SRTA board had multiple warnings about financial deficiencies

NEW BEDFORD — Four years ago, Joseph Cosentino wrote a letter to the advisory board of the Southeastern Regional Transit Authority alleging that the Union Street Bus Company was not complying with federal financial requirements.

The letter, sent the day before Cosentino was ousted from his post as SRTA administrator, was the first of six warnings the board would receive alleging that USBC head John George Jr. was not complying with Federal Transit Administration regulations.

But it was not until February 2014, two months after the FTA asked to be reimbursed for $224,000 that had been improperly spent by USBC, that the board decided to act, handing the information over to law enforcement.

George was indicted by the U.S. Attorney’s office last week, charged with embezzlement for allegedly improperly receiving a pension from SRTA, having SRTA employees work on his personal farm during work hours, using SRTA vehicles for out of state shopping trips and using SRTA funds to buy cell phones and internet for friends, as well as to remodel his kitchen.

New Bedford Mayor Jon Mitchell, who was not in office when George worked for SRTA but is now vice chairman of the board, said Thursday that the FTA’s letter marked the first “substantial allegation” of misconduct at USBC.

But on Sept. 14, 2010, Cosentino sent his own letter to the SRTA board, which was preparing to fire him for what they called “failure to competently carry out the day to day duties of the Administrator’s job.”

Cosentino wrote to the board that George was trying to get him fired because Cosentino had concerns about USBC’s compliance with state and federal law.

“John told me that I was being too hard on him at SRTA,” Cosentino wrote. “I told him that he had to follow the regulatory requirement and that if the Authority found that he was not following the requirements of the FTA, he might not be awarded the operator contract under the upcoming (request for proposals.) He did not deny that he was behind the effort to remove me from office.”

On Sept. 15, the board voted to place Cosentino on administrative leave for the three months remaining in his contract with the transit authority.

George and his attorney, Thomas Kiley, declined to comment for this story.

As mayor of New Bedford at the time, Scott Lang was chairman of the SRTA board, and, along with Fall River Mayor William Flanagan, had a vote weighted heavier than the other eight board members, who represented the suburbs.

Lang said this week that he did not remember Cosentino’s letter.

“I don’t remember anything in the way of Cosentino indicating that ‘I uncovered financial things going on so they are trying to get rid of me,'” Lang said. “What, you think I wouldn’t say anything? Obviously you would say something.”

Two months later after Cosentino wrote his September 2011 letter, the FTA completed a routine triennial review of the authority. That review, described in a Massachusetts Department of Transportation memo, “found a substantial number of deficiencies with respect to federal regulations compliance,” in areas that included “financial, technical, satisfactory continuing control, procurement, debarment and suspension, planning/program of projects, and (the Americans with Disabilities Act).”

The triennial review prompted a Financial Management Oversight review by the FTA’s Office of the Inspector General, as well as a scathing Massachusetts Department of Transportation review released in May 2011.

The state review criticized nearly every aspect of SRTA and alleged that George, the contract operator, had too much control over the Authority’s board members and operations.

“The authority itself is almost entirely unequipped to carry out its statutory management and oversight responsibilities, thereby allowing the contract operator to drive much of SRTA’s policy development and define institutional relationships,” the report says.

The report alleged that capital and operating expenses were “often improperly accounted for” by USBC, and that USBC had improperly used SRTA vehicles to plow private property and travel out of state. The bus company was also found to be out of compliance with the Americans with Disabilities Act.

“With little authority oversight, staff have been reported to engage in a number of unethical activities which may also be violations of federal and state regulations and/or law,” the state review said.

In response to the federal and state reports, the SRTA board brought on Ray Ledoux of the Brockton Area Transit Authority to help rectify problems identified in the reviews.

“The authority back then did have some noncompliant areas,” including financial ones,” Ledoux said this week. To fix the problem, he recommended that the board hire a chief financial officer and grants manager, which the board did.

He also said that in the fall of 2011, the FTA’s Office of the Inspector General started asking SRTA for “several banker boxes of information.” Ledoux complied with the request, but “didn’t want to draw any conclusions,” he said.

Jean Fox, who was the Freetown representative to the board at the time, said she had hoped that the reviews would be a wake-up call for the rest of the board that “we couldn’t continue to rubber stamp stuff George was giving us.”

But, she said, “some people on the board were conflict adverse” and reluctant to question George.

Though the board did ask George for vehicle inventories following the MassDOT report, which he provided, she said members mostly counted on Ledoux to “straighten us out.”

In August 2011, Cosentino sued George, SRTA and its attorney Arthur Frank for wrongful termination. The suit alleged George directed the board to fire Cosentino because Cosentino was trying to open up the process for companies to bid to be the bus operator. If Cosentino had his way, cheaper bids would have the advantage over more expensive ones, potentially allowing George to be out-bid in the future.

The complaint also lists George’s alleged “improper actions,” including: that he did not follow SRTA policy in paying a contractor $10,000, that he used SRTA funds to provide phones to non-employees, that he improperly purchased $31,000 worth of computers, that he was included in a SRTA-funded pension plan without SRTA’s knowledge, that he used SRTA vehicles to transport high school employees to the George Farm and that he had SRTA employees working at the farm during their hours of employment. Many of those allegations are now included in the US Attorney’s indictment of George.

Though he said he read the complaint, Lang said “there was nothing that I remember that would lead me to believe that there was criminality going on.”

The case was dismissed in May 2014 by an agreement of the parties involved. SRTA and George ultimately settled the case, paying Cosentino $185,000 and $10,000 respectively, according to Cosentino’s attorney Philip Beauregard.

There is no record of the settlement, however, in the suit’s case file at Taunton Superior Court.

The SRTA board did not take action against George as a result of the lawsuit.

In fact, USBC was only replaced as the SRTA operator after losing to a lower bidder in September 2011. First Transit’s winning bid was $549,819 lower than USBC.

One month after losing the bid, George applied to be SRTA’s new administrator, replacing Cosentino, losing the bid to current administrator Erik Rousseau after three rounds of voting.

George’s failed attempt to become administrator comes despite seven members of the board voting for him. Representatives from all towns except Westport voted for George, with Fall River and New Bedford, which have weighted votes, voting against him.

Lang said this week he only voted against George because he thought it would be awkward for George to be administrator when another company was the bus operator.

“If we were going to go into a new era in regard to the company, I wanted to make sure that there was a new administrator, too,” he said.

An audio recording of the November 2011 meeting to appoint a new administrator shows only one board member, Mary Ellen Gomes of Westport, raised questions about George’s ethics.

“I feel like there is something that is not being said, and it is embarrassing to me when we have triennial reviews and FMO reviews that show we have so many areas in which we are deficient,” she said. “We need a leader who knows how to follow these rules. I think it’s time we move forward to leave our friends behind and go for what is right.”

Gomes could not be reached for comment this week. In the recording, Fall River’s representative does not explain why the city chose not to support George. Mayor William Flanagan referred all requests for comment to his aide Cathy Ann Viveiros, who did not respond to seven phone calls.

After choosing a new administrator, the allegations about financial improprieties appear to have stopped.

Then, in December 2013, the board received a letter from the FTA asking for its money back.

The letter cites the financial management oversight (FMO) review from 2010 as its reason for asking to be reimbursed for $224,071, saying the review had identified “significant failures in SRTA’s oversight and stewardship of FTA funds, particularly certain fiscal and procurement activities of USBC.”

In the letter, the FTA said federal funds had been improperly spent on paying USBC employees to work at George’s personal farm and to pay for internet service at four different residences.

According to SRTA attorney Arthur Frank, the SRTA board acted “immediately,” discussing the letter at its next scheduled meeting in February 2014.

The SRTA board has since agreed to repay the FTA by not taking federal grant money it had previously been offered but not yet received. Frank said the authority also decided to contact the U.S. Attorney’s office and the Bristol District Attorney’s office to file a criminal complaint against George.

“This was the first time we had heard about anything,” said Frank. In hindsight, Lang said, he does not believe the board should have acted differently or reported George earlier.

“Before we decide that things in a wrongful termination suit automatically turn into an audit, automatically turn into an indictment, and automatically turn into a guilty verdict, let’s remember there is a criminal justice system,” he said. “These are allegations that have to be proven in court.”

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