THE MBTA SUED its former private parking lot operator on Thursday, seeking the recovery of millions of dollars allegedly stolen by the firm’s employees over a three-year period. If the suit is successful, the T says its contract with LAZ Parking Ltd. requires the firm to pay the T twice the amount stolen plus additional penalties and fees.
Both the T and LAZ have acknowledged for some time that parking money was stolen, but they have failed to agree on how much. The MBTA’s lawsuit, filed in Suffolk Superior Court, does not quantify the theft amount, but John Englander, general counsel for the transit authority, said it runs to “several million dollars.”
LAZ officials could not be reached for comment, but they have indicated in the past that the amount of money stolen was significantly less.
The dispute over stolen parking revenues was referred to Attorney General Maura Healey’s office last July. Officials there declined comment on Thursday, but said the investigation is continuing.
LAZ, a Rhode Island-based firm, was hired in 2013 to run the T’s parking operations in return for monthly fees that yielded about $10.5 million a year. The T put the business out to bid last year, and LAZ participated in the bidding process. Ultimately, the MBTA hired Republic Parking System of Tennessee and the contract was redesigned to reduce cash payments from customers and to provide financial incentives for Republic if it boosted parking revenues. LAZ’s contract with the T was terminated on March 31, 2016.
The MBTA’s parking facilities include 12 lots where attendants collect fees directly from customers. Concerns about theft first surfaced publicly in April 2016 when the T confirmed to CommonWealth that a routine comparison of vehicle counts and parking receipts at the North Quincy Station lot uncovered discrepancies. CommonWealth reported at that time that the discrepancies were discovered at a total of six lots, and at least one employee had already been dismissed. LAZ ultimately terminated two employees and transferred a third to a position without cash-handling responsibilities.
LAZ conducted an investigation that confirmed losses occurred at North Quincy, but found little evidence of theft at the Lechmere and Riverside lots. The T referred the matter to the agency’s transit police, and both the T and LAZ conducted audits of their own. T officials gave mixed signals on how widespread the problem was, at one point suggesting it was confined to just a few lots.
But concerns ratcheted up in May 2016, when parking revenue numbers from March and April indicated receipts jumped fairly dramatically after the firing of the LAZ employees. Parking revenues remained high over the subsequent months, suggesting the theft amounts might have been much greater than originally believed.
“After the discovery of the theft and the termination of the employees, the monthly revenue reported and provided to the MBTA by LAZ increased significantly, further confirming that LAZ’s employees had been stealing from the MBTA and that LAZ had failed to properly supervise those employees in order to ensure that all gross revenue was collected at each of the facilities for which LAZ was responsible,” the T said in its lawsuit.
T officials say they now believe that parking revenues were stolen at six lots, including North Quincy, Lechmere, Riverside, Oak Grove, Malden, and Wellington. T officials declined comment on how the money was stolen other than to say documents were altered.
The T said its contract with LAZ requires the company to refund any money lost through theft. The T said it deducted some of what it believes it is owed from its monthly contract payments to LAZ, but the transit agency believes it is still owed money.
According to the MBTA’s lawsuit, the agency is seeking recovery of the amount stolen, a penalty equal to double the amount stolen, a penalty of $200 per parking facility for each day in which revenue was collected by LAZ but not forwarded to the T, and interest on the stolen funds at an 18 percent rate. The court filing also says the T is owed “a penalty in the amount of double the initial penalty and the daily penalty, as required by the management agreement when three of the same penalties occur within any 12-month period.”