in a statement.

No arrests have been made, a law enforcement source said.

FBI agents arrived at Figueroa Plaza, a downtown office tower, at about 9:30 a.m. Monday, according to a person familiar with the proceedings who was not authorized to speak publicly. More than 10 agents showed up on the 9th floor, which is shared between DWP employees and contractors for Ardent, a firm hired by the utility to provide cybersecurity services.

The agents — some wearing suits, others in navy FBI jackets — asked the dozens of employees working on the floor to grab their personal belongings and go to the conference room, the person said. Workers for the DWP were sent back to their desks less than an hour after the search began, but Ardent employees were kept in the conference room much longer.

FBI agents escorted employees for Ardent to their desks one at a time, the person said. The Ardent employees logged into their computers using biometric information so the FBI could search their computers, and then were sent home.

The footage of FBI agents striding into the offices of the city’s water and electrical utility could deal a serious blow politically to Garcetti, who selects the DWP’s top executive and appoints five citizen commissioners to oversee the agency.

When he took office in 2013, Garcetti promised to reform the DWP, an agency frequently criticized over its billing practices and customer service.

Instead, he and his appointees find themselves mired in a controversy over a $30 million, no-bid contract awarded by the utility and allegations, lodged by a city-hired consulting firm, that city lawyers engaged in fraud while settling a class action lawsuit over incorrect utility bills.

The DWP experienced serious legal fallout from a billing system that sent out wildly inaccurate bills, overcharging hundreds of thousands of customers. The chaos prompted lawsuits from customers and prompted the DWP to reimburse ratepayers $67 million in overcharges.

PricewaterhouseCoopers, the consulting giant that implemented the billing system, later alleged the city worked together with an outside attorney to select the plaintiff and the attorney who handled the class-action lawsuit over the billing snafus in an effort to get a more favorable settlement for the DWP.

The search comes during an FBI investigation into Los Angeles City Hall. Federal investigators have cast a wide net for information about foreign investment in Los Angeles real estate developments, according to a search warrant filed last year that names an array of political and business figures.

Among those named were Councilmen Jose Huizar and Curren Price, the former head of the Department of Building and Safety and high-level appointees of Garcetti and Council President Herb Wesson. The warrant also named executives of Chinese firms bankrolling new residential and hotel towers on Figueroa Street in downtown Los Angeles.

The warrant does not say the FBI has gathered evidence of criminal activity by any of the people or companies named in the document. No one has been arrested or charged in the investigation.

In recent months, real estate developers with projects in Huizar’s district have received federal grand jury subpoenas instructing them to turn over communications with the councilman and dozens of current and former Huizar staffers since 2013, two sources familiar with the FBI’s instructions told the Los Angeles Times in January.

Huizar has not been charged in the case and he has denied any wrongdoing.

It’s unclear whether Monday’s searches are related to that investigation.

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©2019 Los Angeles Times

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