Los Angeles, California - A former Los Angeles Department of Water and Power (LADWP) executive has agreed to plead guilty to a federal criminal charge for lying to the FBI about a lucrative job offer he secretly solicited and agreed to accept in exchange for providing “guarantees” of additional LADWP contract money to a lawyer who held a bribery-fueled contract with the department, the Justice Department announced Monday.
David F. Alexander, 54, of Arcadia, agreed to plead guilty to one felony charge of making false statements, a crime that carries a statutory maximum sentence of five years in federal prison.
A one-count information charging Alexander and his plea agreement were both filed today in United States District Court. Alexander is expected to make his initial court appearance in the coming weeks.
According to his plea agreement, Alexander was LADWP’s chief information security officer from May 2017 until February 2019, and then he served as the department’s chief cyber risk officer for the next six months.
Beginning in 2017, Alexander developed a professional relationship with Paul O. Paradis, 58, a New York lawyer who represented LADWP in a lawsuit against PricewaterhouseCoopers (PwC), the vendor it blamed for a major billing debacle. In 2017, Paradis created a downtown Los Angeles-based company known as Aventador Utility Solutions LLC, which obtained a three-year, $30 million no-bid contract with LADWP to perform remediation work on the faulty billing system. Aventador also performed certain cybersecurity-related work for LADWP.
In March 2019, Paradis – who simultaneously had represented a ratepayer suing LADWP while he represented the department itself – resigned as special counsel for LADWP’s billing lawsuit and, later that month, purportedly sold Aventador to an employee. Aventador then changed its name to Ardent Cyber Solutions LLC, and Paradis was to have no financial interest in or control over the Aventador or its successor company.
In February 2019, the Southern California Public Power Authority (SCPPA) – a collective of 11 municipal utilities, including LADWP – issued a request for proposal (RFP) for a cybersecurity services contract at the request of LADWP’s then-general manager, David H. Wright. Alexander, the RFP’s primary drafter, was one of four members of the scoring committee for the SCPPA RFP, which was responsible for presenting its scores and recommendations to the SCPPA’s Cybersecurity Working Group.
Alexander knew the SCPPA RFP process was intended to be a competitive, neutral and transparent process. But he manipulated that process with the goal of securing future cybersecurity work for Aventador, and, later, Ardent.
From late February 2019 to April 2019, Alexander used his position as the LADWP chief cyber risk officer and the vice-chair of the SCPPA’s Cyber Security Working Group to influence the composition of the scoring committee to include individuals whom he could persuade to rank Ardent favorably and shared his confidential scores for the SCPPA proposals with other members of the committee to persuade them to score Ardent favorably.
On April 5, 2019, the SCPPA Cybersecurity Working Group informed Ardent that it would recommend Ardent for the SCPPA contract. Later that day, Alexander met with Paradis, who by that time was covertly cooperating with the FBI. During that meeting, Alexander told Paradis that he had used the SCPPA bidding process to get LADWP’s “desired outcome,” that is, a contract with Ardent, but in a manner that falsely appeared “completely transparent.” Alexander also boasted that he was the one who had secured the contract for Ardent, informing Paradis, “that was me driving it.”
On April 18, 2019, the SCPPA Board approved a multi-award contract for Ardent and two other vendors valued at a total of approximately $17 million.
In June and July of 2019, Alexander further manipulated in Ardent’s favor an RFP process from LADWP for the award of a three-year, $82.5 million cybersecurity consulting services contract. Alexander was one of the RFP drafters and he solicited Paradis’s edits for the drafts to enhance Ardent’s ability to gain the contract over the dozen-plus other vendors.
On July 9, 2019, Paradis told Alexander, via text message, that after he submitted the Ardent proposal, “it will be up to you to ‘manage’ the evaluators the same way you did for the SCPAA [sic] process so that we get the correct result... [winking face emoji].” Alexander responded via text message, “I know my job [crying-laughing emoji].”
During a meeting in mid-July 2019, Alexander told Paradis that, in violation of his obligation to keep his scores strictly confidential, he provided his score sheet to two other evaluators to influence them to give Ardent a high score. At this lunch meeting, Alexander informed Paradis that he was interested in working at Ardent as its business manager.
By the end of that week, Alexander solicited and agreed to accept from Paradis a future job as the chief administrative officer of Ardent, a to-be-determined executive-level annual salary, a sign-on bonus, and recompense of $60,000 per year for 30 years for his early retirement penalty from LADWP. Alexander did so intending to be influenced and rewarded in connection with his ongoing assistance in securing the award of a multimillion-dollar LADWP contract to Ardent and use of his position to guarantee more than $10 million in future task orders for Ardent under the anticipated LADWP contract.
Alexander also asked for a secret Ardent email address and laptop computer to communicate with Paradis and to secretly perform work for Ardent while he was employed at LADWP.
On July 22, 2019, the FBI executed search warrants at LADWP as part of its ongoing investigation into the department and the Los Angeles City Attorney’s Office. Two days later during a voluntary interview, Alexander lied to the FBI about his conversations and agreements with Paradis. On July 26, 2019, Alexander met again with the FBI and again lied, falsely stating that he had declined any employment opportunity with Ardent and that he had never provided any guarantees to Ardent or to Paradis.
Paradis has agreed to plead guilty to a bribery charge for accepting an illicit kickback of nearly $2.2 million for getting another attorney to purportedly represent his ratepayer client in a collusive lawsuit against LADWP related to the billing debacle. Paradis is cooperating with the ongoing investigation into the collusive litigation and corruption at LADWP. Paradis is expected to make his initial court appearance on December 16.
Wright, LADWP’s former general manager, has agreed to plead guilty to a federal criminal charge for accepting bribes from Paradis in exchange for his official action to secure a three-year, $30 million no-bid LADWP contract for Aventador. His change-of-plea hearing is expected to occur in the coming weeks.
Assistant United States Attorneys Melissa Mills, Jamari Buxton and Susan Har of the Public Corruption and Civil Rights Section are prosecuting this case.