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PG&E, Gavin Newsom, and the French Laundry connection | FIRE - POWER - MONEY Investigation

ABC10 investigation: Gov. Newsom brokered a bankruptcy plan that prioritized PG&E, French Laundry friend’s clients over PG&E fire victims.

SACRAMENTO, Calif. — A plate of dinner at Napa County’s award-winning French Laundry restaurant starts at $350, but dining there during the pandemic cost Gov. Gavin Newsom quite a bit more than that.

It was an unforced political error that immediately put Newsom on defense from the appearance of hypocrisy for going against his own COVID safety advice to Californians.

Newsom apologized profusely for the dinner. He was only human, he said. And it was a birthday party for “a friend that I’ve known for almost 20 years.”

The friend was lobbyist Jason Kinney, who shared more than a meal with the governor.

The two men shared an interest in PG&E.

Newsom had inserted himself as “broker” of PG&E’s plan to exit bankruptcy. Bankruptcy documents show the company offered to support the plan only if its terms were “acceptable to the Governor’s Office.”

IN-DEPTH COVERAGE: FIRE - POWER - MONEY

Kinney ran a lobbying shop, Axiom Advisors, which landed a major client in PG&E’s bankruptcy: a committee of companies to whom PG&E owed money.

They included obscure outfits like The Davey Tree Expert Company, but also major interests like Deutsche Bank, the IBEW 1245 union, and NextEra Energy Inc.

Axiom advisors said it “met periodically with the Governor’s office” in a $400,000 fee statement filed in bankruptcy court. Kinney was listed as performing 31.5 hours of billable work.

The plan delivered for Kinney’s clients. They got cash “paid in full” plus interest.

 Axiom Advisors did not reply to a written request for comment on this story.

The deal was done four months before he and the governor sat down for their now-infamous dinner.

‘STEPPING ON US TO GET THERE’

In the town of Paradise, Lawrence Graham prepares his meals inside of a small trailer he’s called home since PG&E committed the felonies that burned his house down.

“All they care about is their bottom line,” Graham said. “I understand business is business, but this is our lives they're messing with.”

Like tens of thousands of other people displaced by the Camp Fire, Graham is a crime victim. PG&E owes them restitution for the harm it caused.

The vast majority of people who lived in Paradise during the Camp Fire have since moved away. The people camping there are a minority.

But if they don’t start building by the end of September, the town government threatens to evict them from their own land.

RELATED: Paradise residents could be kicked off their own property if they don’t have plans to rebuild by Sept. 30 | ABC10 Originals

Even though PG&E exited bankruptcy more than a year ago, the restitution money hasn’t come.

That’s because the bankruptcy plan approved by Gov. Newsom didn’t pay PG&E’s victims cash in full.

PG&E’s bankruptcy rolled their restitution into a trust fund to settle civil damages for more than a dozen other PG&E wildfires, some of whom have been waiting for payment since 2015.

In Paradise, fire victims lost not only their homes and livelihoods: They lost their community. Paradise will take years to be reborn.

“They're helping each other get ahead and stepping on us to get there,” Graham said.

“I don't like living like this,” said David Breed, who’s still camping in an RV where his house once stood. “I'm a big guy and I live in a tiny RV. It's claustrophobic.”

David Breed lost his job after the fire, but found work removing burned trees. The insurance from his mobile home didn’t pay enough to construct a stick-built home and mobile home parks have yet to be re-established.

If he at least had an idea of how much money to expect, David could at least work out a plan for his future life in Paradise, but as of this summer no one had even given him an estimate.

“I would have been happier with a full cash payout from PG&E,” Breed said.

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‘WE’LL MAKE THEM OWNERS AND THEN WE’LL MAKE THEM PAY THEMSELVES’

At the beginning of 2021 wildfire season in June, thousands of PG&E fire victims watched the retired judge in charge of paying them deliver a stern message on their phone and computer screens:

“It’s important for you to want PG&E to do well,” the voice told them.

The message came from retired state appellate court judge John Trotter, who earns $1,500 an hour from the victims’ settlement to manage their money.

It’s a shocking thing to tell 70,000 people whose homes and loved ones PG&E incinerated.

He said it for a reason: “half” of the victims’ $13.5 billion settlement was supposed to come from holding and selling shares of PG&E stock.

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Trotter declined to be interviewed for this series, but has cited federal tax concerns as a reason for delays in selling PG&E stock shares to obtain cash for victim payments.

Asked whether fire victims will ever be made whole in an interview that aired in August on public radio station KQED (@ 8min) he cut to the point: “They never will.”

The Fire Victim Trust run by Trotter has paid out the first 30 percent of some claims and hopes to be able to pay out 50 percent by this fall, he told the station.

The victims were nearly $2 billion short on stock value when Trotter made the video.

“You are 25 or 24 and a half percent owners of PG&E,” Trotter said. “The story of the stock has not been a very good one. And that’s in the face of a very buoyant stock market.”

The stock has never been worth the $6.75 billion victims were told by the bankruptcy court. They were warned that the value could go up or down, but on the day PG&E exited bankruptcy the victims would have needed the stock to go up another 56 percent to be made whole.

The stock value plummeted even further the next month after PG&E admitted its power lines may have caused the massive Dixie Fire, which is still growing after burning more than 500,00 acres in the same region where the Camp Fire burned.

As the flames consumed the town of Greenville, attorneys who pushed for the plan struggled to make sense of Wall Street’s lack of faith in the company, given that Gov. Newsom’s office commissioned and then passed a law intended to ensure there was “no real financial danger to PG&E.”

Delays in payment also delay healing for people like former firefighter Steve Bradley, who raced toward Paradise on the morning of the Camp Fire to try to rescue his grandma, Colleen.

“I’m pretty sure she knew the house was on fire and that she wasn’t going to make it,” Bradley said. “I don't talk about it enough, but that really keeps me up at night. Was she expecting me? Was she expecting me to show up, [to] be able to get there at the last second?”

The remains of Ethel Colleen Riggs were found cremated in her own laundry room, too badly burned to make a positive identification by DNA.

The fact that delays in payment are happening because victims were paid in shares of stock is “infuriating” to him.

“That's really insidious,” Bradley said. “This is like next-level movie, you know, the bad guy in the background smoking the cigar manipulating all these things: ‘we’ll make them owners... and then we'll make them pay themselves.’”

“There should be some adult in the room in the government somewhere, some type of leader that would say ‘No. You shouldn't be making it the victim's responsibility to pay the victims.”

Newsom’s office did not respond to that comment from Bradley or to his simpler question: “Why? Why would you prioritize a corporation over the victims?”

Bradley has watched in horror as PG&E has been named as the cause of more fires, including the 2020 Zogg Fire, which killed an eight-year-old girl and her mother along with two other people. Prosecutors say they’ve decided to file criminal charges, to be decided in the coming months.

“Continue killing people so we can get paid for when you killed our family,” Bradley quipped. “It doesn't seem right.”

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‘PICKING THE SCAB OFF AGAIN’

Victims did vote on PG&E’s bankruptcy plan. Although there are still lingering questions surrounding missing ballots, the plan was overwhelmingly approved.

It’s important to know that the ballots gave victims no alternative plan.

It was deal or no deal, said Meriel Wisotsky, Riggs’ daughter.

She wanted to be done dealing with PG&E instead of voting for more rounds of negotiations.

“They would have to start all the way back over again if you said no,” Wisotsky said. “I signed and said, yes, please. And that was why. It was very painful to go through all this.”

Every day that goes by for Meriel Wisotsky, every extra step she has to take to settle PG&E’s killing of her mom, keeps the trauma fresh in her mind.

“I have spent a lot of the last couple of years trying not to think about how horrible it must have been,” Wisotsky said. “Every time it comes up, it's picking the scab off again.”

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The official voting materials from the bankruptcy court told victims that the plan was the “fastest” way to be paid, pointing to a June 30, 2019 deadline in AB 1054, the state law that granted PG&E state safety certificates.

As first reported by ABC10, that law was authored by lawyers working for Gov. Gavin Newsom’s office and the CPUC, consulting with investment bankers paid by the state.

A no vote, the bankruptcy court warned, would cause their payments to be “delayed” and possibly “reduced.” Delays could take “months and perhaps years.”

The victims voted for the plan. They voted to avoid delays.

They got delays anyway.

U.S. bankruptcy judge Dennis Montali, whose court sent the voting materials, declined to answer questions about what the victims were told and why they are still waiting for payment.

“Judge Montali thanks [you] for your email, but he will not otherwise respond or comment on the report you are preparing,” wrote courtroom deputy Lorena Parada.

None of the victims has been paid fully.

‘IT CAUSES YOU TO LOSE FAITH IN GOVERNMENT’

After declining to answer ABC10’s questions by a July 30 deadline, Newsom’s office did address some of them in an email to ABC10 a week and a half later.

The late response ignored some questions, including whether the governor has a plan to make the victims whole for the $6.75 billion value of the stock shares in the trust.

“The legislation signed by Governor Newsom ensured PG&E couldn’t use the bankruptcy process to duck its obligation to victims,” wrote Amelia Matier, a spokesperson for the governor. “The Governor advocated for a competitive process to improve leverage for victims and ratepayers and force shareholders to put more money on the table.”

Matier said Newsom enacted policies that required a “fair settlement with fire victims.”

“It's infuriating and disgusting. It causes you to lose faith in government,” said Steve Bradley. “It's not like they fixed PG&E.”

On the day he tried to save his Grandma Colleen, Bradley couldn’t make it past the roadblocks into the town of Paradise.

He drove home that night, dejected, watching the flames burn the hill where his grandmother lived.

“This is going to sound weird, but I feel more helpless now than I did back on the day of the fire,” Bradly said. “I understand how fire works, but I don't understand why this is allowed.”

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WATCH MORE FIRE - POWER - MONEY:  As California’s wildfires continue to break records due to overgrown forests and climate change, the state faces another crisis. The biggest power company is a convicted felon with a tendency to spark new fires. PG&E is guilty of America’s largest corporate manslaughter case. Experts say PG&E has avoided accountability for its crimes and worried the power company will kill again. But how did we get here? Can anyone force PG&E to be safer?