cast out
cast out
after being a fixer inside various los angeles city departments, and helping the fbi and prosecutors send officials to jail, paul paradis is all alone.
In 2008, Paul Paradis helped secure $2.4 billion for investors defrauded by Enron, the sketchy accounting firm that turned out to be one of the biggest white collar crime syndicates ever. As co-lead counsel, Paradis managed 12 law firms who clawed back money from big banks doing business with the Houston-based company. Things were going well for the New York lawyer. An apparent finance whiz who once considered a career on Wall Street, Paradis decided instead to become a plaintiff’s lawyer “because he wanted to protect those incapable of protecting themselves.”
This week Paradis will be sentenced for his participation in three bribery-related schemes involving Los Angeles city officials, including arranging for a puppet attorney to sue Paradis’ own client, the city of LA, as part of an insane litigation strategy to clean up the incompetence of city leaders over botched utility billing. For that magic trick, he got a $2.1 million kickback. His bribery conviction carries a 10-year maximum sentence.
“I am deeply ashamed of my actions because they were completely reprehensible and went against everything that I have ever stood for,” wrote Paradis in a letter to U.S. District Judge Stanley Blumenfeld, who will sentence him on Tuesday. “My actions ruined my life, and I have literally lost everything that I have ever worked for because of my choice to engage in this wrongful conduct.”
In addition, Paradis, 60, is millions in debt, disbarred, and says he has a brain tumor. He went from owning an oceanfront Santa Monica property and a home in Rancho Mirage to living in an apartment in Scottsdale, Arizona. Paradis declined comment for this story, which is based on civil, bankruptcy and criminal court documents. How did he wind up in LA? And who enabled him?
From our guy to fall guy
Repeat after me: First they celebrate you, then they hate you, then they forget you.
That pretty much sums up the trajectory of Paradis’ life over the past eight years. In LA, things changed. He went from solving a big problem for city Democrats by drafting the collusive lawsuit and settlement over wrong Los Angeles Department of Water and Power (LADWP) bills, to being cast out by his former boss only after they got caught.
In 2014, Paradis and Paul Kiesel, a well-known local plaintiff’s lawyer, were contemplating who to sue over the malfunction of DWP’s new billing system. Thousands of people were getting incorrect bills. Since a former partner of Kiesel’s, Thom Peters, was the head of the civil litigation at the city attorney’s office, they landed a meeting with city attorney officials. They exercised various legal theories. Should they sue the utility? Or the evil corporation that consulted on the billing system’s new lawsuit, Pricewaterhouse Coopers (PWC)? Eventually the answer was: hey let’s sue ourselves and PWC.
Paradis has admitted to doing some clever, bold, and dumb things. By manufacturing the Jones v. City of LA lawsuit, and installing a puppet attorney for wrongly billed LADWP ratepayers, it allowed the city to run interference on a bunch of other lawsuits it was facing, which were wiped out as a result of its controlled Jones settlement. Paradis lawyered his client so hard that his client didn’t even know Paradis was representing the city at the same time he was representing the client (to be fair, Paradis never told him or the court). The settlement was executed, and leaders blamed Pricewaterhouse Coopers. As a result, Paradis was the man, dining with people in Mayor Eric Garcetti’s orbit and officials at DWP. He had his own office inside DWP. These people were practically his friends.
But when news hit in March 2019 that the city represented both sides of the lawsuit and a Paradis-controlled cyber security company scored millions in no-bid contracts, Paradis was dead to them. Now officials at the city attorney’s office, the mayor’s office and LADWP had their own reputations to save. The city attorney’s office said Paradis went “rogue,” without their knowledge, that “No one in the city attorney’s office had any involvement, or awareness, of any such plan.”
Paradis went straight to the FBI and U.S. Attorney’s Office. He confessed to his culpability and maintained the offices of the mayor, city attorney, and LADWP authorized much of what he did. He alleged widespread corruption within city departments. The FBI and prosecutors were skeptical, so he offered to wear a wire. For the next 15 months, with the federal government’s OK, Paradis met with and covertly recorded a number of DWP officials, as well as a close lobbyist friend to Garcetti. Paradis was there in the desert when about 10 FBI agents with guns drawn stormed into the home of then LADWP General Manager David Wright. He recorded former DWP IT official David Alexander asking for a job in exchange for pushing contracts for Paradis’ cyber security company. Paradis ended up doing 2,000 hours of work for the feds, providing the kompromat that led to the prosecution of Wright, Alexander and Peters, the former city attorney official.
This only seemed to piss off the city even more. It hit him with a $30 million claim for the kickback and money paid to Paradis and his former cyber security companies Aventador and Ardent. It’s a strategy that City Attorney Hydee Feldstein Soto is continuing, despite some of the conduct being at the direction of the FBI. And the U.S. Attorney’s Office has not provided him with the certification to help him fend off the claim. Private lawyers for LADWP are also seeking $30 million from Paradis as a part of victim restitution in his criminal case.
“The Department believes it is necessary, and just, and appropriate to sentence Paradis to the longest possible period of incarceration in light of the havoc he wreaked at LADWP for over four years, the tens of millions of dollars he stole from Los Angeles ratepayers, and his patent lack of real remorse for the full scope of the harm he caused in Los Angeles,” wrote a Paul Hastings attorney.
Paradis says the city has it backwards. It is not a victim, but a beneficiary to the fraud, because it pushed bids for Paradis’ cyber security companies, as well as knew about, and did nothing to stop the filing of the collusive lawsuit. Paradis responded by saying he “worked closely with numerous City Attorney personnel, LADWP personnel and outside counsel in executing the collusive litigation scheme.” According to Paradis, money from the contracts also went toward paying employees and carrying out the contract work.
Lawyers for DWP said Paradis “wove a false narrative that LADWP’s billing system and IT issues could not be resolved without his costly management.” As evidence that DWP did have a real cyber security issue, Paradis pointed out that after canceling the Aventador and Ardent contracts, DWP awarded a total of $157 million in cyber security contracts to fix the issues.
Even after stories by me and the LA Times about the cyber contracts, the city continued to do business with Aventador under a different name, Ardent. Paradis said LADWP officials knew it had cyber security issues and liked Paradis’ company. On April 23, 2019, over a month after the news of the scandal broke, then-LADWP board president Mel Levine publicly stated, “there were never any questions raised about the capabilities of the employees of [Aventador] ... they are highly regarded cybersecurity experts and everything we know about them, which is a lot, is that they are highly qualified.”
A day four years in the making
Unlike other defendants in the case, it looks like Paradis will not be holding back on his sentencing day. In his letter to the judge he said the collusive lawsuit was “authorized” and “directed" by “City Attorney official,” as the Justice Department said so itself in court filings. He said City Attorney Mike Feuer’s deputy, Jim Clark, initiated the collusive lawsuit. Clark’s job was to monitor cases at the city attorney’s office and report back to Feuer.
“With Clark’s authorization and direction, Mr. Paradis and Kiesel created the collusive “white knight” suit by hand-picking friendly plaintiff’s lawyers,” wrote Paradis’ criminal defense lawyers at Winston & Strawn.
Paradis also said that Feuer was in the room when “senior members" of the city attorney’s office, as the Justice Department describes it, ordered a hush money payment to bury information revealing the DWP litigation collusion during a Dec. 1, 2017 meeting Feuer was calendared for. Feuer said he doesn’t remember such meeting. A text message from Peters to Paradis following the meeting says, “Mike is not firing anyone at this point. But he is far from happy about the prospect of a sideshow “
Prosecutors, acting more like defense attorneys, also quote from that text message, but leave “Mike” out. They won’t identify the architect of the collusion or who authorized the extortion payment. Paradis has, but it remains to be seen what kind of receipts he will be able to show the judge that the public doesn’t know about. Many parts of Paradis’ papers are redacted as to his cooperation with the criminal investigation and the State Bar of California.
The criticism of Paradis has never really gone beyond saying that Paradis is a convicted felon. It’s an easy way to shutdown any discussion. But throughout history, criminals have been some of the most valuable sources of information. Federal prosecutors have called Paradis’ cooperation “unprecedented” and “extraordinary.”
David Peterson, a longtime Los Angeles area attorney, said his intrigue with the LADWP litigation scandal led to him having dinner with Paradis. Peterson essentially became convinced that Paradis was being used by city leaders as a scapegoat. And that without him, the corruption within the city attorney’s office and at DWP would never have been discovered, nor would LADWP’s failed compliance with state and federal cyber security requirements.
“He needs to be allowed and even encouraged to continue his involvement and cooperation in getting out the true story about this disgraceful failure of two of our important governmental entities,” wrote Peterson in his letter to the judge in support of Paradis.
Paradis’ lawyers argue Paradis isn’t getting the sentencing credit he deserves for the amount of cooperation with prosecutors and the State Bar. His lawyers said Peters got the same amount of credit for State Bar cooperation despite Paradis putting in more hours, and that Wright and Alexander got credit for things like depression, while Paradis got virtually none.
“While defendant’s cooperation was no doubt more extensive, involved, and ultimately more important than Peters’ cooperation, both in terms of the information defendant provided and the results it produced, it by no means warrants the non-custodial sentence that defendant seeks,” argued prosecutors, who want him in prison for 18 months.
They said his conduct was worse than the other three defendants “combined.” Paradis argued that the government’s numbers don’t reflect that. Paradis’ calculated offense level is 36, while the total level for Alexander, Peters and Wright is at 91, argued Paradis.
“Such an argument reflects that the government’s ultimate sentencing recommendation included inappropriate considerations and is both erroneously and unjustly inflated,” argued Paradis’ lawyers.
His lawyers also called out how, “Many wrongdoers and potential co-conspirators were not even charged and face no criminal penalties,” and mentioned former LADWP commissioner Bill Funderburk, and Kiesel, Paradis’ former co-counsel. Prosecutors said Paradis bribed an LADWP board member by performing legal work for the board member in exchange for the board member’s vote for the $30 million Aventador contract. Former LADWP board member Bill Funderburk denied taking the bribe. Prosecutors called Kiesel “a victim” regarding his role in being ordered to pay the hush money payment or risk getting fired by the city attorney’s office.
Send some people to jail, and from afar it looks like justice was served. But Paradis is just a piece of it. This saga has now become about not who has been brought to justice, but who hasn’t. It’s the same old story of a privileged professional class avoiding consequences. Federal prosecutors have compared Paradis’ corruption to a virus. If “corruption is contagious,” as the argue, then who was patient zero? And why are prosecutors not telling us? Right now it’s looking like we’ll never know.