Chicago Transit Authority Sued for ‘Systemic Fraud’

Cause of Action suing CTA for over-reporting 'vehicle revenue miles'

Chicago / AP

A government watchdog group is suing the Chicago Transit Authority (CTA), alleging that the CTA may have improperly received between $30 million and $150 million in taxpayer funds by over-reporting mileage for grant funding dating as far back as 1982.

Cause of Action announced Wednesday it is pursuing a lawsuit against the CTA after the Department of Justice declined to investigate what the watchdog group calls "systemic fraud."

The Federal Transit Administration determined in April 2012 that the CTA had misreported data in 2010.

A subsequent Cause of Action investigation uncovered a 2007 report showing the CTA had over-reported its Vehicle Revenue Miles (VRM), and as a result received $1 million to $5 million more in federal grants than it was entitled to receive.

The report noted that miles were over-reported by "similar or slightly smaller amounts," potentially going back as far as 1982. By Cause of Action’s estimate, that could add up to between $30 million and $150 million in improper federal grants.

Cause of Action sent its findings to the Department of Transportation, DOT Inspector General, and Department and Justice, but it says there has been no federal investigation. DOJ declined to investigate the matter in December.

"We are pursuing this fraud lawsuit against the CTA because American taxpayers deserve accountability," said Cause of Action's Executive Director, Dan Epstein. "The reputations of political insiders cannot be more important than the integrity of federal programs and the protection of taxpayer funds. When the federal government, including Department Inspectors General, cannot be counted on to discourage fraud, citizen watchdog groups like ours must intervene."

The CTA is well connected politically, thanks to President Barack Obama’s Chicago roots. Robert Rivkin, the current General Counsel at the Department of Transportation, formerly served as the CTA's General Counsel from 2001 to 2004.

Valerie Jarrett, one of President Obama’s closest advisers, was a chair of the CTA from 1995 to 2003.

The CTA did not immediately respond to a request for comment.