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03/6/2015

Law360: Nonprofit Asks 7th Circ. To Revive FCA Chicago Transit Suit

Read the full story here: Law360

A government watchdog asked the Seventh Circuit on Wednesday to revive its False Claims Act suit against the Chicago Transit Authority for overbilling the government up to $55 million for bus usage, saying the nonprofit brought original, nonpublic information in the case.

 

Cause of Action, a Washington-based public interest group, said it was the first to blow the whistle on CTA for its allegedly fraudulent billing of the Federal Transit Administration for miles its buses traveled when they were not in service. U.S. District Judge Robert M. Dow Jr. dismissed the suit in October, saying the group’s accusations were “substantially the same” as some that had been published elsewhere. But Cause of Action said Wednesday its 2012 complaint went further than the two earlier allegations, neither of which was made public.

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03/4/2015

False Claims Act Should Apply To Chicago Transit Authority

Cause of Action is filing a brief with the United States Court of Appeals for the Seventh Circuit asking it to reverse a lower court ruling that barred CoA from suing the Chicago Transit Authority (CTA) under the False Claims Act.

In March of 2012, CoA provided the U.S. Department of Justice with evidence that CTA had for years intentionally over-billed the Federal Transportation Authority, defrauding taxpayers out of tens of millions of dollars. The Department of Justice declined to intervene in the case, and the U.S. District Court for the Northern District of Illinois granted CTA’s motion to dismiss.

Congress passed the False Claims Act to stop fraud against the federal taxpayer. The core question in this case is whether that law also applies in the City of Chicago.

Cause of Action Executive Director Dan Epstein released the following statement today:

“The taxpayers overpaid CTA by tens of millions of dollars, yet nothing has been done by either State or Federal authorities to recover the money. CTA was politically connected – its former Congressional appropriator, Roy LaHood, was Secretary of Transportation, its former General Counsel, Ron Rivkin, was the Department of Transportation General Counsel, and its former Board chairwoman, Valerie Jarrett, was a senior Presidential advisor when the fraudulent billing occurred and when the federal government did nothing to recover the funds wrongfully paid. Someone needs to speak up for the average taxpayer. This is why my organization is asking the Seventh Circuit Court of Appeals to allow our case to proceed so that CTA may be held accountable.”

 

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05/22/2014

Cause of Action: “Court Must Hold Chicago Transit Accountable for Fraud”

FOR IMMEDIATE RELEASE            CONTACT: Adam Temple, (843) 722-9670

May 22, 2014                                                              temple@jdafrontline.com

Cause of Action: “Court Must Hold Chicago Transit Accountable for Fraud”

CTA Seeking Dismissal Over Technicality To Avoid $150 Million Fraud Allegation

 WASHINGTON – The Chicago Transit Authority (CTA) engaged in a potentially years-long fraud, fleecing the American taxpayer, and is now pushing a federal court to follow the Justice Department’s lead and look the other way rather than hold it accountable. Cause of Action (CoA), a government accountability organization that is pursuing False Claims Act litigation against the CTA, filed opposition papers today calling on the U.S. District Court for the Northern District of Illinois to rule against the CTA’s motion to dismiss its claims.

“The Chicago Transit Authority potentially defrauded hard-working American taxpayers of up to $150 million,” said Cause of Action Executive Director Dan Epstein. “To date, no funding has been paid back and the CTA is hoping to avoid any accountability by having this case dismissed on a technicality. The court has an opportunity in this case to defer to how Congress intended accountability to work by allowing these claims to proceed past this threshold stage and get to the merits.  Our hope is that the district court validates the role that the public can play in making government open and honest.”

CTA has likely been overreporting estimated mileage to receive a higher amount of federal grant funding at least as far back as 1982.  As a result, it has potentially obtained up to $150 million at the expense of American taxpayers. After CoA reported this story to the government, the Department of Justice, led by Attorney General Eric Holder, declined to intervene in the case.  CoA then filed the False Claims Act litigation to challenge CTA’s possible fraud.

On March 13, 2014, the CTA moved for the dismissal of CoA’s claims on a procedural technicality.  The court will now decide whether to dismiss the case or elect to hold oral argument prior to deciding.

About Cause of Action:

Cause of Action is a non-profit, nonpartisan government accountability organization that fights to protect economic opportunity when federal regulations, spending and cronyism threaten it. For more information, visit www.causeofaction.org.

To schedule an interview with Cause of Action’s Executive Director Dan Epstein, contact Adam Temple, temple@jdafrontline.com 

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05/22/2014

Related Documents: Fraud at the Chicago Transit Authority

United States District Court for the North District of Illinois Eastern Division

Memorandum of Points and Authorities in Opposition to Defendant’s Motion to Dismiss (May 22, 2014)

Defendant CTA’s Motion to Dismiss (March 13, 2014)

Complaint for Damages, Injunctive Relief, and Declaratory Judgment (May 8, 2012)

 

 

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01/22/2014

Washington Free Beacon: Chicago Transit Authority Sued for ‘Systemic Fraud’

Read the full story: Washington Free Beacon

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.”

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01/22/2014

Cause of Action Pursues Multimillion Dollar Fraud Lawsuit Against the Chicago Transit Authority After Justice Department Refuses to Intervene

FOR IMMEDIATE RELEASE                                                                                                     CONTACT:      

January 20, 2014                                                                                                        Mary Beth Hutchins, 202-400-2721

Cause of Action Pursues Multimillion Dollar Fraud Lawsuit Against the Chicago Transit Authority After Justice Department Refuses to Intervene

WASHINGTON – Cause of Action (CoA), a government accountability organization, is pursuing False Claims Act litigation against the Chicago Transit Authority (CTA) for engaging in systemic fraud at the expense of American taxpayers. The Department of Justice (DOJ), led by Attorney General Eric Holder, declined to intervene in the case.

CoA first brought the lawsuit to the DOJ’s attention on May 8, 2012, uncovering up to $150 million in taxpayer funds that the CTA may have improperly received by overreporting mileage for grant funding dating as far back as 1982. On December 16, 2013, the DOJ refused to intervene despite the Federal Transit Administration’s (FTA) own determination on April 27, 2012 that the CTA had misreported data in 2010.  Furthermore, the Department of Transportation’s (DOT) Inspector General and the FTA communicated about the need for recusals of agency employees moving forward.

In addition to the improper reporting, there exists potential conflicts of interest between the CTA and the Executive Branch; most notably Robert S. Rivkin, the current General Counsel at the DOT, who formerly served as CTA’s General Counsel from 2001 to 2004, and Valerie Jarrett, current Senior Advisor to the President, who was formerly a chair of CTA from 1995 to 2003.

“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 Inspector Generals, cannot be counted on to discourage fraud, citizen watchdog groups like ours must intervene.”

According to a report by the House Committee on Oversight and Government Reform, this isn’t the first time the DOJ decided not to intervene in a high-profile fraud case: In 2009, the DOJ and then Assistant Attorney General, Thomas Perez, who is the current Secretary of Labor, declined to intervene in a whistleblower lawsuit alleging the City of St. Paul improperly received federal funds. Perez’s decision, apparently involving an inappropriate quid pro quo agreement with the city, allowed the fraud to go unpunished.

In October 2012, CoA released an investigative report about fraud at the CTA, which can be read here.

About Cause of Action:

Cause of Action is a non-profit, nonpartisan government accountability organization that fights to protect economic opportunity when federal regulations, spending and cronyism threaten it. For more information, visit www.causeofaction.org.

To schedule an interview with Cause of Action’s Executive Director Dan Epstein, contact Mary Beth Hutchins,  202-400-2721 or Annalisa Musarra, annalisa.musarra@causeofaction.org.

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10/18/2012

Cause of Action Reveals As Much As $150 Million in Potential Fraud by the Chicago Transit Authority

FOR IMMEDIATE RELEASE: October 18, 2012                                                                                                    

CONTACT:  Mary Beth Hutchins, 202-507-5887

 

 

Cause of Action Reveals As Much As $150 Million in Potential Fraud by the Chicago Transit Authority

Were Taxpayer Dollars Improperly Granted to Chicago’s Bus System?

 

WASHINGTON – Federal government accountability group Cause of Action (CoA) today released a report based on insider audit information that reveals the Chicago Transit Authority (CTA) may have improperly received up to $150 million in taxpayer funds, dating as far back as 1982.

 

Documented in “A Bus Tour of Chicago-Style Fraud,” a 2007 audit report of the CTA obtained by Cause of Action reveals that the transit agency was found to have overreported the city’s bus Vehicle Revenue Miles (VRM). This misrepresentation of data could have led to the disbursement of a larger share of available federal U.S. Department of Transportation (DOT) formula grant funds than the CTA was entitled to receive. In fiscal year 2006 alone, CTA may have received from $1 million to potentially over $5 million in excess grant funding.

 

“For thirty years, the CTA may have been defrauding US taxpayers of millions of dollars and investigators at the Department of Transportation, though aware of this potential fraud, have seemingly taken no steps to investigate or report on the matter,” said Dan Epstein, executive director of Cause of Action. “Our own investigation revealed a web of connections and influence among the CTA, the U.S. Department of Transportation, and the White House where investigating potential fraud may be mired in politics. In 2011, when notified of the audit we recently obtained, the DOT and its IG acknowledged that while they would look into the matter, a conflict of interest with current staff and CTA existed. To our knowledge no investigation has taken place.”

 

As CoA’s report highlights, those potential conflicts of interest could include Robert S. Rivkin, the current General Counsel of the U.S. Department of Transportation who was General Counsel of the Chicago Transit Authority from 2001 to 2004, during the time CTA was likely overreporting its VRM.  Additionally, Valerie Jarrett, Senior Advisor to the President, was Chair of CTA from 1995 to 2003. As of April of 2009, Jarrett was still receiving deferred compensation from the Chicago Transit Authority.

 

 

About Cause of Action:

Cause of Action is a nonprofit, nonpartisan organization that uses investigative, legal, and communications tools to educate the public on how government accountability and transparency protects taxpayer interests and economic opportunity. For more information, visit www.causeofaction.org

 

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