Fired MTA Official Claims Billing Fraud

A woman who was abruptly terminated from her job as controller of the Metropolitan Transportation Authority three weeks ago has fired back, filing a legal claim this week declaring that she intends to sue the transit agency and two top officials for fraud, conspiracy, harassment, defamation and breach of contract.

Jeannie I. Johnson contended in the claim that she was fired to “cover up” what she alleged was a conspiracy by her boss, chief MTA financial officer Ronny Goldsmith, and others to inflate the cost of contract accountants who worked in her office.

In addition, Johnson asserts that MTA Inspector General Arthur Sinai “leaked defamatory statements” about her to the news media and board members.

The claim is the legally required prelude to a lawsuit against a government entity, which can only be sued if it rejects the action.

Johnson’s attorney, Pamela A. Mozer, said Sinai and Goldsmith have accused her client of demanding kickbacks from people she hired for the MTA’s accounting department.

Mozer said the accusation is a “misrepresentation” intended to humiliate Johnson, a veteran accountant from the Bay Area who had worked for the transit agency for 10 months.

An MTA spokesman declined to comment on Johnson’s claim, noting that her actions are still under investigation by Sinai as the agency’s inspector general.

Mozer was less circumspect, claiming that Goldsmith, not her client, had committed “wrongful acts” intended to circumvent federal contracting rules and “cheat taxpayers” out of thousands of dollars.

Mozer said Goldsmith contracted with Johnson and her firm--Johnson & Associates--in July to put into operation the MTA’s new computerized financial information system. Mozer said Johnson quickly discovered that she needed a staff of three accountants to assist her in the new job.

According to the claim, Goldsmith received a bid for the work from accounting giant Coopers & Lybrand that would have paid staff accountants $65 per hour. The claim says Johnson offered instead to recruit, interview and hire personnel herself and charge the MTA just $55 per hour for each employee. According to Mozer, Johnson planned to pay the accountants $35 to $40 per hour each, with the remaining amount of money retained to cover expenses and give her a profit.

According to the claim, Goldsmith accepted her bid and Johnson hired the accountants in August.

A week after they arrived at work, however, the claim asserts that Goldsmith told Johnson that billing for the new staffers would have to be channeled through a different contractor--computer consultants b.d. Systems of Torrance. In turn, the claim asserts b.d. Systems channeled the contract through a Los Angeles-based subcontractor named Third Wave Enterprises.

The result, according to the claim: The two new contractors each marked up the accountants’ pay by 20%. The $35 per hour staffers thereby ended up costing the MTA $77 an hour, the claim asserts.

“This was an outrageous act that allowed a favored contractor to make undue profits at the expense of taxpayers,” Mozer said. “Jeannie recruited these people, hired them, trained them and supervised them. All that these third parties did was bill for them.”

Mozer said that the appearance of a “kickback” resulted from the fact that the staffers offered to pay Johnson the difference between the $55 per hour they were paid directly by Third Wave and the $35 or $40 per hour they contractually agreed to take from Johnson.

Attempts to reach b.d. Systems and Third Wave on Wednesday were unsuccessful. MTA rules forbid such contractors to comment on MTA business to the news media.

Mozer said she believes that Goldsmith moved the contract to b.d. Systems to circumvent MTA rules and federal guidelines requiring board approval for contracts valued at more than $100,000.

Two of the accountants Johnson hired--David Powell and Sherryl Brinkley--have joined her claim. Both were fired a few days after Johnson, according to Mozer.

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