Employees at the MBTA's former parking vendor "skimmed millions of dollars in cash" from the agency's parking facilities, Attorney General Maura Healey said Monday, announcing a settlement with LAZ Parking.
LAZ Parking Limited LLC agreed to pay $5.6 million to settle two legal disputes, according to the attorney general's office.
LAZ won a five-year, $39 million contract with the MBTA in late 2012, according to court documents, and the payments announced Monday amount to about 14 percent of the total contract price.
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"After review by third party auditors, and on mutual agreement with the MBTA, LAZ acknowledges the alleged theft by three dishonest employees at a limited number of these parking lots. Once the loss was discovered, we acted swiftly to identify and immediately terminate those allegedly responsible," LAZ President Jeffrey Karp said in a statement. "Throughout this process we have been diligent, fully engaged and cooperative with the authorities involved to identify the nature and extent of the financial loss to the MBTA."
The LAZ contract was terminated at the end of March 2017 and Republic Parking System took over management of the T's parking facilities, according to the attorney general and the MBTA.
According to an assurance of discontinuance filed in Suffolk Superior Court on Monday, the contract specified that all the fees LAZ collected were the property of the MBTA and the vendor was liable for any losses as a result of employee theft.
The attorney general alleged that by failing to implement revenue controls, LAZ gave supervisors and parking attendants the "opportunity and means to skim cash revenue."
Healey's office also accused the company of either submitting false reports and invoices to the T or falsely claiming the reports complied with the contract.
LAZ agreed to pay $1.1 million to the state to settle the attorney general's false claims allegations, and agreed to pay the T $4.5 million to settle a May 2017 breach of contract lawsuit.
"The MBTA is pleased to have reached a resolution that makes the MBTA whole for the losses it sustained," said John Englander, the MBTA's general counsel.
In May 2016, Englander told the MBTA's Fiscal and Management Control Board that officials had identified discrepancies between parking revenue and car counts and there were plans for further investigation. The MBTA fully controls about 100 parking facilities.
The attorney general alleged that LAZ submitted false reports because of its failure to audit revenue and usage at 13 attended lots.
"LAZ employees skimmed millions of dollars in cash from MBTA parking facilities, robbing the public of funds we need to invest in transportation," Healey said in a statement. "Through this settlement, we're recovering millions of dollars for the state and forcing the company to change its bidding practices."
According to the attorney general's office, nothing in the settlement precludes law enforcement from investigating any criminal allegations associated with the alleged revenue skimming. The AG's office declined to comment on whether any criminal investigation is underway.
"LAZ has accepted our share of any responsibility and we have honored all of the commitments we had made and fully reimbursed the MBTA for the losses which were incurred," Karp said. "For the past 36 years Laz Parking has been built on the core values of respect, commitment to people, honesty and integrity and trust. We are proud to live up to these values and always do the right thing for our clients and customers."