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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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10/23/2012

Bloomberg News: Chicago Agency Overbilling U.S. Told to Change Mileage Claims

Read the full story here. Business Week

“Cause of Action, a Washington-based research organization, in a report last week suggested the federal government was slow to investigate “Chicago-style fraud” at the authority because Transportation Department General Counsel Robert Rivkin held the same post at CTA from 2001 to 2004 and Valerie Jarrett, a senior adviser to President Barack Obama, was chairman of the agency’s board from 1995 to 2003.

 

The Cause of Action report cited a 2007 Illinois state audit that said Chicago’s transit system may have received as much as $5 million a year in extra U.S. funding for as long as 30 years. After its investigation, the FTA said the amount was closer to $700,000 to $800,000 a year….”

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10/23/2012

Press Release: FTA Confirms Overreporting by the CTA

FTA Confirms Overreporting by the CTA

Cause of Action’s Investigation Into Potential Fraud With Federal Grant Money Exposes CTA & the Department of Transportation

 

WASHINGTON – In the wake of Cause of Action’s investigation into potential fraud at the Chicago Transit Authority, new facts have emerged confirming not only overreporting by the CTA, but knowledge by the Department of Transportation’s Federal Transit Administration of the overreporting.

FTA Administrator Peter Rogoff sent a letter to CTA on April 27, 2012 stating that FTA had “conducted an in-depth review regarding the way in which Vehicle Revenue Miles (VRM)” were reported. The conclusion of this review was that “CTA should revise its data for the 2011 Report Year to reflect the definition of ‘revenue service’.”

Cause of Action’s Executive Director Dan Epstein issued the following statement in response:

“FTA’s letter highlights two very important facts. First, CTA was, as Cause of Action suspected, violating the reporting manual used to calculate VRM, thereby improperly receiving federal grant money.

But secondly, 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.

It appears an explanation for why FTA limited its review to one year, and failed to disclose its findings to Cause of Action following our expedited FOIA request, is that there is clearly a politically motivated cover-up happening at the Department of Transportation.

Cause of Action’s revealing investigation into opaqueness and poor stewardship of tax dollars only further raises the spectre of corruption at the same agency Cause of Action revealed to have had two officials violate the Hatch Act.  Just as no punishment occured when Kathleen Sebelius violated the Hatch Act, no punishment will occur with a CTA that defrauded the American taxpayers. Cause of Action exists to fight this kind of corruption and show the American taxpayers exactly what is happening to their money in the hands of corrupt politicians.”

This revelation by the FTA raises a number of questions that Cause of Action views as critical to the public interest:

  1. Why did FTA not act on Thomas Rubin’s 2007 report of this exact behavior by the CTA?
  2. When did DOT Inspector General Calvin Scovel decide to investigate the matter?
  3. Is there evidence to suggest that this same type of overreporting is happening at other transit authorities around the United States?
  4. Why hasn’t the FTA reported the CTA to the Department of Justice for a criminal investigation in light of their overreporting and potential years of defrauding American taxpayers?
  5. How does the President explain the Chicago connections of Secretary LaHood, Robert Rivkin, Valerie Jarrett and himself in light of this misuse of taxpayer dollars?

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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10/19/2012

REPORT: A Bus Tour of Chicago-Style Fraud (Update)

The independent auditor whose report Cause of Action obtained and included in our original report, “A Bus Tour of Chicago-Style Fraud,” has decided to come forward and make his name public.

Mr. Thomas Rubin is an outside auditor who was retained by the Illinois Auditor General in 2007.

See our updated report incorporating Mr. Rubin’s name, below.

 

Bus Tour of Chicago-Style Fraud

CTA-Exhibits

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10/19/2012

Chicago Tribune: Report: CTA reaped millions by over-reporting bus mileage

Read the full story here. Chicago Tribune

“The CTA has potentially inflated by up to $150 million the federal taxpayer money it received since as far back as 1982 by “fraudulently over-reporting” the number of miles CTA buses travel while in service, according to a new report by a little-known watchdog group. In its report, titled “A bus tour of Chicago-style fraud,” Washington-based Cause of Action alleged that CTA officials reaped millions in extra federal money that the agency was not entitled to by improperly including “deadhead,” or out-of-service bus miles, along with funding-eligible revenue bus miles when applying for money from the Federal Transit Administration.

The CTA has followed the FTA’s guidelines related to reporting mileage data, and it used the same methodology for almost 30 years, up through last year when the rules were changed, a CTA spokesman said Wednesday. But Cause of Action, which said it based its findings on “insider audit information” from six years ago, said the CTA likely continues to get away with its inaccurate mileage reporting, with the knowledge of the U.S. government, because of the transit agency’s political connections stretching from Chicago to Washington…”

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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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