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LA Mayor Boots DWP Chief The Day After FBI Raids Connected To 2013 Overbilling Scandal

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FBI agents leave the headquarters of the Los Angeles Department of Water and Power after spending several hours inside the building Monday, July 22, 2019. (Reed Saxon/AP)
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UPDATED July 23 at 3:29 p.m.

A day after the FBI served a search warrant on the L.A. Department of Water and Power, Mayor Eric Garcetti showed General Manager David Wright the door.

FBI agents searched the downtown offices of LADWP and City Attorney Mike Feuer on Monday. While spokespeople for both the FBI and U.S. attorney's office declined to describe the subject of the investigation, the city attorney's office acknowledged it is linked to the aftermath of the utility's 2013 overbilling scandal.

Wright had announced his retirement last month, but had been expected to leave in October. On Tuesday, Garcetti said the change in leadership couldn't wait another day.

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Meanwhile, the DWP board has appointed Chief Operating Officer Marty Adams as general manager on an interim basis, recommending the mayor and City Council approve him for the permanent post.

"Marty Adams has the experience and integrity to reassure Angelenos -- the residents who own this utility -- that the agency works for them," Garcetti said in a statement.

The sudden shuffling adds to the churn of leadership at the DWP. The last three general managers lasted three years each in the job before retiring.

Adams has been with the DWP for 35 years. He held his first DWP job at age 19.

"I think everybody who knows me knows this is my life," Adams said.

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Adams' salary, once he's confirmed, will be $419,000 a year. His first order of business will be to manage the fallout of the FBI investigation.

WHAT WE KNOW ABOUT THE INVESTIGATION

Little is known still about the subject of the investigation, but on Monday, city attorney spokesman Rob Wilcox released the following statement:

"As has been reported, the FBI served search warrants for documents on several City employees at both CHE [City Hall East] and DWP offices, including some of our staff members. The warrants served on our staff relate to issues that have arisen over the class action litigation and settlement surrounding the DWP billing system, and the City's lawsuit against PwC. We have and will continue to cooperate fully with the expectation that the investigation will be completed expeditiously."

Thousands of ratepayers were overcharged when a new billing system rolled out through late 2016. The DWP and the city attorney's office later tried to recover millions of dollars from the maker of the billing software. It's those and possibly other actions which are now at the center of a federal investigation.

Jamie Court, who heads up the advocacy group Consumer Watchdog, said Monday he believes the FBI is looking for evidence of conflicts of interest and no-bid contracts.

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The group has long criticized the legal tactics LADWP and the city attorney's office used in response to the botched rollout of the billing system. It said the public was deprived of a higher payout and that government funds were misspent.

In April, Court held a news conference calling on the state attorney general to step in and take the overbilling litigation away from the city attorney's office.

Court said Feuer and his staffers created conflicts of interest when they quickly settled one plaintiff's lawsuit over the DWP overbilling, then worked with an outside attorney to find a different plaintiff whose allegations and settlement would be more favorable to Los Angeles. Feuer may have known about the dual representation, according to court documents cited by the Daily Journal, which has covered the case closely.

Court described the new plaintiff as a "White Knight Plaintiff." A white knight is a plaintiff whose case would lead to a less expensive settlement for DWP ratepayers who were overbilled and would allow the city to target the designer of the billing system, PricewaterhouseCoopers, for massive damages.

Court also pointed to contracts awarded by the DWP without competitive bidding as potential wrongdoing.

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The lawsuit over the overbilling received final approval from the court in July 2017, but Consumer Watchdog opposed it.

The DWP did not respond on Monday to requests for comment about the search warrants. Representatives of PricewaterhouseCoopers also declined to comment.

UPDATES:

3:29 p.m. on 7/23: This article was updated to include the ouster of LADWP's general manager.

5:21 p.m. on 7/22: This article was updated with a statement from city attorney spokesman Rob Wilcox.

This article was originally published on 7/22/19 under the headline "FBI Raids LADWP And City Attorney's Office (It's Linked To That 2013 Overbilling Scandal)"

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