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Saturday, Jul 2, 2022

City Attorney Details Sordid Allegations Against PricewaterhouseCoopers

The L.A. City Attorney’s office asked a judge for permission on Friday to file additional documentation of fraud and bad behavior allegedly perpetrated by PricewaterhouseCoopers (PwC) – the contractor hired to run the Los Angeles Department of Water and Power’s billing system.

The request asks leave to file an amended complaint detailing allegedly fraudulent misconduct by PwC and several senior managers discovered during the ongoing civil lawsuit. The discoveries include revelations concerning prostitutes, hotel stays, two Las Vegas bachelor parties, and thousands of dollars for bottle service billed to the city from July 2011 to May 2013, according to the filings.

L.A. Mayor Eric Garcetti issued a statement promising to look into the matter.

“These allegations against a city contractor, if true, are not only reprehensible, but also a betrayal of our core values and the people’s trust,” Garcetti’s statement reads. “I will do everything in my power to hold the responsible parties accountable for any and all wrongdoing.”

The underlying lawsuit was filed in L.A. Superior Court in March 2015 after the disastrous rollout of the department’s new online billing system. PwC was paid almost $70 million for the project, which the city attorney’s office sued to collect, claiming the firm’s faulty handling of the department’s billing system led to thousands of customers being charged incorrectly, resulting in the loss of hundreds of millions of dollars in revenue. A Los Angeles Superior Court Judge denied a motion to dismiss the case and further discovery conducted by the city revealed the additional allegations of impropriety.

The proposed amended complaint paints a vivid picture of PwC executives spending lavishly on the city’s dime. The PwC partner in charge of implementing the department’s billing system, Trevor LaRoque, allegedly directed a third-party contractor to falsify billing records and expense an array of charges to the city. These bills included a bachelor party trip to Las Vegas for LaRoque, as well as prostitutes.

PwC’s attorney Daniel Thomasch, an New York City-based partner at Gibson, Dunn & Crutcher, denounced the newest allegations as a scare tactic meant to publicly embarrass the consulting firm.

“PwC never submitted falsified time records to LADWP and never received a single dollar from LADWP to which it was not due,” Thomasch said in a statement. “LADWP’s amended complaint is not provoked by concerns over a subcontractor’s billing practices – it is a crude attempt to disparage PwC because PwC has had the audacity to stand up to LADWP’s much-hyped, but baseless, lawsuit.”

The allegations pushed the Board of Water and Power Commissioners to ask the department’s leadership “to pursue all appropriate remedies, up to and including the possibility of debarment,” according to a release issued by the utility. Should PwC receive a debarment, it could be banned from servicing government contracts with the department for up to five years.

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