VTAscrambles to fill paratransit service after FBI raids contractor.

After contractor raided by FBI, emergency plan targets thousands of disabled riders

SAN JOSE — Valley Transportation Authority officials scrambled Thursday to fill paratransit service to thousands of disabled customers after the FBI raided its beleaguered outgoing contractor, with whom the agency cut ties with this summer amid allegations of fraud and shoddy bookkeeping.

VTA General Manager Nuria Fernandez said Thursday afternoon that an emergency plan was being put into action to fulfill the 2,500 daily trips it provides to about 7,000 people.

“We are fast-tracking that plan,” Fernandez said, “and asking customers to be patient with us.”

That patience was thoroughly tested Thursday morning, with paratransit customers complaining to this newspaper that “the system collapsed,” and calls from riders and drivers were not being answered by Outreach & Escort Inc., which has provided ride services for disabled South Bay residents for over two decades.

The FBI confirmed a search warrant was served at Outreach’s office in Milpitas, but declined to comment further. Outreach and Escort Inc. did not respond to calls and an email for comment.

After receiving news about the raid and calls from frustrated customers that they weren’t being picked up, VTA said it worked feverishly to arrange transportation for the disabled who rely on the service.

One customer said that after being on phone hold for 20

minutes, he later got a message that normal service had been suspended. He added that service had become “incrementally worse for disabled riders, who must wait a minimum of 60 to 90 minutes longer” than their scheduled pickup times.

VTA officials did not elaborate on the FBI search warrant, but they strongly implied it was related to an audit released earlier this year that found Outreach may have charged as much as $7 million a year for services it could not document. That led to the transit board ending its 23-year partnership with Outreach, which is paid $20 million annually.

At the time, Outreach CEO Katie Heatley defended her nonprofit agency, asserting that they recorded numerous trips manually until converting to electronic record keeping earlier this year, and that the alleged subpar record-keeping could be “explained by technology.”

The audit also criticized VTA for not requiring routine competitive bids and failing to insist on independent access to Outreach’s systems to verify critical data, leading to promises of better oversight by transit officials. A lawsuit against Outreach has also been filed by VTA stemming from the audit.

Fernandez said Thursday that the audit was forwarded to the FBI and the Santa Clara County District Attorney’s Office to probe for potential criminal liability. But she said VTA did not get any notice of the FBI action they announced at an afternoon news conference at their North San Jose headquarters.

“While we were not aware of their action,” Fernandez said, “we knew there would be the possibility the FBI would move forward with its investigation.”

The District Attorney’s Office deferred any comment about Outreach to the FBI.

With Outreach, VTA operated 215 white Prius cars and vans on South Bay roads and have become a familiar part of the Silicon Valley landscape over the past two decades. They provide specialized, door-to-door transportation for people with disabilities who are not able to ride buses or light rail independently. Those riders use the service for everything from dialysis appointments to trips to senior centers for lunch and shopping.

Now that Outreach’s operations appear to be frozen, Fernandez said VTA is invoking an emergency contract directly with MV Transportation, rather than having it brokered through Outreach. Incidentally, Thursday was also the deadline for new bids to provide paratransit service in the South Bay replacement bid proposals, and the transit agency was undergoing a 12-month phaseout of Outreach when Thursday’s news broke.

Meanwhile, officials like Cindy Chavez, chairwoman of the VTA board and a Santa Clara County supervisor, sought to assure customers that while there will be disruptions, the agency is working to resume normal service as soon as possible.

“While all this is getting unwound and dealt with,” Chavez said, “you will be our focus.”