$2 Million Camera Bribery Charges Expands To 13 States

[UPDATE February 2014: The company is suing their salesperson saying he went 'rogue', the salesperson is now fighting back saying not only was he 'carrying out orders' but this was done in another dozen states.]

This spring, an Australian company, Redflex Systems, admitted to bribing a Chicago City official with $2 million in payments. The company's internal investigation is a detailed and unambiguous admission, including such details as:

  • Two former company officials were involved in $2.03 million payments to a consultant who was friends / associate with the City Program Manager for the traffic cameras.
  • "The investigation concluded that Redflex officials paid for vacation-related expenses for the City Program Manager for at least 17 different trips from 2003 through 2010. The expenses for 16 of those trips (including hotels, flights, rental cars, golf games, and meals) were paid for by the former EVP or the Consultant, who were reimbursed by Redflex. In addition, the former EVP or the Consultant purchased a computer, Chicago-area golf games and meals for the City Program Manager and was reimbursed by Redflex. These improper expenses totalled approximately $20,000."

What do you think?


I'm stunned...that Chicago has a Governmental Ethics Ordinance, I mean. :)

The Chicago contract (which is being canned when it expires this month) represented 13% of Redflex's worldwide revenue ($~$100M) Mayor Rahm Emanuel said that the contract was immediately cancelled once he found out about the Redflex investigation, and that "his move to block a new contract for the operator of Chicago’s red light camera program shows the city has “zero tolerance” for ethical violations." (LOL)

There are two other geographic locations that the feds are looking into where similar 'activities' with Redflex took place - they wont say which two other cities are involved, but Jefferson Parish, LA (suburban New Orleans) is most likely one of them. Stay tuned for that story once it hits.

The 'consultant' (hired by Redflex) that was allegedly spreading around Redflex money in Chicago is a guy named Marty O'Malley (longtime friend of the City Program Manager [who ran the camera program], John Bills.) That same consultant is being implicated in the Jefferson Parish probe as well.... Bills retired in 2011 and claims no wrong-doing (of course he does). :) Redflex investigators (the law firm they hired) claim the kick-back scheme was the brainchild of Bills (of course they do; ignoring that the same 'consultant' is possibly implicated in other cities' kickback schemes as well).

Here's an audit report from the Chicago Inpector Generals office (from May 2013) showing that, although city officials claim the redlight program exists for 'safety' reasons, there is NO EVIDENCE to support this claim - and MUCH EVIDENCE showing that 'safety' has not even been a consideration when placing/moving these cameras (they also claim no evidence that placement of cameras was done to maximize revenue either - more like the program was a complete joke, with no oversight whatsoever).

Status Quo - Here's a story from a few days ago saying that Mayor Emanuel's campaign received $10K in political donations from the wives of 2 different exec's from System Development Integration - one of the companies bidding for the new contract once the Redflex contract expires. (note that the Trib story it links to is no longer there) :)

Here's the map of the Chicago redlight camera locations.

Finally, check out this story from Chandler, AZ that includes a study that shows that increasing yellow light times is more effective (yet obviously less lucrative for municipalities) for increasing safety/lowering accidents than red-light cameras are. Note how the City Transportation Engineer from Chandler ignores this data completely so he can continue to justify having redlight cameras at some of those same intersections now... :)

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In case you can't tell, I think (and always have) that the reasoning for redlight cameras is complete bullshit. Safety of the public is not even a concern, nor was it ever.

Albeit to a lesser extent, graft is not uncommon with large contracts. There is always someone who seemingly has the 'inside track' when a big RFP hits. The policy of my former integrator was 'walk away' if someone asked us to pay for the opportunity to get their business.

One example of this was with local (Native American) Indian Nations, where 'non native' owned businesses were asked to pay a 'license fee' in order to bid work. Rather than a flat fee, this amount almost always was calculated as a percentage of future contract grosses. You paid the fee if you wanted to bid, not if you won.

Other cases included a large retailer asking all sub-contractors to fund a large scale, luxury golfing junket. If you didn't pitch in, you shouldn't expect to be a sub very long afterward.

While the dollar amounts are large in the Chicago example, I expect the practice is fairly common on a smaller scale in countless projects. Season tickets here, little league uniforms there, a thousand dollars in an envelope... it happens.

But it would lessen if exposed. Anyone who can share current examples, let us know.

Bribery in Chicago? I'm shocked, shocked...

(somebody will have to tell me how to embed a youtube video here)

When the the Supreme Court decides that corporations are people for election contributions should we be surprised?

On a side note, municipalities here in Florida have been caught shortening yellow light times in areas where red light cameras have been installed.

So the Redflex bribing scandal is evolving. The company is alleging that a salesperson went rogue and secretly handed out these massive bribes without them knowing (editor's note: ha!)

The salesperson is fighting back, claiming that this was a systematic effort approved and designed by the company (see the counterclaim).

Here are some specific allegations of the salesperson against his former company:

  • The company approved 'celebratory tokens" which the salesperson claims was just a fancy term for gifts to customers and prospects.
  • He was simply 'carrying out orders' of his superiors and that the expenses were approved repeatedly over years including directives to "proceed in a cautious and appropriate manner in providing gifts and entertainment to city officials."
  • He is claiming that it is not just Chicago but includes 'celebratory tokens' to officials in California, Washington, Texas, Colordao, Florida, New Jersey, Georgia and more.

The claims about lots of other deals / states could make this a whole lot messier.

"The claims about lots of other deals / states could make this a whole lot messier. "

Or this thing gets settled out of court with confidentiality agreements signed by both parties, without either admitting to any wrongdoing, and the rest of this story gets canned unless criminal charges for bribery and traffic of influence get laid.

Problem is that this is spurring journalists in various states to look into their local deals and probe into any impropriety there. They may find evidence with their own local officials, expanding the issue. Your scenario may happen but to state it as a fact is misguided.

I'm not stating anything as a fact, just as very likely since this is a private matter between an employer and its employee, even though it has a very public tinge. It wouldn't be a first.

If anything, what the press attention might do is push someone in one or some of the cities listed in the counterclaim to lay those bribery and traffic of influence charges so they don't get splashed too badly.

"to lay those bribery and traffic of influence charges so they don't get splashed too badly"

What?

Never underestimate politicians.

I still do not understand what you are saying. Politicians are going to do what?

Have any criminal charges for bribery actually been laid yet?

All there seems to be references to are civil complaints between Redflex and it's former salesman.

The charges in the civil complaints are relatively new and have only recently been reported. This increases the likelihood that local reporters will investigate into officials in their city.

And you are simply wrong here: "this is a private matter between an employer and its employee." This is a court case getting coverage across the country.

Please no more comments here unless you can bring to bear some new specific information about the case.

All I'm saying is that I haven't seen any evidence a D.A., state, or federal prosecutor has laid any criminal charges against anyone, wether it be Redflex and/or it's former employee.

The only thing that seems to be going on at this point is a lot of posturing by Redflex and this saleman with neither of them admitting they are responsible for anything.

Alain, they both agree that government officials were bribed. There is NO dispute there. The dispute is whether the company ordered it OR the employee went rogue. That's it.

I think we both agree that bribing a government official is wrong and if there's no doubt it happened, so much the better.

So why hasn't any government official taken criminal legal action against either of them? Or am I missing something?

Alain, in situations where risk of flight or statute of limitations concerns are not manifest, it is not unusual to wait for outstanding litigation to resolve before proceeding with new actions for two (or more?) reasons.

1. It complicates the action due to jurisdictional/administrative issues

2. It enables the second action to use all evidence/investigative work discovered in the first action, often obtained at great expense.

Although sometimes grandstanding is seen by a D.A. running for reelection, usually the wise (and economical) choice is to wait for the conclusion of the first action.

Thanks for pointing that out Rukmini.

That makes sense. There shouldn't be any reason to have taxpayers foot the bill if the evidence can be gathered at no cost to them. And this does seem to be a win-win since it should be clear who the authorities will be going after once the outcome of these civil suits are determined.

I'd heard of evidence from some high profile criminal cases being used in subsequent civil litigation, so it would only be logical that it could also happen in reverse.

It just makes me leery that public prosecutors would wait so long to step in after the company itself determined there had been wrongdoing through its own internal investigation and made the information public months ago.

I don't know how much you follow Canadian legal news, but we've been embroiled in a huge corruption inquiry in Quebec, involving several public servants and elected officials, with allegations of wrongdoing extending over several decades in some cases, and most of the folks up here have a hard time with the fact that some of these things can be covered up so easily for so long, especially when they appear to be so widespread.

It's not quite at that stage yet but things are coming to a head:

Red-light camera vendor's bribery issue draws Clearwater inquiry - Tampa Bay Times

  • "city administrators have requested corporate gift records from the company."

Redflex, DFW's Favorite Red Light Camera Company, Is Accused of Passing Bribes in Texas - Dallas Observer

  • "Dallas contracts with its competitor, American Traffic Solutions, for its red-light-enforcement program, but Richardson, Plano, Balch Springs, Coppell, Duncanville, Grand Prairie, Mesquite, Roanoke and probably others all use Redflex."

Red Light Camera Company Accused Of Bribery - Newsplex Albemarle county, VA

  • "Richmond, Newport News, Norfolk, Chesapeake and Virginia Beach all use Redflex cameras."

Red light camera corruption could extend to Wash. - King5.com - King County, WA

  • "There are over 20 cities in Washington State that use red light cameras and they're split between two different vendors. In Seattle it's American Traffic Solutions. The other is a company called Redflex."

Company behind Jacksonville's red-light cameras accused of bribing officials in Florida, 12 other states - Jacksonville.com - Jacksonville, FL

  • "The company overseeing Jacksonville’s red-light cameras has been accused by one of its former executives of giving “gifts and bribes” to government officials in 13 states, including Florida"

All of the above articles and many more have been published in the last couple of weeks. It seems most news organizations assumed the problem was confined to the Chicago area until Aaron Rosenberg dropped his bombshell in the October countersuit revealed last month. Now, the ripples are spreading far and wide.

Excellent backgrounding work Carl! :)

Ditto!

A town near where I used to live, Brick, decided to take down their red light cameras, to great acclaim.

People all over the state are pointing to the Brick story and the corruption allegations, demanding that all red light cameras be taken down.

A number of cities and towns in SoCal have already disabled their "red light scameras" and some have removed them. After being installed for a while drivers avoided those intersections or used extra care, and since there were successful arguments made to increase the length of yellow lights, fine receipts plummeted.

Update - Indictment: the former CEO of traffic camera manufacturer Redcam was indicted on federal corruption charges. So much for the rogue sales person defense.

Also, this will make opponents of traffic cams happy: "Redflex's US operations took a hit in 2013 as the company installed 54 new systems—but removed 101."