Chicago Fraud

Chicago Transit Authority misrepresented bus mileage, got millions in extra fed funds, watchdog says

Chicago Transit Authority
October 24, 2012

Cause of Action (CoA), a government watchdog group, has accused the Chicago Transit Authority (CTA) of defrauding the federal government of millions of dollars and the Obama administration of not doing anything about it.

The watchdog issued an October 18 report  that "uncovered the potential of up to $150 million in taxpayer funds improperly being awarded to the Chicago Transit Authority (CTA) due to CTA’s potentially fraudulent reporting dating as far back as 1982 and possibly continuing to the present."

Bloomberg then reported yesterday that the Federal Transit Administration (FTA), an agency of the Department of Transportation (DOT), requested that the Chicago Transit Authority revise its 2011 mileage filing.

The transit authority inappropriately reported the so-called "deadhead" miles between the bus station and the first stop, during which the buses generally carry no passengers, as "revenue-producing miles," according to reports.

The "CTA’s gotten more money than it deserves," Cause of Action executive director Dan Epstein told the Washington Free Beacon.

"They may have over-reported these miles with knowledge" that the reporting practices failed to comply with federal regulations, Epstein added.

The Bloomberg report indicates the federal government may have known about the over-reported miles earlier this year. The Cause of Action report suggests it may have known earlier, however.

"Calvin L. Scovel, the DOT Inspector General (IG), and the U.S. House of Representatives Committee on Government Oversight and Reform (Oversight Committee) were informed of the fraud in 2009 and 2011, respectively," the report says.

"It would appear that if the CTA at least knew in 2007 or even in 2009, if they knew that this was potentially problematic," then this situation warrants an investigation, Epstein said.

Cause of Action issued a statement yesterday in response to the Bloomberg story. Epstein said in the statement, "FTA is revealing that it had knowledge of overreporting occurring, and by conducting a review of only 2011, it ignored the 2007 report presented by auditor Thomas Rubin that showed the same potential actions happening in fiscal year 2006."

"Why has it taken so long for the FTA to pay attention to this?" Epstein asked the WFB.

Officials told him that this is a sensitive issue, Epstein said.

"We know why it’s a sensitive issue," he said, noting that there were several potential conflicts of interest tied up in the case.

"CTA’s General Counsel from 2001-2004, Robert Rivkin, is the current General Counsel of the DOT and Valerie Jarrett, Chair of the CTA from 1995 to 2003, is a Senior Advisor to President Obama,"according to the Cause of Action report.

Epstein noted that Ray LaHood, the current Secretary of Transportation, served as a Republican Congressman from Illinois’s 18th district from 1995 to 2009 when much of the alleged fraud could have occurred.

"Was he aware of any potential fraud?" Epstein asked.

"There should be no surprise that there is an interconnected web" of actors and interests connecting Washington and Chicago, Epstein said.

Cause of Action submitted an expedited Freedom of Information Act request to the Department of Transportation and its inspector general because "we think the facts of this case are of incredible public interest," Epstein said.

Both agencies denied the request.

Neither the Federal Transit Administration nor the Chicago Transit Authority returned requests from the Free Beacon for comment.

"This just reeks of politicization," Epstein said.