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Academy Bus to pay $20.5M after being accused of defrauding NJ Transit for years

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Academy Bus will pay $20.5 million to settle a lawsuit filed by New Jersey accusing the private company of underreporting missed bus trips and by over-billing New Jersey Transit for hours and miles driven in what authorities described as an “extensive multi-year, multi-million-dollar fraud.”

The Hoboken-based company also agreed to be overseen by an independent monitor, implement new policies and add more training for employees to ensure Academy accurately log trips it fails to complete and how many miles its drivers travel, the state Office of the Attorney General said Friday.

The agreement announced Friday is the state’s largest-ever non-health care False Claims Act settlement.

“Academy is glad to have worked cooperatively with the state of New Jersey to resolve this litigation,” Academy Bus spokesman Ben Martin said Friday in an emailed statement. “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.”

The complaint also alleged that Academy’s internal records tracked two sets of bus trip numbers – the “real” number of missed bus trips (which Academy labeled “RN”) and an adjusted set of numbers that was always significantly lower, and which Academy submitted to NJ Transit.

Academy was paid about $12 million a year to operate seven NJ Transit routes in Hudson County with the alleged fraud taking place between April 2012 and December 2018. Those routes handled about 175,000 trips per year and New Jersey Transit kept the fares collected from riders.

In addition, Academy also billed NJ Transit for miles and hours driven for buses that had not actually run, often shifting drivers to its more profitable charter bus routes.

The missed trips delayed or stranded tens of thousands of riders over the years, the attorney general’s office said in 2020 when the suit was filed.

New Jersey Transit deducted $150 for each reported missed bus trip, and $300 for any unreported missed trip later discovered, court papers said. On occasion, NJ Transit would spot-check Academy with a GPS tracking device called “Clever” installed on its buses as well.

In one instance, an Academy dispatcher told CEO Francis Tedesco moving drivers would cause missed trips on NJ Transit routes. Tedesco responded: “I don’t care about NJ Transit. I want my drivers at this very moment for charter,” according to court papers.

Text messages between Academy employees illustrate how they discussed fudging the numbers that would be sent to NJ Transit, court papers stated. The fewer deductions Academy made, the more money it received from NJ Transit, according to the companies’ agreement.

In 2016, for example, Academy missed 13,234 trips but only reported 1,173 of the missed trips to NJ Transit, costing NJ Transit $3,618,300.

The $15 million suit filed by the state Office of the Attorney General in November 2020, intervened in a whisteblower suit brought by former Academy employee Hector Peralt. Peralta will receive an undisclosed portion of the settlement.

Academy admitted no wrongdoing in approving the settlement.

NJ Advance Media staff writer Larry Higgs contributed to this report.

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Jeff Goldman may be reached at [email protected]

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