FBI agents served a search warrant at the Milpitas offices of a company that served as the paratransit broker for the Santa Clara Valley Transportation Authority, prompting the agency to take over managing the service.
For the agency's riders
The VTA said that the agency terminated the Outreach and Escort Inc. service this summer. The government agency was in the process of transitioning away from Outreach managing the service because its auditor was worried the company was overbilling for services never rendered.
The VTA alerted the FBI and the Santa Clara County District Attorney's Office after conducting an audit. In August, the board also filed a lawsuit against Outreach, alleging breach of contract, fraud, false claims and unjust enrichment.
In 2015, VTA's auditor general performed an audit, showing that Outreach seemed to be overbilling because the reported trips were far higher than what the auditor found, the lawsuit alleges. The auditor also found that "modifications" were made after being asked for information regarding discrepancies, the lawsuit alleges. This raised concerns for the auditor general that Outreach had billed for trips not actually made, the suit claims. Also, at a public meeting of the VTA board of directors, a woman said that she had been directed by Outreach supervisors staff to fix the data, VTA alleges.
Outreach may have charged as much as $7 million a year for services it could not document, leading the transit board to end its partnership with the company it had started using in 1993.
The FBI raid on Thursday “expedited the need for VTA to implement the contingency plan to provide services for paratransit customers,” the agency said.
As a broker, Outreach managed contracts and made reservations, but did not provide rides, the VTA said. No routes or rides will be impacted because of this investigation, the VTA said.
VTA Board Chair Cindy Chavez said the VTA board sued Outreach and began a 12-month transition based on an audit. "We had a plan and are instituting it sooner," Chavez said.
"The FBI executed a search warrant at offices of Outreach. We're taking steps to continue providing services," VTA General Manager Nuria Fernandez said at a news conference Thursday afternoon in San Jose.
Chavez said that Paratransit customers were the "highest priority."
"It's an important service for the most vulnerable members of our community," she said.
A phone number listed on the Outreach website was not in working order on Thursday. No one immediately responded to an email seeking comment either. And the FBI did not immediately return a phone call to explain the raid.
The VTA has 7,000 registered paratransit clients. Paratransit is a specialized, door-to-door transport service for people with disabilities who are not able to used traditional bus, BART or public transportation routes.
Outreach said on its LinkedIn page it is the American Disabilities Act paratransit broker for Santa Clara County to bring “safe, reliable and cost effective methods of transportation to the community. We are more than a transit agency, we are a human agency as well.”
Paratransit customers should call (408)321-2300 to book rides or get more information.