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Former LA city lawyer gets probation for aiding extortion

The former head of the city's civil litigation office escaped prison time because the judge was impressed with his cooperation with the state bar.

LOS ANGELES (CN) — A former top litigator with the LA City Attorney's Office was sentenced to three years probation for aiding and abetting the extortion of an outside lawyer who worked for the city in connection with a collusive lawsuit the city had indirectly brought against itself.

Thomas Peters, 57, who until 2019 was the chief of the civil litigation branch, was given nine months of home detention as part of his sentence and ordered to pay a $50,000 fine.

At a hearing Tuesday, U.S. District Judge Stanley Blumenfeld wasn't persuaded by the government's request to send Peters to prison for 18 months, which was already well below the recommended sentence of as long as 51 months by the U.S. Probation Office.

The judge cited Peters' "extraordinary" cooperation with the state bar in sharing the details of what the judge said was "an incredibly sordid affair" whereby the LA City Attorney's Office concocted a strategy to find a wiling plaintiff lawyer to file a class action against the city on behalf of customers of the LA Department of Water and Power to relatively quickly and painlessly resolve the deluge of litigation from the utility's new, error-prone billing system.

"Mr. Peters has a lot to be ashamed of but he he has responded in a way that is to his great credit," Blumenfeld said, referring to Peters' "fulsome cooperation," which is still mostly under seal.

Peters pleaded guilty in 2022 to pressuring Paul Kiesel, a special counsel for the city, to give in to a $1 million extortion demand by Kiesel's recently fired secretary, who had evidence the city was itself behind the class action filed on behalf LADWP ratepayers against the city. Peters had threatened to fire Kiesel if he didn't take care of the extortion threat, even if it meant paying up.

Although Peters wasn't the mastermind behind the sham lawsuit, he had been aware that it was devised at the City Attorney's Office and helped to keep it secret from the court.

"I thought through fear and cowardice that it was somebody else's problem," Peters told the judge at his sentencing hearing. "I have no one to blame but myself."

The city, through Paul Paradis, another outside counsel, had prepared the so-called white-knight lawsuit as it faced a wave of litigation from the botched rollout of its new billing system. According to the prosecutors with U.S. Attorney's Office in LA, the collusive lawsuit was intended as a vehicle to reach a quick and relatively inexpensive settlement of the ratepayers' allegations that would extinguish the claims by rival class actions.

An Ohio lawyer brought in by Paradis to file the collusive lawsuit received a $10 million cut from the $19 million in attorneys fees that were part of the settlement. Paradis, who has pleaded guilty and will be sentenced in June, received a $2.35 million kickback from the Ohio lawyer who's not identified in court filings.

However, Kiesel's former secretary, only identified as Person A in court filings, had stolen documents that belonged to the city from her then-boss, allegedly in anticipation of being terminated by Kiesel and with plans to use the documents as leverage in an employment lawsuit against his firm.

She threatened to give the documents to PwC, the supplier of the glitchy LADWP billing system, which had been sued by LA for hundreds of millions of dollars and which had gotten wind of the sham class action.

"Person A had demanded over a million dollars from Kiesel," according to Peters' plea agreement. She threatened to reveal the documents, embarrassing the city and scuttling a $67 million settlement with ratepayers. "Peters knew that public disclosure of the information that Person A threatened to reveal would be highly damaging to the reputation of the City Attorney's Office."

According to the plea deal, Kiesel considered Person A's demands "extortion" and didn't want to pay. Peters ordered Kiesel to do what it took to "resolve the situation" including, if necessary, paying off his former employee in exchange for the "sensitive documents." Peters threatened to fire Kiesel as the city's special counsel if he refused, and Kiesel ended up paying $800,000 to his former secretary.

Peters was the fourth official to plead guilty to charges arising from the LADWP billing debacle and its aftermath, following former DWP general manager David Wright and David Alexander, a former chief cyber risk officer at the water agency, and Paradis. Peters, who ran the city attorney's civil litigation division for five years between 2014 and 2019, was the first figure from the City Attorney's Office to be implicated in the scandal.

Follow @edpettersson
Categories / Criminal, Government, Law, Regional

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