After settling fraud case, NJ Transit denies $48M contracts with Academy Bus

A little more than a month after Academy Bus settled a fraud case with the state and agreed to pay a $20 million fine, NJ Transit’s board of directors unanimously denied two contracts that could have seen it paying $48 million to the company.

Transportation Commissioner and NJ Transit Board Chairwoman Diane Gutierrez-Scaccetti recommended against approving the contracts Monday night, saying she did not believe guidelines were in place required by the settlement to protect NJ Transit and it riders.

“The ink on that settlement is barely dry and it is barely 30 days old. There have to be controls in place. As of this reading those protections are not in place,” she said. “Such an award would put NJ Transit at a disadvantage.”

The contracts were to run NJ Transit local bus service in Hudson County. The board instead unanimously awarded the two, three-year contracts to the next-highest bidder, Coach USA, for a total of $57.5 million.

In November 2020, the state Attorney General filed a suit against Hoboken-based Academy, charging it with defrauding NJ Transit out of $15 million between April 2012 and December 2018, by underreporting the number of trips it missed and charging for others it never ran on the seven routes it was contracted to handle in Hudson County. The suit charged the company kept two sets of books, one that recorded trips actually made and the other set altered to placate NJ Transit.

Under the settlement, signed on Feb. 11, in which Academy admitted no wrongdoing, the company agreed to pay a $20.5 million fine, to pay for an independent monitor to provide three years of oversight and better train employees how to log uncompleted bus trips and mileage. NJ Transit has taken policy and technical steps on its end to ensure closer monitoring and better documentation of bus trips run by contractors, officials said.

Before the vote Monday, the board heard from a state legislator, a retired legislator and riders who urged them not to approve a contract with the Academy.

“I urge board to reject these. It’s like saying, ‘hey Bernie Madoff, you’ve been in the industry a long time, let me give you more money and see what you do with it,’” said Adam Reich, a commuter. “The settlement doesn’t bar them (from bidding), but you should have them cool off for a few years.”

State Senator Joe Cryan, D-Union, was more blunt – the settlement wasn’t a good one, he said, and he urged the board to think about the riders left behind in the 13,000 trips Academy was accused of missing by the state Attorney General’s lawsuit.

That appeal resinated with board members, especially those who ride buses and trains.

“I can’t in good conscience vote yes. I’m thinking of all those people left on the side of the road,” said Board member Sangeeta Doshi.

Board member Robert Gordon, a former Fair Lawn mayor and state senator, cited provisions of two state laws that allowed the board to reject the Academy bids, even though they were the lowest prices. One of the laws mentions six factors for a company to be considered a responsible bidder, which includes moral integrity, he said.

“I don’t believe the Academy organization is a responsible bidder…13,000 missed trips and keeping two sets of books raises questions about moral integrity,” Gordon said.

Others agreed. “I would hope NJ Transit stands up and doesn’t award the contracts to the Academy until they get a whole series of questions answered,” said retired State Majority Leader Loretta Weinberg.

Cryan was critical of the settlement during and after the meeting, saying it didn’t put the commuters of the state first.

“The settlement is well, unconscionable. The procedure required in the settlement needs time to be in place,” Cryan said afterward. “The settlement shocks the conscious. There should have been criminal charges filed and quite frankly the $20 million is a light number given the length and cost of the fraud. I’d like to see a full review of how this settlement was reached and who made the decisions. Whoever did, they didn’t put the commuters of New Jersey first.”

An Academy spokesman said last week that the company was in “full compliance with all requirements of the settlement agreement previously announced.” The spokesman couldn’t be reached immediately for comment Monday.

The contracts were to run Hudson County Local bus Routes 2, 84, 88 and North Hudson local bus routes 22, 23, 86 and 89, said Nancy Snyder, an NJ Transit spokeswoman. They take effect on June 26.

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Larry Higgs may be reached at lhiggs@njadvancemedia.com.

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