Ex-Consultant to MTA Charged in Kickback Case

A New York insurance consultant was charged by a federal grand jury Wednesday with making $85,000 in kickbacks to a Metropolitan Transportation Authority administrator in return for consulting deals.

John D. McAllister, 49, was indicted for allegedly making 23 payments to Abdoul Sesay, the former risk manager of the MTA’s construction division.

Sesay, who oversaw insurance operations for subway construction until he was fired in July, pleaded guilty six months ago to felony charges of kickbacks and tax evasion. He cooperated with authorities, said Assistant U.S. Atty. Marc S. Harris. Sesay admitted to receiving “payments and other benefits” from McAllister.

John Crouchley, McAllister’s attorney, said his client “denies any wrongdoing, intends to defend against the charges and expects to be fully exonerated.”

Sesay was responsible for soliciting bids and awarding contracts to insurance companies and other businesses that assessed potential liability regarding the MTA’s rail projects. In 1992, he recommended that McAllister and a number of other consultants be hired to assist him on insurance matters.

“Sesay didn’t have much of a staff so he hired a number of outside consultants who operated, essentially, as his staff,” Harris said. “McAllister would fly out to Los Angeles, work for a period of time, and submit a bill.”

McAllister, who worked with Sesay intermittently for about two years, earned about $400,000, with some of the money going to sub-consultants, Harris said.

According to the indictment, McAllister made 23 payments to Sesay, or to others on behalf of Sesay, “intending to influence and reward” them in connection with the subway project. The payments included about $32,000 to Sesay’s American Express account and $33,000 to Sesay directly.

“When McAllister would receive money from the MTA, he’d kick back a portion to Sesay,” Harris said. “He’d kick back the money for work already given or to influence Sesay to give him additional work.”

The federal indictments are the latest in a series of difficulties for the $5.8-billion subway project.

Nevertheless, MTA spokesman Jim Smart said: “We are very pleased that it was the work of our own inspector general who initiated this investigation that has helped result in this indictment.

“The vast majority of our employees are hard-working, honest, ethical individuals,” Smart said. “But we cannot and will not tolerate any fraudulent behavior.”

Prosecutors have recommended that Sesay, scheduled to be sentenced in April, receive no more than 21 months in prison--far less than the maximum penalty of 23 years. McAllister faces about three years in prison, Harris said.

Sesay also has admitted accepting about $25,000 from another insurance consultant, who received about $80,00 in consultant contracts in 1993.

The charges against McAllister and Sesay stem from an ongoing investigation by the MTA inspector general, working with the FBI, IRS and U.S. Department of Transportation’s inspector general.