Cloning Dan Carvin

Next month, City Controller Laura Chick plans to begin an audit of law firms and officials who monitor them. With the city spending $29.6 million on outside legal help last year — double the costs of four years ago — Chick and several City Council members also want to set up a unit of investigators to help root out fraud and waste of taxpayer money.

Former investigator Dan Carvin was hired by Chick in 2002 to do just that. But he was fired after three months for being overzealous, and is suing the city for wrongful termination. So now City Attorney Rocky Delgadillo faces the odd predicament of spending hundreds of thousands of taxpayer dollars fighting against "quibbling" Dan Carvin, in a case that is emblematic of a problem Chick now says she is ready to tackle.

Buried under tips from whistleblowers, Chick hired Carvin in March 2002 to take on fraud, waste and inefficiency by city employees and contractors, including lawyers. An investigator with 35 years of experience, previously with the MTA’s Office of Inspector General, Carvin knew of a lawsuit related to the Hyperion Sewage Treatment Plant, in which an attorney billed the city for a year to gain access to privileged documents, but did not review them. Carvin disclosed concerns about possible wastefulness and received authorization from his supervisors to meet with the assistant city attorneys overseeing the case, Dillingham—Ray Wilson v. City of Los Angeles, which has generated more than $6 million in legal fees for several law firms specializing in public-utility litigation.

After soliciting input on Carvin from the firms she hired, Assistant City Attorney Cynthia McCall, along with Assistant City Attorneys Robert Cramer and Michael Claessens, met with Carvin on May 8, 2002. McCall then communicated displeasure about the meeting to Deputy City Controller Patricia Canfield. Two weeks later, Chick fired Carvin, claiming he had been too aggressive and acted without her authorization.

Lately, what looks like a case of shoot the messenger keeps getting worse for Delgadillo, who allowed McCall, Claessens and Cramer, his top litigators, to oversee the matter, despite their direct involvement. Private lawyers have tried to discredit Carvin, but have been successful only in forestalling a trial date until March 22. Earlier this month, an appeals court rejected a petition by Jackson & Lewis attorney Edward Zappia, sending the case back to Los Angeles Judge Robert Hess, who suggested that it might be time for the city to put some money on the table. Carvin, 63, has been out of work for almost three years. A state law may allow him to double his lost wages because he was pursuing false claims on the city’s behalf. The alternative for the city is to put Chick and McCall on the witness stand and see what a jury thinks.

McCall is heading toward retirement, sources say. In 1997, the City Attorney’s Office was forced to defend another lawsuit, in which McCall distributed memos alleging a city contractor was making death threats. She no longer is overseeing the Carvin matter. Chick gave a videotaped deposition recently in which she stumbled over the difference between an auditor and an investigator. She balked when asked about contributions to her campaign by a former partner of Brown, Winfield & Canzoneri, which has made more than $4 million off the Hyperion Sewage Plant lawsuit.

After two years of battling Carvin, Chick now is asking for funding for a whole team of Dan Carvins. Council Members Wendy Greuel, Jack Weiss and Antonio Villaraigosa, a candidate for mayor, introduced a measure on December 1 to create an investigative unit in Chick’s office. "These reforms will give the controller the tools she needs to identify waste, fraud, and institute reforms to protect taxpayers," Villaraigosa said. A spokesperson for Greuel says the investigative unit should beef up Chick’s ability to act on fraud and abuse leads without predetermining the scope of her inquiry, as an audit requires. "An investigative unit would allow her to act immediately," says Janelle Erickson, who was not familiar with the Carvin case. The measure is under review by the Audits and Government Efficiency Committee, which is chaired by Greuel. If it moves to a vote by the City Council, Erickson says, the City Attorney’s Office will review whether the measure requires amendments to the City Charter.

The call for an investigative unit stems from the public-relations scandal at the Department of Water and Power, and perceptions of impropriety at the Airport and Harbor departments. Despite political pressure from state Senator Richard Alarcon, also a candidate for mayor, Chick has taken her time in deciding to audit the glaring problem of attorney over-billing. A spokesman for Chick says she will begin auditing law firms and their billing practices, and the City Attorney’s Office’s oversight of them, in January.

In her deposition, Chick said that Carvin was too quick to inquire about attorney billings in a seven-year legal quagmire that has cost the city more than $6 million. Carvin’s attorney, Louis Cohen, has introduced evidence to show that in responding to McCall’s requests for input on Carvin, attorneys at Brown Winfield ran afoul of a citywide policy intended to prevent what is known as block billing, the listing of two tasks under a single time entry. Carvin is just one seasoned investigator who will be watching to see what conclusions Chick draws from the legal billings on the massive Hyperion litigation, if any. Meantime, taxpayers may wonder why the city has spent more than $300,000 fighting a lawsuit that drags on, as Carvin’s damages double by the day.

A spokesperson for Delgadillo gives two possible explanations. "The city is the client, so they make the decision on whether to settle a case," the spokesperson says. "Or frequently legal arguments that seem like losers are necessary to prevent bad precedents."

The City Council does not appear to have reviewed the matter or given any direction to Delgadillo’s office. In fact, systematic review of outside legal billings is among the reforms being debated in the City Council. And the city’s legal position fails to suggest that lofty principles or troublesome precedents are at stake. Attorney Edward Zappia accuses Carvin of "quibbling" over being terminated, but his arguments have been procedural and unconvincing to the trial and appellate courts.

When Chick finally starts digging in January, and when she gets her team of investigators, the Carvin case, and the lawsuit Carvin wanted to investigate in the first place, might be good places to start.


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