Attorney General Alleges That Hoboken Bus Company Committed Fraud

HOBOKEN, NJ — New Jersey Attorney General Gurbir Grewal announced Monday that the state has intervened in a whistleblower lawsuit against Hoboken-based Academy Bus, which advertises itself as the nation’s largest private transportation company.

The complaint alleges the company defrauded New Jersey Transit out of more than $15 million by, according to a press release, "vastly underreporting the number of scheduled bus trips that the company missed and charging fees for hours and miles driven for bus trips that never happened."

Academy operates seven NJ Transit bus routes in Hudson County, representing approximately 175,000 bus trips each year. Academy bills NJT approximately $12 million annually for its services and retains the fares.

Grewal said Monday, "“Most of us know how frustrating it can be to wait for a bus that doesn’t show up on time or never appears at all."

Filed in state Superior Court in Essex County, the lawsuit alleges that Academy engaged in an “extensive multi-year, multi-million-dollar fraud” by failing to report tens of thousands of missed bus trips between April 2012 and December 2018. The case is the highest dollar-value whistleblower lawsuit in which the state has intervened, according to the release.

The Attorney General alleges that Academy’s fraud “caused the riding public to suffer because Academy missed tens of thousands of bus trips on busy Hudson and South Hudson service area bus lines. Riders were delayed if not stranded.”

The service areas primarily cover the Hudson County waterfront, including Bayonne and Jersey City, and include the heavily used Route 119 line for commuters traveling to and from New York City.

Under its contract with NJT, Academy was required to report the number of bus trips that were missed for each bus route on a monthly basis. An individual “trip” is when a bus travels from one end-point of a route to the other. NJT would then deduct an assessment for each missed trip.

Texts reveal 'two sets of numbers'

The Attorney General’s complaint describes how Academy’s internal records allegedly two sets of numbers, according to the release: the real number of missed bus trips (which Academy labeled “RN”) and an adjusted set of false numbers.

The Attorney General’s complaint quotes from text messages between Academy employees where they communicated about how much they would reduce the “RN” before sending them to NJT.

In one instance, according to text messages quoted in the complaint, one employee proposed reducing the real number of missed trips for September 2018 from over 1,800 to just 700. Another responded, according to the release: “Bro bro. It’s 1800 missed, really – we are gambling with this huh?” Academy eventually reported 804.5 missed trips to NJT for that month, allegedly defrauding NJT by failing to report over 1,000 missed trips.

The complaint alleges that Academy may have missed so many trips because it was shifting drivers from the NJT routes it covered to its more profitable charter bus routes.

In addition to Hoboken-based Academy and its affiliated corporate entities Academy Lines, LLC; Academy Express, LLC; Number 22 Hillside, LLC; and No. 22 Hillside Corporation, the complaint announced indviduals at the company as defendants.

The attorney general became aware of the issue becaues of an action filed against Academy by a former Academy Terminal Manager Hector Peralta, who worked at Academy and 22 Hillside for 14 years.

The state is represented by Deputy Attorney General and Section Chief Lara Fogel, Deputy Attorney General and Assistant Section Chief Kenneth Levine, Deputy Attorney Generals Eric Boden and Dana Vasers, all from the Government & Healthcare Fraud Section of the Division of Law’s Affirmative Civil Enforcement Practice Group, and Assistant Attorneys General Jeremy Hollander and Janine Matton of the Affirmative Civil Enforcement Practice Group.

The complaint can be found here.

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