Academy Bus LLC, accused of charging NJ Transit millions of dollars for no-show buses, settled the historic case with the Office of the Attorney General for $20.5 million, according to an announcement Friday.
This marks the state’s largest settlement outside the health care sector, according to the press release announcing the award from Acting Attorney General Andrew Bruck.
“This settlement sends a clear message: defrauding the state doesn’t pay,” Bruck said in the release. “We are not only requiring the corporate defendants to pay more than the amount of their alleged fraud. We also are holding individual defendants financially responsible and requiring Academy Bus to adopt corrective measures designed to prevent similar misconduct in the future.”
Academy and the other defendants in the case did not admit wrongdoing or liability, according to the agreement. Despite the size and scale of the fraud allegations, no criminal charges have been filed in this case. The Attorney General’s office declined to comment on that matter.
“Academy, the nation’s largest privately owned motor coach company, is glad to have worked cooperatively with the State of New Jersey to resolve this litigation,” said Ben Martin, an Academy spokesman. “Additional internal protocols, checks and balances eliminate the possibility for similar issues to arise in the future, and Academy looks forward to restoring service to pre-COVID levels and reliably transporting its loyal customers around New Jersey.”
As part of its contract to run seven bus routes in Hudson County, NJ Transit requiredAcademy to provide reports indicating bus trips that are taken each month, buses that arrived late and missed trips. These reports provide the basis for payment to Academy and where deductions should be made if there are missed or unreported missed trips.
Academy knowingly misreported its numbers to NJ Transit almost daily for more than six years, according to the complaint. In one instance, an employee proposed lowering the number of missed trips in September 2018 from more than 1,800 to 700, according to text exchanges between Academy employees.
It all started with a whistleblower
This case began in 2017 after a whistleblower, fired Academy employee Hector Peralta, filed a False Claims Act lawsuit. This lawsuit was sealed at the time so no one, not even the defendants, were made aware of the case in 2017. Once the lawsuit was filed, the government then decides whether it wants to take on the case, or intervene, which is why this case went public in 2020.
Peralta, who will receive $3.9 million of the settlement, was represented by Neil Mullin, of Smith Mullin P.C. and Paula Dillon, of Goldman Davis Krumholz & Dillon.
“My heart goes out to all the commuters who stood out in ice and snow and stood out in heat while Academy Bus missed them, left them standing, and concealed all those missed trips from the state of New Jersey,” Mullin said. “This is a great day for the commuters above all and it’s a great day for Mr. Peralta who lost his job because he blew the whistle on this corruption.”
Peralta also has a separate case against Academy that has not yet been settled.
While the scope of the Attorney General’s complaint was from April 2012 to December 2018, documents obtained by NorthJersey.com and the USA TODAY Network New Jersey revealed that issues with Academy date back to at least 2006. Internal auditors at the agency raised red flags about the Hoboken-based company, specifically problems with no-show buses, inadequate monitoring of private carriers and poor record keeping, yet the company kept securing multi-million dollar contracts at NJ Transit.
In February 2020, agency officials dismissed a recommendation from auditors that could have reduced the risk of fraud in the private carrier affairs department, which oversees Academy.
In November 2020, the board approved a three-year, $32.6 million contract for Academy to run bus routes in Middlesex County. That same day, the Attorney General filed a notice to intervene in the Academy case. Gov. Phil Murphy later terminated the contract and it wasawarded to another private bus company.
What’s next for Academy
Several Academy employees named as defendants in the case are also subject to fines, according to the settlement, in addition to Academy and several of its affiliate companies.
Thomas Scullin, vice president and chief operating officer, must pay $150,000; Edward Rosario, a general manager, will owe $50,000; and Antonio Luna, an assistant manager, will pay $50,000, according to the settlement. Frank DiPalma, the company’s controller, who was also named as a defendant, does not have to pay any money, according to the agreement.
All are still employed by Academy.
Luna left Academy in 2019, as the case was under investigation by the Attorney General’s Office, and went to work for NJ Transit. He was fired from the agency last February, two months after NorthJersey.com reported he was employed by NJ Transit despite being named a defendant in this case. He returned to Academy as a part-time dispatcher.
While not named as an individual defendant in the case — though his involvement in the alleged fraud is discussed in the Attorney General’s complaint — Academy CEO Francis Tedesco is the signature on the settlement agreement for his four companies involved and as the guarantor for the money owed.
In the last year, NJ Transit increased its oversight of contracts with private carriers by updating its tracking software so it generates a report for each late or missed bus trip and hired more staff to monitor buses on the ground and ensure the software stays updated and accurate.
Academy no longer holds any contracts with NJ Transit, but if they are awarded one in the future, the settlement agreement requires the company to meet the following standards:
Submit with each invoice to NJ Transit a personal certification from a senior vice-president, chief financial officer or such person’s designee that attests to the accuracy of the submission, as well as to the accuracy of the supporting daily and monthly reports of operation.
Retain an independent Integrity Oversight Monitor — approved by NJ Transit and paid by Academy — to oversee the accuracy of its internal documentation of bus trip operations, as well as the accuracy of invoices and missed trip and miles and hours reporting, for three years.
Implement new policies and procedures to ensure accurate reporting of missed trips and hours and miles driven. The new policies and procedures must include staff training on accurate reporting, the maintenance of adequate records and databases, and adequate document retention.
Create bus operator training policies that ensure the proper use of all provided equipment, including proper use of clever devices and other telematics, as well as the proper reporting of equipment malfunctions.
Create procedures that Academy road supervisors must employ to ensure conformity to contracted bus service regulations, as well as driver adherence to specific bus routes and accident reporting
Colleen Wilson covers the Port Authority and NJ Transit for NorthJersey.com. For unlimited access to her work covering the region’s transportation systems and how they affect your commute, please subscribe or activate your digital account today.
Jets receiver/returner Braxton Berrios didn’t have to wait long to learn how hard it is to keep a roster spot in the NFL.
Berrios, a 2018 Patriots sixth-round pick, spent his rookie season on injured reserve and New England cut him in 2019 before he ever played a snap.
But the Berrios isn’t bitter about his brief time with a team that is now his biggest rival.
“Really, I feel like I got a PhD in football (in New England),” Berrios said on the “Adam Schefter Podcast. “It didn’t work out for whatever reasons. And looking back it’s the best thing that ever happened to me.”
The Jets claimed Berrios soon after he was cut and he has found a way to contribute ever since: Berrios has been the backup slot receiver since 2020 and set a career high in catches (46) and receiving yards (431) last year. But his big breakout came on special teams, where he became one of the league’s best returners on the way to a first-team, All-Pro selection.
“I kept going, obviously, and found ways to be productive,” Berrios said. “Obviously, in the return game was the first way. And then I really, really wanted to make sure I was seen as a receiver as well, and really over the last two years I’ve gotten a lot more of those opportunities. Then you marry those opportunities with now being named the first-team All-Pro last year as a kick returner: it’s finally full circle, it’s maybe starting to work out a little bit.”
Berrios admitted that he felt he had his “back up against the wall” on the Patriots’ talented roster. He certainly doesn’t have to worry about the Jets cutting him as he enters his fourth season with the team: Berrios signed a two-year, $12 million earlier this year.
But even if Berrios isn’t mad at the Patriots, there is one thing that should have the Jets extremely motivated when they play their rival this fall: the Jets haven’t won a game against New England since 2015.
Thank you for relying on us to provide the journalism you can trust. Please consider supporting us with a subscription.
Most New Jersey beach towns should be jealous of Wildwood. The city has the widest beach on the Jersey Shore, stretching 1,500 feet from boardwalk to surf in some places.
But Wildwood has its headaches, too. Some beachgoers complain the sandy expanse requires too long a schlep to the water’s edge. The beach also collects pools of water, which can breed insects and become health hazards, and the sand drifting down from the north tends to clog storm drainage pipes.Plus, there’s all that beach to clean.
Since 2014, Wildwood has gladly allowed the neighboring borough of North Wildwood to borrow truckloads of its sand every winter—including some that clogs those drainage pipes.
Now the city of Wildwood is poised to sign the state-aid agreement required for a 50-year partnership with the Army Corps of Engineers and the state Department of Environmental Protection for beach replenishment and maintenance. North Wildwood has already signed. Once the deal is in place, the Army Corps can proceed with its Wildwoods project, probably starting in fall 2023, pending easements from private property owners at various locations along the beach.
The centerpiece of the project will be a series of dunes totaling 25,000 linear feet (about 4.7 miles) from North Wildwood to Wildwood City and south to Wildwood Crest and Diamond Beach. (Wildwood Crest and Lower Township, which includes Diamond Beach, also have to sign their own state-aid agreements.) To build the dunes, sand will be taken from a substantial swath of Wildwood’s beach all the way south to Wildwood Crest.
North Wildwood has reason to seek the Army Corps’ help; its sand perpetually drifts south each winter, leaving beachfront properties vulnerable. For Wildwood, the Army Corps should be able to solve several problems, explains Carl Groon, a projects coordinator for the city.
For one thing, the width of the beach will be reduced by several hundred feet at some points, meaning shorter walks from boardwalk to water and less beach to clean. Second, grading the beach with a greater slope from the new dunes to the surf, should help eliminate the pooling problem. Finally, in the event of extreme storms, the dunes should mitigate flooding.
Groon says Wildwood’s new dunes will range in height from 14 to 16 feet. They will be built between the city’s five piers, each at a different distance from the boardwalk, depending on existing structures and other factors.
The dunes will create some obstacles for Wildwood spectator activities. “If they shrink our beach, we will have less beach to use for events,” acknowledges Groon. However, he adds, “I think it’s well within our ability to make it all work.”