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GAO Finds Fraud in Commuter Program
Federal Workers Selling Transit Cards

By Lyndsey Layton
Washington Post Staff Writer
Tuesday, April 24, 2007

It's a perk of federal employment: a free monthly subsidy that pays for commutes on public transportation. But scores of workers have been taking the government for a ride, selling their benefits on the Internet and pocketing millions in cash each year.

The program, which covers 300,000 federal employees nationwide, has been abused by workers across a variety of agencies, the Government Accountability Office will report to Congress today. Workers in the Washington region alone have defrauded the government of at least $17 million a year, with the actual figure probably several million dollars higher, according to the GAO.

Employees have taken the benefit vouchers, known locally as Metrocheks, and turned them into a kind of black-market currency, selling them -- often at a discount off the face value -- to buyers who can use them to ride Metro, regional buses or commuter railroads.

Workers have been accepting the transit subsidies but driving to work, or claiming a subsidy far greater than their commuting costs and selling the excess, GAO investigators found. For example, one employee at the Department of Transportation claimed the maximum benefit of $105 per month, but his commute cost $54.

Meanwhile, agencies have been handing out transit subsidies to employees who receive free parking spaces, to employees who no longer work for the government and, in some cases, to people who apparently were never employed by the agencies.

Monitoring sales on eBay over three days last August, GAO investigators found 58 people selling Metrochek cards and investigated 20, all of whom were federal employees. Among them:

· A Northern Virginia man who works for the Transportation Department and has been receiving the maximum transit subsidy since 2004, even though he often "slugs" to work -- jumping into the impromptu carpools on I-95/395 lanes -- gets a ride with a neighbor or rides his motorcycle. He sold his unused Metrocheks, worth $1,080, on eBay. He told investigators he did not know it was illegal, despite a warning on the cards.

· Both members of a married couple working at the Defense Department received transit subsidies but drove to work together. The husband told investigators he sold 61 lots of Metrocheks, worth $6,000, on eBay. The wife denied selling hers and said she used her subsidy for personal travel -- a violation of the program -- but both spouses' names appeared on the eBay accounts.

· A worker at the Internal Revenue Service received monthly transit subsidies since 2004 and at the same time had a free parking space at his office. He told investigators that he sold Metrocheks valued at $930 on eBay.

· 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.

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