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Los Angeles Department of Water and Power headquarters. | Photo by Russell Mondy/Flickr (CC BY-NC 2.0)
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A second former Los Angeles Department of Water and Power executive pleaded guilty Tuesday to a federal criminal charge in the probe of the city’s handling of the botched launch of a DWP billing system.
David Alexander, 54, of Arcadia, entered his plea in downtown Los Angeles to a felony charge of making false statements. Alexander was the utility’s chief information security officer from May 2017 until February 2019, then served as the department’s chief cyber risk officer for the next six months.
He is expected to be sentenced on June 7.
Last month, a former LADWP general manager, David Wright, 62, of Riverside, pleaded guilty to a federal bribery charge in the case.
Paul Paradis, 58, a New York attorney hired by the city, also pleaded guilty in January to a bribery count in the secret scheme to settle a major lawsuit brought against the utility on terms favorable to the city.
Alexander knew Paradis, who was representing the LADWP in a lawsuit against the vendor the utility blamed for the billing debacle, which led to many customers receiving wildly inflated bills. In 2017, Paradis created a downtown Los Angeles-based company known as Aventador Utility Solutions, which obtained a three-year, $30 million no-bid contract with the LADWP to overhaul the faulty billing system. Aventador also performed certain cybersecurity-related work for the LADWP.
In March 2019, Paradis — who simultaneously represented a ratepayer suing the LADWP and the department itself — resigned as special counsel for the utility’s billing lawsuit and, later that month, allegedly sold Aventador to an employee, prosecutors said. Aventador was changed to Ardent Cyber Solutions, and Paradis was to have no financial interest in or control over Aventador or its successor company.
A month earlier, the Southern California Public Power Authority — a collective of 11 municipal utilities, including the LADWP — issued a request for bids, written primarily by Alexander, for a cybersecurity services contract at the behest of Wright, the LADWP’s then-general manager. Alexander was also one of four members of the scoring committee who would review the bidders, and manipulated the process to favor Aventador, and later Ardent, prosecutors said.
After the SCPPA’s cybersecurity group informed Ardent that it would recommend the company for the SCPPA contract, Alexander met with Paradis, who by that time was cooperating with the FBI, telling the lawyer he had used the bidding process to get the “desired outcome,” according to prosecutors.
Alexander boasted, “that was me driving it,” according to court documents.
The SCPPA board approved a contract for Ardent and two other vendors worth a total of $17 million. In June and July of 2019, Alexander manipulated another $82.5 million contract to Ardent, prosecutors said.
Alexander later solicited from Paradis a future job as the chief administrative officer of Ardent, along with an executive-level salary, a signing bonus, and compensation of $60,000 per year for 30 years to cover his early retirement penalty from the utility, prosecutors said.
On July 22, 2019, the FBI served search warrants at the LADWP, and two days later, Alexander lied to the FBI about his conversations and agreements with Paradis. Days later, Alexander lied again, falsely stating that he had turned down a job offer with Ardent and had never provided any guarantees to Ardent or Paradis.
Paradis is expected to be sentenced in July on the bribery charge for accepting an illicit kickback of nearly $2.2 million in exchange for getting another attorney to purportedly represent his ratepayer client in a collusive lawsuit against the LADWP related to the billing debacle. Paradis is cooperating with the ongoing investigation into corruption at the utility.
Wright faces sentencing in April on a federal criminal charge for accepting bribes from Paradis in exchange for his official action to secure the $30 million no-bid contract for Aventador.
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