Redflex whistleblower tossed from $300 million lawsuit over Chicago red light camera bribery scheme

By Jonathan Bilyk | Aug 9, 2016

A lawsuit, potentially worth as much as $300 million, will continue against Redflex, the company accused of bribing Chicago’s former transportation director to land the city’s red light camera deal. 

But the former Redflex executive who aided the investigation into the bribery accusations and filed the lawsuit on behalf of the city will not be allowed to attempt to claim a cut of any potential award, after a federal judge said his whistleblowing did not add enough to the investigation to merit a share.

On Aug. 8, U.S. District Judge John Tharp delivered a written opinion, formalizing and explaining in greater detail the legal reasoning that led him on Aug. 2 to dismiss plaintiff Aaron Rosenberg from the pending litigation.

Essentially, Tharp said, while Rosenberg may have aided the investigation and even provided information that has since led to the criminal prosecution of the city’s ex-transportation director and various officials at Redflex in connection with the bribery scandal, the information Rosenberg provided came after the Chicago Tribune had already made the scandal public and City Hall had launched a formal investigation in response.

That, said Tharp, siding with Redflex, should mean Rosenberg lacks the legal standing, as a whistleblower, needed to collect a share of whatever the city might win in court as a result of the lawsuit, brought under Chicago’s False Claims Ordinance.

“Rosenberg invites a comparison of the publicly disclosed information about the bribery scheme and the allegations of his complaint, but that analysis demonstrates that the principal topics discussed in the complaint had been publicly disclosed before the complaint was filed, and that the new information that Rosenberg supplied in his complaint was simply additional detail about the very same bribery scheme with which any regular reader of the Chicago Tribune was already quite familiar,” Tharp wrote.

Rosenberg’s lawsuit was filed in April 2014 in Cook County Circuit Court as a qui tam action – meaning it was filed by Rosenberg, as an individual, but on behalf of City Hall. Rosenberg had represented Redflex in negotiations with the city.

However, the case was kept under seal by Cook County Judge James E. Snyder until Chicago city attorneys indicated the city would intervene in the case, essentially taking the lead in the litigation. The seal then was lifted in August 2014.

The case was moved at Redflex’s request to federal court in 2015.

In the lawsuit, Rosenberg alleged Redflex owed the city perhaps as much as $300 million for using millions of dollars in bribes targeted at former Chicago Department of Transportation manager John Bills, who allegedly offered his assistance in steering the red light camera contract award process to Redflex.

According to the complaint, the scheme went to the highest levels at Redflex, as bogus invoices in which the bribes were concealed were approved by former Redflex top executives.

Bills and other co-conspirators have all been indicted in connection with the scandal.

The complaint alleged Redflex should be made to pay under the city’s ordinance because the vendor repeatedly denied in official ethics disclosure forms its involvement in bribery and other fraudulent activities.

Rosenberg asked the court to award him an unspecified percentage of any judgment awarded to the city in recompense for Redflex’s alleged misconduct, plus attorney fees and court costs.

Rosenberg is represented in the action by attorney John J. Muldoon III, of the firm of Muldoon & Muldoon LLC, of Chicago.

However, in response, Redflex challenged Rosenberg’s claim to being a whistleblower, saying he shouldn’t be entitled to anything the city may ultimately collect from Redflex, should City Hall prevail in court.

Tharp acknowledged the lawsuit would continue with or without Rosenberg, and he noted Redflex’s apparent animus in moving to combat their former executive’s attempt to claim a cut of any judgment.

“Redflex’s motion appears to be animated, at least in part, by its view - evident in its briefs - that Rosenberg is now seeking to profit from the actions he took that caused the company to lose hundreds of millions of dollars in business and exposed it to substantial potential liability in this lawsuit,” Tharp wrote. “Reading Redflex’s briefs, it is difficult to avoid the conclusion that its primary purpose is to deny Rosenberg any portion of a future damage award.”

But the judge said Redflex’s reading of the law is still correct.

Rosenberg argued the information he provided in his lawsuit was more specific and detailed than what was disclosed in the Chicago Tribune articles or other sources.

But Tharp said, even that additional information was simply additional details to an alleged plot, the specifics of which were already widely known before Rosenberg filed his lawsuit.

“The Rosenberg complaint simply did not reveal any information that added any new allegations or transactions that were involved in the (red light camera) bribery scheme,” the judge wrote.

Redflex is represented in the action by attorneys with the firm of Honigman, Miller Schwartz & Cohn, of Chicago.

The city of Chicago is represented by staff attorneys from its Department of Law.  

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