LOS ANGELES (CN) – FBI agents searched the headquarters of the Los Angeles Department of Water and Power on Monday morning, in an investigation of the city’s handling of a lawsuit over a billing system error that overcharged thousands of customers.
A consulting firm alleged the city attorney’s office worked with outside counsel to try and curry favor with the utility company in a multimillion dollar settlement with customers, according to media reports.
The Los Angeles Times reported Monday that the FBI is also looking into a separate lawsuit filed by the department of water and power and the city against the consulting firm that rolled out the billing system responsible for the inaccurate bills.
Audit and consulting firm PricewaterhouseCoopers was at the center of the $67.5 million settlement in Los Angeles County Superior Court in 2016, where the customers said a system designed and implemented by the firm overcharged them, due to faulty meter readings.
The department blamed the firm for failing to properly manage the system, and the city sought legal costs against the vendor.
Customer said in their lawsuit that the utility ignored state and municipal laws by imposing rate hikes on customers based on inaccurate readings, and threatening to cut off electricity and water services if they did not pay the bills.
The utility paid tens of millions of dollars to refund customers, and hire a third-party consultant and independent monitor.
According to media reports, PricewaterhouseCoopers argued in court that the lead plaintiff in the class action lawsuit over the improper billing retained attorney Paul Paradis in 2014. Paradis also acted as outside counsel for the city and the utility company in the separate lawsuit against the consulting firm. That conflict of interest is now under investigation by an ethics expert.
Customers overcharged received a credit under the terms of the settlement and former customers received refunds. PricewaterhouseCoopers did not immediately respond to a request for comment Monday.
A spokesperson for the FBI’s Los Angeles office says search warrants were served today at the Department of Water and Power headquarters in downtown Los Angeles and at a location in City Hall.
FBI agents were seen at the city attorney’s office inside City Hall on Monday, according to media reports.
The FBI cannot comment on the nature of Monday’s search, because the affidavit in support of the search warrant has been sealed.
No arrests are planned, and agents are expected to be at both locations through the day and possibly into the evening, said Laura Eimiller with the FBI’s Los Angeles office.
A Department of Water and Power spokesperson confirmed the raid but declined to comment, and the city attorney’s office did not immediately respond to requests for comment Monday.
Alex Comisar with Mayor Eric Garcetti’s office said the mayor was informed of the raids early Monday.
“The mayor believes that any criminal wrongdoing should be investigated and prosecuted,” Comisar said in an email. “His expectation is that any city employee asked to cooperate will do so fully and immediately.”
This is not the first time FBI agents have raided City Hall recently. Last November, agents served warrants at the home and office of City Councilman Jose Huizar.
Several city employees were named in federal search warrants issued in 2017 and 2018 over major development projects that they approved.