LA utility chief resigns from job, pleads the 5th after FBI raid

A day after the FBI swept the office of Los Angeles Department and Water Manager David H. Wright, the leader of the troubled utility resigned from his job and invoked the Fifth Amendment against self-incrimination as part of ongoing litigation tied to a controversial $67 million ratepayer settlement.

Wright, who was supposed to stay on to lead the utility until the fall, resigned Tuesday after calls from Mayor Eric M. Garcetti amid a mounting federal investigation.

Wright is the third figure to plead the Fifth during depositions in the ligation, which has now been spotlighted by an FBI inquiry into allegations of bribery, kickbacks, extortion, and the defrauding of a consumer class involving private attorneys contracted out by the office of City Attorney Michael N. Feuer.

Wright was under questioning Tuesday by Gibson, Dunn & Crutcher LLP, which is defending Pricewaterhouse Coopers LLC from a suit by the city over the rollout of the billing software. Los Angeles v. Pricewaterhouse Coopers LLP, BC574690 (L.A. Super Ct., filed March 6, 2015).

Pricewaterhouse Coopers’ lawyer sought Wright’s knowledge of what the company believes was a sue-and-settle scheme in which special counsel for the city directed a lawsuit against the city. Such arrangements, called reverse auctions, are not illegal in themselves but can lead to collusion and fraud if not monitored closely. In this case, almost $15 million was paid out in attorney fees to class counsel Jack Landskroner, who did no discovery, and has refused to answer whether any of that money was paid in kickbacks to the city’s special counsel Paul O. Paradis or anyone else. Jones v. City of Los Angeles, BC577267 (L.A. Super. Ct., filed April 1, 2015).

Investigators are also examining $30 million in no-bid contracts issued to Aventador Utiliies, the Paradis-owned company that was paid $20 million to fix the billing problem before it was canceled following media reports.

Wright joined the department in 2015 around the time the controversial Antwon Jones v. City of Los Angeles settlement was coalescing and eventually became manager as Garcetti vowed to reform the troubled department.

“LADWP needs leadership that maintains the public trust, and commands the respect of people in and outside of the organization,” Garcetti said in a statement Tuesday.

Utility veteran Marty Adams will assume leadership effective immediately, according to the mayor’s office.

“Marty Adams has the experience and integrity to reassure Angelenos — the residents who own this utility — that the agency works for them. I have decided that a change in leadership can’t wait another day, and that’s why I am acting to begin Marty’s service as general manager effective immediately,” Garcetti said.

The FBI also searched the city attorney’s office and the Beverly Hills office of Kiesel Law LLP, which was one of two special counsel hired by the city to represent its interests in the billing litigation.

Kiesel confirmed a search warrant was served.

“And I gladly provided access to all of the information that was requested,” he said.

Kiesel has maintained under oath the drafting of the Jones complaint was done at the direction of the city attorney’s office while Feuer’s office said special counsel committed ethical breaches without its knowledge.

The FBI field office in Cleveland said it did not search the office of Landskroner Grieco Merriman LLC, nor did it have activity pertaining to the investigation. The firm represented the Jones class until withdrawing recently.

The Department of Justice in New York City did not respond to questions about a potential investigation into Manhattan-based Paradis Law Group.