BOSTON — A former high-ranking worker within Keolis and the ex-general manager of a Massachusetts-based electrical company are facing criminal charges after federal investigators say they stole more than $8 million that was meant to be used to operate the MBTA commuter rail system.
John P. Pigsley, 58, is slated to be arraigned Wednesday afternoon in federal court in Boston after he was indicted by a federal grand jury on five counts of wire fraud, one count of conspiracy to commit wire fraud, six counts of tax evasion, one count of filing a false tax return and four counts of structuring financial transactions to evade reporting requirements, according to United States Attorney Rachael S. Rollins.
John Rafferty, 69, of Hale’s Location, New Hampshire, has been charged by an information and has agreed to plead guilty to one count of conspiracy to commit wire fraud, Rollins said.
Keolis has operated the MBTA commuter rail system since 2014 under an annual contract of $291–$349 million.
Pigsley was employed as Keolis’ Assistant Chief Engineer of Facilities and was responsible for the maintenance of MBTA Commuter Rail Facilities and their engineering operations, including handling corrective repair and project management for assets and maintenance and ordering and approving his subordinates’ orders of electrical supplies from outside vendors for Keolis between 2014 and November 2021, according to charging documents. Pigsley also operated a separate construction company called Pigman Group.
Rafferty was the general manager of LJ Electric, Inc., an electrical supply vendor to which Keolis paid over $17 million between 2014 through 2021.
During that time, Pigsley and Rafferty allegedly defrauded Keolis of over $4 million through a false LJ Electric invoicing scheme. Specifically, it’s alleged that Rafferty purchased vehicles, construction equipment, construction supplies and other items for Pigsley and the Pigman Group, and Pigsley directed Rafferty to recover the cost of these items by submitting false and fraudulent LJ Electric invoices to Keolis. The fraudulent LJ Electric invoices are said to have included a percentage profit that Rafferty allegedly kept for himself.
Rafferty also spent more than $3 million on items for Pigsley and others including at least nine trucks, seven Bobcat machines, at least $1 million in home building supplies and services, and a $54,000 camper in which Keolis paid Rafferty more than $4 million based on false LJ Electric invoices, according to the documents.
In addition to the false invoicing scheme, it’s alleged that Pigsley directed Keolis to purchase copper wire, which he then stole and sold to scrap metal businesses, keeping the cash proceeds for himself. To conceal the theft, investigators say Pigsley personally picked up the copper wire orders from vendors or had the orders delivered to his Beverly home. Pigsley is said to have then personally transported the wire to scrap yards where he traded it for thousands of dollars in cash several times a month and sometimes more than once a day.
Pigsley obtained more than $4.5 million in cash by stealing and scrapping the copper wire, the documents stated.
Investigators say Pigsley also defrauded the IRS by failing to withhold and pay federal income taxes on income he received from the LJ Electric invoicing scheme and from scrapping copper wire, in addition to filing a false tax return for the tax year 2016.
In a statement, Rollins said, “There is perhaps no single state agency that impacts the daily lives of the millions of people who live and work in the greater Boston area more than the MBTA. Over the last few years, T ridership has had to endure its fair share of both acute and chronic issues. Today, unfortunately, we add fraud to that list. The criminal conduct alleged here specifically involves the Commuter Rail – the entity Keolis operates for the T – and two men who lied to, cheated and stole from Keolis.”
An investigation remains ongoing.
This is a developing story. Check back for updates as more information becomes available.
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