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LOS ANGELES (CNS) - A new disciplinary charge has been filed by the State Bar of California against a Tarzana attorney linked to litigation related to the botched rollout of a Department of Water and Power billing system in 2013, it was announced Friday.
Michael J. Libman was originally the attorney for a class of DWP ratepayers in a lawsuit against the city of Los Angeles related to the scandal. The suit resulted in a settlement in which Libman received $1.65 million in attorney fees, according to the State Bar.
Once conflict-of-interest issues were discovered in the representation of the city and DWP ratepayers, the judge overseeing the litigation appointed a new attorney to take over as class counsel. That attorney, Brian Kabateck, was tasked with evaluating the prior settlement and assessing its fairness, officials said.
The State Bar alleges Libman plotted to hack the email and phone accounts of both the judge overseeing the DWP litigation and Kabateck.
"As a result of his alleged actions in connection with the DWP litigation, Mr. Libman is already facing serious disciplinary charges," George Cardona, the chief trial counsel for the State Bar, said in a statement. "The additional conduct alleged in this new charge further evidences a repeated disregard of the ethical standards that govern attorney conduct."
The newly filed disciplinary notice contends that after the appointment of Kabateck, Libman plotted to hire two Israeli hackers to hack the personal email and phone accounts of Kabateck and Judge Elihu Berle, based on his unfounded hope that he would uncover something to demonstrate that they were acting corruptly in their handling of the DWP litigation, according to the State Bar.
The State Bar alleges that Libman plotted the hacking in a series of meetings and phone calls with New York attorney Paul Paradis, who was also involved in DWP litigation. Libman was not aware, however, that at the time of their conversations, Paradis was working as a confidential informant for the FBI, and, at the law enforcement agency's direction, recorded all of his phone calls and meetings with Libman.
Libman already faces seven misconduct charges in a notice of disciplinary charges filed by the State Bar in March. Those charges allege that Libman used his client, Los Angeles ratepayer Antwon Jones, as an unknowing pawn to file a class action lawsuit in 2015 against Los Angeles that would be settled on terms favorable to the city.
Libman allegedly signed his name to legal filings he did not create and knew were written by Paradis or Beverly Hills attorney Paul Kiesel, both of whom were representing the city as outside counsel. Libman was charged in the earlier notice of disciplinary charges with conflict-of-interest violations, lying about previous work under oath, and failing to obey court orders.
The scandal stems from 2013, when the DWP implemented a billing system it had procured from outside vendor PricewaterhouseCoopers. After the utility rolled out the new system, hundreds of thousands of ratepayers received massively inflated and otherwise inaccurate bills. Soon afterward, the city and DWP faced multiple class-action lawsuits filed by ratepayers alleging harm resulting from the faulty system.
In December 2014, the City Attorney's Office retained Paradis as special counsel to represent the city in a lawsuit against PwC. When Paradis began representing the city in that litigation, the City Attorney's Office was aware that he was simultaneously representing Jones, who had a claim against the DWP arising from billing overcharges. Jones was unaware that his lawyer, Paradis -- who was playing both sides of the fence -- also represented his intended adversary.
Shortly afterward, Paradis recruited an Ohio lawyer to nominally represent Jones in the collusive lawsuit with the understanding that Paradis would do virtually all the work. In exchange, and unknown to the city, Paradis and the Ohio lawyer agreed that Paradis would receive 20% of the Ohio lawyer's fees in the Jones v. City case as a secret kickback.
In July 2017, the judge issued final approval of the $67 million settlement agreed to by the parties in Jones v. City, including roughly $19 million in plaintiffs' attorney fees, of which the Ohio lawyer and his law firm obtained $10.3 million. The Ohio lawyer then secretly paid $2.17 million to Paradis, disguising the kickback as a real estate investment, and funneling it through shell companies that Paradis and the Ohio lawyer had set up exclusively for the purpose of transmitting and concealing the illicit payment, prosecutors said.
David Wright, the former general manager of the DWP, was sentenced in 2022 to six years in federal prison for bribery in connection with the case. Thomas Peters, a former senior official at the City Attorney's Office, was sentenced in May 2023 to nine months of home detention for taking part in an extortion scheme tied to the billing debacle. David Alexander, the utility's former chief information security officer and its former chief cyber risk officer, was sentenced in 2022 to 48 months in federal prison for lying to the FBI about a secret business relationship with Paradis. Paradis was sentenced last year to nearly three years in prison for accepting the almost $2.2 million kickback.
According to government documents cited by Consumer Watchdog, following the original collusive litigation settlement, an employee of Kiesel's -- who had been retained by then-City Attorney Mike Feuer to represent the city -- threatened to expose the city's misconduct unless she was paid off, and unnamed "senior members of the City Attorney's Office" directed the extortion payment to be made in the amount of $800,000.
The DWP has estimated that the billing scandal cost the city more than $120 million.