SHREVEPORT, La. (CN) – A former Shreveport, Louisiana, attorney and a local businessman claim the city wrongly accused of them blackmail after they offered to help fix a municipal water billing error that was costing it $1 million a year.
Michael Wainwright, an attorney now living in North Carolina, and Scott Pernici, the businessman, claim in a lawsuit filed in Caddo Parish, Louisiana, that in 2015 they realized the city was routinely underbilling high-consumption water users and brought their data to Mayor Ollie Taylor and city’s chief administrative officer, Brian Crawford.
As described in March 2 lawsuit, it was Pernici who discovered the discrepancy while examining his own residential water bill.
According to the complaint, he "was unable to reconcile the amount he was billed for the gallons of water listed against the tier rates” established by city ordinance.
Pernici went on to examine the bills of family and friends and found the same discrepancy in the billing. He then contacted Wainwright, a personal friend, and asked him to take a look at the city ordinance and the tiered structure Shreveport used to bill for water, and to compare them with what people were actually being charged.
After looking at numerous bills, Wainwright concluded that not only was Pernici on to something, but that residential customers living within city limits who used large amounts of water were under billed by $9.16 a month, while those that lived outside city limits were under billed by $18.32 a month.
All told, they said, the city was losing well over $1 million a year.
Wainwright and Pernici say once they were sure of their calculations, they approached the city, explained what they'd found, and offered to help it recoup the money in return for a small fee.
They "viewed the circumstances as a classic 'win-win' opportunity," the complaint says.
But instead of the city thanking them and agreeing to pay the fee, Wainwright and Pernici claim, the city fathers had Sharon Pilkinton, the water department's billing specialist, fix the problem using Wainright and Pernici’s confidential data.
The two men claim they later received a letter from Shreveport City Attorney William Bradford Jr. admitting the city had used the confidential information provided by Wainright and Pernici to fix the problem.
In response, Wainright and Pernici promptly sued the city, and their dispute with the Shreveport officials was soon public knowledge.
After The Shreveport Times reported on the lawsuit, Mayor Tyler issued a written statement in which she explained the water billing system had not been set up under her administration, but that once notified of the discrepancies, her administration set out immediately to correct it.
Tyler also implied that the individuals who brought the issue to her attention had attempted to blackmail the city, the complaint says.
“The outside parties involved demanded $250,000 for the information and a contract for future work. The last demand which threatened to expose this to the public rose to $1.8 million. I have been steadfast in my convictions to not allow the city to be extorted or blackmailed on the backs of its citizens,” the mayor wrote.
In an October radio interview, Crawford said the city had refused to compensate for the information because it was brought to them “from an individual who doesn’t live in our state and says: ‘Hey, no, I’m the person who discovered the error in the water bill and I want my money. And if I don’t get my money, I’m going to make this public,’” Crawford said, and continued. “So – Kind of like a shakedown thing; kind of a threat.”’
Crawford also said the city had brought in the justice department and the FBI to have it “thoroughly looked at because it’s – it’s hard to fathom that just the random citizen out there would have stumbled across this information and we’re trying to determine who inside the city had access to that information as well.”
A federal judge in January refused to drop Wainwright and Pernici's claims against the city. The case is ongoing.
The new lawsuit says “Wainright’s and Pernici’s observations that publication of water billing errors by the city has an adverse effect on the public’s trust, is commonly known and indisputable; is an observation routinely noted in the city’s own internal audits; and, clearly does not constitute blackmail or extortion.”
The lawsuit takes issue with the city’s use of the words “blackmail,” “extortion,” and those that say plaintiffs were holding them “hostage” or “bullying” or attempting to perform a “shakedown” of them.
Wainright and Pernici say the city’s accusations imply they were involved in some kind of criminal activity, which, they say, they weren’t.
The lawsuit seeks damages for defamation and for money paid to a third-party company that double-checked Wainright and Pernici’s calculations. It also asks the court to direct the city to publicly retract “all defamatory statements that have been published thus far.”
The lawsuit was filed by Jerald Harper and Anne Wilkes, both of Shreveport.
Wilkes said in a phone call Wednesday she is not at liberty to comment on ongoing litigation.