5/29/2019Pennsylvania: Whistleblower Exposes Red Light Camera Program Fraud
Former red light camera insiders launch lawsuit filed against the Philadelphia Parking Authority alleging widespread fraud. Part 1 of 2
The former manager who ran the red light camera program in Philadelphia, Pennsylvania, and the former quality assurance officer for the Philadelphia Parking Authority (PPA) are calling out their former employer. Andrew J. Dankanich and Nicholas A. Marrandino have asked a federal judge to grant them whistleblower protection after they were fired for raising questions about the inaccuracy of the photo ticketing equipment operated by Conduent (Xerox).
"The fraud implicated both $100 million in procurement fraud as well as contractual penalties that went unpaid," attorney Andrew B. Austin wrote in court filings. "Plaintiffs attempted to rectify this fraud but were terminated for their investigation into -- and interference with -- the fraud."
When Dankanich and Marrandino alerted the Philadelphia city solicitor to the mismanagement in October 2018, they were blown off with a six-minute phone conversation about their concerns. Dankanich and Marrandino assembled a complete case file laying out how the city could recover millions in damages from Conduent for failing to meet its contract obligations. The city was not interested.
"Plaintiffs allege that the reason their complaint has been so stridently denied by the city solicitor has nothing to do with the merits of the case, but instead due to the need for political expediency to protect individuals both within and closely associated with Philadelphia leadership," Austin wrote.
Former PPA executive director Vincent J. Fenerty Jr, who was described in a 2017 city audit as an "unchecked tyrant" (read report), renewed the $100 million red light camera deal with Conduent in 2014 and 2017 despite massive ongoing problems with the system. An internal audit showed Conduent owed $25 million in damages for all of the technical problems with the system under the contract, but the company retained close ties with the city. Conduent rewarded Philadelphia's former mayor, Michael A. Nutter, with a seat on the board of directors shortly after he left office in 2016. Nutter was paid $295,000 for attending eleven meetings last year.
"Due to the conspiracy among Conduent, Mr. Fenerty, and others, Fenerty ordered the PPA to refund all penalties withheld from Conduent and further stop withholding any monies -- despite the clear contractual language authorizing such penalties -- so as to protect Conduent from financial harm," Austin wrote.
Dankanich and Marrandino allege the current mayor, Jim Kenney, made the complaint disappear as a favor to Fenerty. Dankanich says he personally observed Fenerty intervene to ensure Conduent won the red light camera contract. Dankanich was dispatched during contract negotiations to speak with executives at rival contractors Redflex and American Traffic Solutions (now Verra Mobility) with orders to "trip them up" with difficult questions. When it came time to speak with Conduent (Xerox), he was ordered to "shut up."
"While the committee members had previously discussed and come to a consensus that the Xerox's system was inferior in a number of significant and material evaluation criteria, defendant Fenerty revealed that defendant Xerox/Conduent had won the award," Austin explained.
A three-judge panel threw out the contract challenge ATS filed in 2014 finding no violation of state law in awarding the lucrative deal to Conduent (view ruling). The city insists it cannot legally sue Conduent because the profit from the red light camera program goes to a state fund. Conduent also rejects Dankanich and Marrandino's claims.
"We strongly deny the allegations in the lawsuit asserting improper conduct pertaining to Conduent and believe the lawsuit contains many factual inaccuracies," Conduent spokesman Neil Franz told TheNewspaper in an emailed statement. "As we are not a party to the litigation, we have no further comment on the matter."