FBI Raids Santa Clara VTA’s Former Paratransit Contractor

Without warning on Thursday, the FBI raided a company hired by the Santa Clara Valley Transportation Authority to drive thousands of disabled riders every day.

FBI spokesman Prentice Danner confirmed that the agency served a search warrant on Outreach and Escort Inc., which has brokered paratransit services for the VTA since 1993. “Unfortunately, I’m unable to go into further details,” he added.

The VTA ended its $20 million-a-year contract with Outreach this past summer. But the problems arose long before that. In 2015, an audit found that the company apparently charged up to $7 million for services it never gave.

The transit authority pulled its contract with Outreach five months ago, but continued to rely on the nonprofit to broker the 2,500 daily door-to-door rides with a subcontractor until finding a replacement. As a broker, Outreach managed administrative work and reservations but delegated the driving to a company called MV Transportation.

In August, the VTA took things a step further by filing a lawsuit against Outreach alleging false claims, fraud and unjust enrichment. Cindy Chavez, who chairs the VTA Board of Directors, said the agency handed over the audit findings to Santa Clara County prosecutors and federal investigators.

Nuria Fernandez, VTA general manager and CEO, said the agency prepared for this kind of emergency, but didn’t expect it would come this soon. At a press conference hours after the FBI raid, she assured paratransit riders that there will be no interruption in service. But instead of calling Outreach, where the phone lines are tied up, she urged them to call the VTA’s customer service line at 408.321.2300.

“We had a transition plan that we thought we had 12 months to implement,” she said, “and now we are trying to fast-track that plan.”

Outreach oversees 215 white Prius cars and vans, which transport people to doctor appointments, day programs, school and errands. Each one-way trip costs the VTA $25, though it charges only $4 to the riders. MV Transportation will continue to drive the 7,000 registered riders with disabilities that prevent them from using VTA buses and light rail, VTA officials said.

The lawsuit filed by the VTA in late August points to the same red flags that came up in the audit, which was the first in the 23-year history of the Outreach contract.

According to the lawsuit filed in Santa Clara County Superior Court, auditors found evidence that Outreach modified trip records to inflate the numbers and over-bill the VTA. Up to 30 percent of billed trips were allegedly missing pickup and drop-off times, the claim states. It also references former Outreach employee Priscilla Gonzales, who said she quit earlier this year because a supervisor told her to fudge ridership numbers.

Click here to read the audit.

Jennifer Wadsworth is a staff writer for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

9 Comments

  1. How clueless can you be? Why would a law enforcement agency give a warning to the target of a search warrant?

  2. 20 million a year? Thats a lot of pot holes not filled. Speaking of the FBI how much went to the Clintons?

  3. They had a contract with the county for 23 years and in that time they were only audited once? That’s not what I call effective oversight.

  4. If the County can waste millions of dollars like this, I say F**K Measure B!

  5. #Waterdistrict @Valleywater another big waster, one day the law will go after the guilty.

  6. does anybody know of another service like guaranteed ride was aclient of there until they fudged up,,

  7. > Each one-way trip costs the VTA $25, though it charges only $4 to the riders.

    So, if the VTA doubled the number of trips, they could charge $2 per rider. Am I correct?

    OK. I think I’m ready to work in government.