Thomas H. Peters, 55, the former head of the Los Angeles City Attorney's Civil Litigation Branch from February 2014 to March 2019, will plead guilty to a federal charge for threatening to fire a plaintiffs' attorney from a lucrative special counsel job with the city unless the attorney paid an extortion demand from a former employee who was threatening to expose the city's collusive litigation over its faulty water-and-power billing system. Peters will plead guilty to aiding and abetting extortion, a crime that carries a statutory maximum sentence of 20 years in federal prison.
By December 2014, the city and LADWP were facing multiple class-action lawsuits over the flawed rollout of a new billing system during the previous year. In December 2014, the City Attorney's Office hired Paul O. Paradis, 58, a New York-based lawyer, and Paul R. Kiesel, a Beverly Hills plaintiffs' attorney, as special counsel to represent the city in an anticipated lawsuit against PricewaterhouseCoopers (PwC), the vendor the city blamed for the billing system debacle in which thousands of ratepayers were massively overcharged, while others were significantly undercharged, resulting in financial losses to the city and LADWP.
The city's lawsuit, filed in March 2015, alleged that PwC caused hundreds of millions of dollars in damages due to the faulty billing system. The city agreed to pay Paradis and Kiesel 19.9 percent of any recovery in the litigation, meaning the two lawyers would gain millions of dollars in attorneys' fees from the case. Around this time, Paradis simultaneously represented Antwon Jones, an LADWP ratepayer suing the city and the department for billing overcharges he incurred from the billing system debacle. By January 2015, City Attorney's Office personnel knew that Paradis represented the city and Jones.
In April 2015, an Ohio attorney whom Paradis had enlisted to purportedly represent Jones filed a Paradis-drafted lawsuit against the city and LADWP. Paradis secretly agreed to accept and did accept an illegal kickback of $2.2 million for steering the lawsuit to the Ohio attorney. Paradis will plead guilty to a bribery charge for this offense.
By spring 2015, a senior City Attorney's Office Official told Peters that Jones v. City was a friendly lawsuit intended to help the city settle globally and on its desired terms all claims related to the LADWP billing debacle, that Paradis referred the case to the Ohio attorney for that purpose, and that the senior City Attorney official had directed and authorized this strategy before the complaint was filed. Despite objections in an internal email in August 2015 from the city's class action counsel that a proposed $13 million attorney fee award was unjustifiably high because, in part, the Ohio attorney had done “little demonstrative work to advance the interests of the class,” the city agreed to the fee proposal. In July 2017, a Los Angeles Superior Court judge approved the $67 million settlement agreed to by the parties in Jones v. City, including $19 million in plaintiffs' attorney fees.
Under the plea agreement, on November 16, 2017, Peters learned from Paradis that a former long-time employee of Kiesel's, “Person A” had stolen or improperly retained from Kiesel's law firm certain documents that would show the city's undisclosed collusion with the Ohio attorney in the Jones v. City lawsuit. Person A had threatened to reveal the documents if Kiesel did not pay her more than $1 million to return them and threatened to appear at the next hearing in the City v. PwC case – scheduled for December 4, 2017 – in which the court was set to hear arguments on PwC's motion to compel the city to produce the Jones v. PwC draft complaint. Peters knew that this document would lead PwC to discover the unknown collusive origins of the Jones v. City case and damage the city's litigation and the reputation of the City Attorney's Office.
On November 17, 2017, Peters met with Kiesel, Paradis and Paradis' law partner, to discuss Person A's threats. Kiesel complained that Person A's threats and demands constituted extortion, and he did not want to pay her. Peters ordered Kiesel to pay Person A's monetary demands or be fired as the city's special counsel in the PwC litigation. Peters did not have the direct authority to fire Kiesel. By the time of the November 17, 2017 meeting, Kiesel and his law firm had invested thousands of hours of uncompensated labor into City v. PwC. Additionally, Kiesel paid more than $30,000 in non-labor costs on behalf of the city for the PwC litigation.
On December 1, 2017, Peters met with other senior City Attorney's Office members and updated them on the status of Person A's threats. The update included that Kiesel had unsuccessfully attempted to negotiate with Person A at LADWP headquarters and that Person A had threatened to appear at the City v. PwC hearing and reveal the documents showing the city's collusion. Peters conveyed that Kiesel had described Person A's threats as “extortion.” Peters was directed to take care of the situation, and he agreed to do so.
After the December 1, 2017 meeting, Peters sent a text message to Paradis advising that senior leadership at the City Attorney's Office was “not firing anyone at this point” – meaning that a decision to seek termination of the special counsel contract had not been made at the meeting – but warning that others were concerned about “the prospect of a sideshow” if Person A made good on her threat to appear in court and reveal the documents showing the city's collusion.
On December 4, 2017, Peters, Kiesel, Paradis, and Paradis' law partner, along with a friend of Kiesel's who knew Person A, attended the hearing in City v. PwC. Person A appeared at the December 4 hearing and attempted to give documents to a court employee, who advised Person A that the court would not accept records from a non-party. Person A approached the lead counsel for PwC with the documents, stating that she had information that could help PwC's case. PwC's counsel exchanged business cards with Person A and asked her to call him.
At Kiesel's direction, Kiesel's friend asked Person A to reinitiate negotiations of her monetary demands to Kiesel. After the hearing, Peters, Kiesel, Paradis, and Paradis' law partner met in Peters' office, where Peters reiterated that Kiesel needed to pay Person A's monetary demands to obtain the return of the documents, or he would be fired, which would mean significant financial losses to Kiesel and his law firm. On December 4, 2017, Person A, Kiesel, and Kiesel's friend met at a restaurant and further discussed Person A's demands. Kiesel agreed to pay $800,000 to Person A so she would not release the documents.
At 9:15 p.m. on December 4, 2017, via text message, Kiesel told Peters of the agreement reached with Person A, including that Kiesel would pay Person A $800,000 and that Person A would return the documents to Kiesel. Peters replied to Kiesel later that night, stating, “Good job,” and directing Kiesel to ensure a strong confidentiality agreement with Person A regarding the $800,000 payment and the documents.
In May 2019, after Peters had resigned from the City Attorney's Office, he received an inquiry from that office asking what he recalled about the 2017 payment to Person A. Understanding that the City Attorney's Office was investigating if Peters would, if asked by someone outside the city, reveal the extortion or the underlying collusion, Peters falsely replied that the matter had only involved an employment dispute. Peters conveyed that he would continue to conceal the extortion and collusion by intentionally omitting from his reply that the “settlement” had involved Kiesel paying Person A $800,000 in extortion money to hide the city's collusion, that Peters had directed Kiesel to satisfy Person A's monetary demands or be fired as special counsel, and that Peters had discussed the situation with and received direction from senior members of the City Attorney's Office.
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