GAO Finds Fraud in Commuter Program

· A worker at the Commerce Department left her job in 2001 but received benefits until 2006, when she changed addresses and the agency caught the mistake. By that time, she had sold Metrocheks worth $4,000, according to the GAO.

· The Coast Guard gave transit subsidies to one man who apparently did not work for the agency; no employment records could be located for him, the GAO found. The Treasury Department gave Metrocheks to 25 people who never worked at that agency, according to the GAO.

Metrocheks are paper cards with magnetic stripes and are used to pay transit fare. The holder does not have to show identification, and the cards have no coding that would trace them to a federal agency.

Sales have been brisk despite a warning on the back of the Metrocheks that says they are not transferable, and a pledge signed by workers that says they will use the cards only to cover their commuting costs. Approximately 163,000 federal employees in the D.C. metropolitan area receive Metrocheks.

Yesterday in the plaza outside the Transportation Department on 7th Street SW, a federal worker said she had witnessed a Metrochek transaction one morning.

"The only reason I know about it is, one girl who smokes out here, one morning a contractor came up and handed her some money, and she said she was selling her Metrocheks," said the woman, 49, a Federal Highway Administration employee who spoke on the condition of anonymity. "I guess free money is free money."

The GAO testimony, scheduled today before the Senate's Permanent Subcommittee on Investigations, describes a program that costs taxpayers $250 million annually but has virtually no oversight.

"The internal controls on this particular program are grossly inadequate, and no one agency is responsible for overseeing or managing the program -- that is a recipe for disaster," said Sen. Norm Coleman (Minn.), the panel's ranking Republican, who initiated the investigation. "It's not a case of someone being asleep at the switch; it's a case of no one being at the switch at all."

The GAO flagged the problem as early as 1993, shortly after a handful of federal agencies began offering the subsidies. The program became mandatory for all executive branch agencies in 2000, and participation soared.

But the buying and selling of Metrocheks has gone unfettered. Yesterday, nine sellers on Craigslist and eBay were trying to unload cards.

Coleman said the idea behind the program -- to reduce traffic congestion and pollution by getting federal workers to use public transportation -- remains worthwhile.

But he said basic controls should be enacted: Employment should be confirmed before someone is enrolled in the program; workers should not get parking spaces and transit benefits at the same time; agencies should verify employees' commuting expenses; and when an employee leaves an agency, the administrator of transit benefits should be notified.

"Most importantly, there should be greater clarity on precisely which agency or agencies are responsible for running this operation," Coleman said. And, he said, workers caught selling their Metrocheks should be punished.

Colleen M. Kelley, president of the National Treasury Employees Union, said that her group is concerned about possible fraud. But she noted that the Metrochek program "fills a number of vital needs, including helping federal workers with their commuting costs and assisting in efforts to reduce the amount of traffic."

GAO spokesman Paul Anderson said his agency sent letters on Friday about specific cases of fraud to the departments of Commerce, Transportation, State, Homeland Security, Defense and Treasury; the IRS; the Patent and Trademark Office; and the Coast Guard. It is up to those agencies to decide whether to pursue administrative or criminal action, Anderson said.

Staff writers Sue Anne Pressley and Stephen Barr contributed to this report.