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Alexandra Wrage
President and Founder, TRACE


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Nicola Bonucci 
International Lawyer and former
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Dave Lee
FCPA Compliance Consultant, TRACE
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Sunny McCall
Senior Director II, Compliance Training, TRACE
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Lee Nelson
Independent Compliance and
Ethics Attorney
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Jessica Tillipman
Associate Dean for Government Procurement Law, The GW University Law School
  • Writer's pictureDave Lee

Last Stop on the Gravy Train (1 of 2)

Train Station

Last month, James Stevens, a former supervisor at Philadelphia’s mass transit system, was sentenced to 37 months in prison for taking roughly $86,000 in cash and other benefits in connection with $4.6 million in camera supply and maintenance contracts. Known locally as SEPTA, the system is the 6th largest in the U.S., and serves 750,000 daily riders.

The bribes are alleged to have been made between 2014 and 2018, and included expensive concert tickets, frequent dinners, and payments to a sham charity that were pocketed by Stevens. (The vendor also endorsed Stevens’ contract negotiation skills on the latter’s LinkedIn profile – although that detail isn’t specified in the indictment.)

As with many corruption cases, the details reveal lessons and insights for anticorruption practitioners. This post highlights some practical takeaways for other organizations; a later post will discuss the potential downstream impact of the corruption.

(Sometimes) Legitimate Payments

Among the improper benefits that the U.S. Department of Justice cited in its prosecution of Stevens are sponsorships of his department holiday parties. Yet companies are often asked to help cover similar expenses.

Indeed, it is common for customers or public officials to ask their vendors and other business partners to help sponsor charitable fundraisers or social events, usually with an eye towards building goodwill by spending time together in a more relaxed setting. In such instances, a sponsoring company should look to confirm various facts, including:

  • In fundraisers, the charity is formally registered with the relevant authorities. In the U.S., the Internal Revenue Service maintains a searchable registry of tax exempt organizations. Bear in mind, though, that the database includes trade and political organizations in addition to charities, so practitioners should check the specific type of tax exemption claimed (listed at Box I in the Form 990 filing).

  • The charity is well established and serves a public purpose.

  • The event carries organizational imprimatur – i.e., the sponsorship is solicited with the knowledge and endorsement of the company or agency where that customer or public official works, and (where applicable) with the knowledge and endorsement of the charity.

  • The sponsoring company would send a handful of employees or other representatives to the event, to participate in the social nature of the event.

  • There are enough other sponsors so as to avoid any inference of undue influence (or the nature/amount of your company’s sponsorship is not so significant that it could be seen as excessive or improper).

  • The amount of the sponsorship is consistent with the nature of the event. Factors here include the lavishness of the venue, the nature of the event, and the number and types of invitees.

  • The payment is made to a proper recipient – usually the company or agency seeking the contribution (as opposed to individual employees), or the charity itself.

Culture Matters

Around the same time, other management-level employees in a different part of SEPTA had been abusing corporate credit cards for their personal benefit, to the tune of nearly a million dollars. They would get caught after a 2019 audit. Not too long after that, the agency was criticized for hiring recent retirees as independent consultants, even though they were collecting SEPTA pensions at the time – a practice that SEPTA’s general counsel later admitted he should not have allowed.

It’s not clear whether Stevens, who claimed to report directly to the general counsel, sought internal approval for having a contractor foot the bill for the holiday parties, or otherwise disclosed the funding. Given that these parties were held at an ordinary pub, they were likely not lavish – and his staff may have simply believed the event was paid through SEPTA’s budget, or with Stevens’ own personal funds.

But this seems unlikely for the hotel rooms given to Stevens and his colleagues during a 2015 visit by Pope Francis to Philadelphia. The rooms were originally booked by the Delaware-based vendor for its own use, so that its staff could be on hand in case of problems. But Stevens and SEPTA employees had no such need for the rooms, as they could have simply used SEPTA’s head office – located on the same block as the hotel. If anyone at SEPTA thought it was improper or unusual to be booking these hotel rooms, it does not appear to have led to any sufficient remedial action within SEPTA.

FCPA Compliance Consultant, TRACE 



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