Feds Probing Western Mass. Transit Agency Insurance Contracts

Federal authorities are investigating contracts and insurance policies of the agency that oversees public transportation services for 24 western Massachusetts communities.

The government’s probe is also focused on the Pioneer Valley Transit Authority’s involvement with a $115 million project to redevelop the city’s Union Station into a major transportation hub.

Federal agents searched the PVTA’s Springfield headquarters on this week, as well as the offices of Hulmes Transportation Services, a Belchertown company that contracts with the PVTA to provide transportation to disabled riders as part of its “paratransit services.”

The PVTA is one of the largest of the state’s 15 regional transit authorities. It oversees public transportation in the Pioneer Valley and owns 190 buses and 120 vans, but contracts with outside companies to provide the drivers.

Assistant U.S. Attorney William Welch would not comment on PVTA’s contract with Hulmes. But in a letter received Wednesday by the authority’s governing board, Welch singled out PVTA administrator Gary Shepard’s decisions “regarding the award of the paratransit services contract as well as insurance coverage purchased by the PVTA over the last several years.”

Historically, regional transit authorities have paid the insurance costs to cover drivers against accidents and other claims. But as those costs have risen over the last several years, many of the authorities have stopped paying the bills themselves and shifted the burden to the bus companies they contract with.

“You could infer from the letter that the PVTA has continued to buy insurance coverage over the years,” Welch said.

Keith Henry, the PVTA’s chief financial officer, said about $410,000 of the agency’s $32 million budget goes to insurance costs.

The PVTA’s insurance broker is Chase, Clark, Stewart and Fontana, an agency managed by Springfield City Councilor Timothy Rooke. Rooke did not immediately return a call seeking comment.

Shepard, who said he had no intentions of stepping down from his post as head of the PVTA, would not comment on any of the points made in Welch’s letter.

“The only comment I want to make is we will cooperate fully with whatever investigation is conducted by the FBI or whoever,” he said.

Welch’s letter also said that the federal probe has “uncovered troubling information” about the PVTA’s involvement in a project to refurbish the city’s vacant Union Station into a regional transportation hub. The $115 million project relying on state, federal and private funding has stalled, and is the subject of a recently completed federal audit.

The audit has not been made public, and Welch would not comment on it. His letter says the federal investigation will “encompass a thorough financial review of the Union Station project and the PVTA’s finances.”

PVTA chairman James St. Amand said the agency “really does not have a direct role in the Union Station.”

“Our role in that was minimal,” he said.

But a 2002 publication put out by organizers of the Union Station project touts an agreement the PVTA made with the city and a private developer that cleared the way for construction to begin at the old train station. In the publication, Shepard says the PVTA helped raise $35 million in federal and state money for the project.

In a closed meeting Wednesday, the PVTA board decided to hire an independent lawyer to investigate the claims made by federal investigators. The board also voted to allow agents to search the hard drives of computers seized from PVTA offices on Tuesday.

“At the present time, Gary Shepard has the full confidence of the board, and we’ll see where this investigation goes,” St. Amand said.