DWP manager placed on leave amid questions about outside bitcoin business
LA politicsDakota Smith
May 26, 2023
A Los Angeles Department of Water and Power executive has been placed on administrative leave while the utility investigates his involvement in the bitcoin mining industry and whether he has adhered to ethical rules that require employees to obtain permission for remote work.
John Chen, who earns $320,688 as director of the DWP’s corporate performance office, owns a company that started with bitcoin mining
in Colorado on the 2018, court and business documents show.
Chen, a 30-year veteran of the DWP, also registered as a manager of a mining data center company in North Dakota in 2018, company records show.
According to a source at the utility, Chen was granted furlough last month after The Times asked the DWP about Chen’s ventures.
A DWP spokesperson declined to comment on Chen’s administrative leave. Cynthia McClain-Hill, chairman of DWP’s supervisory board, called the issue of Chen’s outside ventures a “concern”.
“I would expect employees at DWP, and especially employees at its level, to devote their full-time attention to the city and the affairs of the city,” McClain-Hill said.
In an interview with The Times, Chen likened bitcoin businesses to owning real estate or stocks and said he didn’t need the utility’s permission to work on it.
It’s an investment, he said. I’m not running it. There are outside employees who run it.”
Chen’s attorney, Michael Faber, said Chen is exploring all of his options, including the possibility of a lawsuit against the DWP.
Bob Stern, who helped draft the city’s ethics and public campaign finance laws, said Chen’s bitcoin work is only a problem if he can’t do his DWP job.
Is he giving LA what he deserves? Does he play 40 hours a week?” said Stern.
Court documents, business records and news reports about Chen’s assets give some details about the operation.
A company owned by Chen paid $13 million to buy a former Intel Corp. plans in Colorado Springs in 2018. Another company owned by Chen spent $6.5 million to upgrade the property and increase electrical capacity, according to documents filed in federal bankruptcy court in Colorado. (In December 2020, one of Chen’s companies filed for bankruptcy. The case was dismissed several months later.)
Chen confirmed that he was working with Chinese and Singaporean companies in the Colorado venture.
Chen also entered into an economic development agreement in 2018 with Colorado Springs Utilities, a public utility for electricity, natural gas, water and wastewater, to get a reduced rate on electricity.
Chen said he chose to invest in Colorado Springs because he could get a unique building. He secured a very low rate in Colorado Springs for electricity, he said.
In 2018, Aram Benyamin was the general manager of energy supply at Colorado Springs Utilities. Benyamin and Chen worked together at the DWP before Benyamin was hired by Colorado Springs Utilities in 2015.
Benyamin rejoined the DWP last year as chief operating officer, the No. 2 positions in the utility.
Benjamin said in an interview that he was not involved with Chen’s company which won an economic development contract in 2018.
Chen said he regularly flew to Colorado, but said he traveled on my own time.
Two employees who worked for Chen’s company in Colorado Springs told The Times that Chen sometimes visited the site twice a month.
Chen made no secret of his affairs in Colorado Springs.
When neighbors there complained about the loud noise coming from it
computer cooling fans
the bitcoin mining operation, he gave an interview to the Colorado Springs Independent, promising to plant pine trees to dampen the noise.
North Dakota news outlets also reported a massive fire in 2019 that burned down a warehouse in Grand Forks, ND. The warehouse was operated by one of Chen’s companies, according to a Grand Forks Fire Department report reviewed by The Times. The report estimated that the building contained $6 million worth of bitcoin mining equipment.
Chen joined DWP in 1990. As DWP’s director of business performance, he is responsible for keeping the utility transparent and accountable in its work.
Times researcher David Shen contributed to this report.
Fernando Dowling is an author and political journalist who writes for 24 News Globe. He has a deep understanding of the political landscape and a passion for analyzing the latest political trends and news.