FEMA investigating ferry operator’s bills
Effect on Belford
remains to be seen
By elaine van develde
Staff Writer

When it came to a ferry service out of Middletown, one foe cried fraud and the feds came.

That foe is staunch opponent Robert Riker, Rumson, a transportation consultant and retired engineer of the Port Authority of New York and New Jersey.

For more than a decade, Riker has made it his mission to disprove the viability of ferry service operated by Weehawkin-based New York Waterway out of the Belford section of the township.

His quest manifested itself in many comments in public forums and print alleging NY Waterway was bilking the government of Federal Emergency Management Agency subsidies after the 9/11 terrorist attacks on the World Trade Center.

The $1.7 million monthly FEMA funding was put in place to boost transportation in the devastated New York harbor.

Riker said his comments contending fraud, made in the Independent and another area newspaper in August 2002, led investigators from the New York/New Jersey Port Authority Inspector General’s Office right to his doorstep.

He said inspectors from FEMA and investigators from the Port Authority Inspector General’s Office questioned him for several hours in his home during three or four visits between October 2002 and April 2003 and on the phone.

Officials from the Port Authority Inspector General’s Office served a seven-page federal subpoena on April 18 to NY Waterway at its headquarters, demanding all records relating to the company’s relationship with FEMA through the Port Authority. The investigations are central to a bigger U.S. Department of Justice fraud inquest, Riker said.

While the fraud allegations center on the company’s New York operations, Riker said, the "Belford [ferry service] is an element [of the fraud] — the one that got me started looking at [NY Waterway]."

NY Waterway’s business in Belford is better than anywhere, with "an average of 1,125 passengers [leaving] each morning out of Belford," said Waterway spokesman Pat Smith.

The company has no worries, especially when it comes to Belford business, he said.

"It’s the most successful route NY Waterway has ever had," Smith added.

Riker said the company would not have success without the "padded subsidies illegitimately used by the company elsewhere."

When asked about the charges about funds allegedly scooped from FEMA’s back pocket, FEMA official Carol Hector-Harris pointed to the Port Authority for answers, saying, "The Port Authority asked for the investigation. For us, it’s just a reimbursement process."

The bills and payments submitted by private companies that collect the subsidies are funneled through the Port Authority, she said.

"Of course, if they’re overbilling, then there would be a problem with reimbursement," Hector-Harris said.

Port Authority spokesman Steven Coleman did not return repeated tele­phone calls.

Riker said FEMA should have some answers about the case because its in­vestigators questioned him.

In a written statement, NY Waterway confirmed it was being investigated by the federal government.

"We are cooperating fully with the Justice Department in an inquiry con­cerning ferry service in New York har­bor. We are confident that this inquiry will confirm our good work," the NY Waterway statement reads.

The company touted itself in the statement as having "an exceptional 16-year record of providing ferry service for the Metropolitan area, especially in the difficult months since September 11, 2001."

NY Waterway’s record is based on a monopoly in the industry gained through an unfair advantage in government ties, according to Riker.

It’s a link that has given the com­pany an unfair edge in the commuter ferry industry that was bought with hid­den taxpayer dollars, he said.

"My interest, I think, is that NY Waterway and the governmental offi­cials whom they have cultivated have stolen, I estimate, $100 million of pub­lic funds in the last few years." Riker said.

In addition, Riker said he has all the paperwork to back the allegation and it will all be revealed with the investiga­tion.

NY Waterway officials maintain that the allegations of unfair advantage and fraud are a result of jealousy by ferry companies that were outpaced by the Belford service, according to the com­pany’s statement.

The fact that Belford runs boats to Manhattan every 30 minutes has made it a leader in the industry, said Riker.

"The reason NY Waterway can af­ford to run the service with such fre­quency on such large boats is that they’re making so much money from the FEMA subsidies that they can afford to lose some money in Belford," he said, noting that each boat holds 300 to 398 passengers. "They’d have to be losing money. My calculations show operating costs and costs (50 cents per passenger) paid to the county to run the service cannot possibly turn a profit."

"Our ridership is pleased; our com­petitors are not," the NY Waterway statement reads.

Riker said that if ferry services were provided equal opportunities, there would be no evidence of excess billing and government favoritism.

The only ferry service to bid on Belford’s Bayshore Ferry Terminal ser­vice was NY Waterway, Smith said.

No other service submitted a bid, Riker said, because they’d be outbid­ding their own services.

Seastreak currently operates a ferry service out of Highlands and Atlantic Highlands. The now-defunct NY Fast Ferry operated out of Highlands and Keyport.

The Belford terminal cost almost $10 million in federal funds, which Riker said was another governmental perk af­forded to NY Waterway.

"No one could afford the service if they had to build a terminal, let alone provide runs every 30 minutes and run­ning three boats at the same time in or­der to make the frequent runs. It all costs too much," he said. "The other services had the same amount of rider­ship that NY Waterway has now, but they just have that ridership spread out over several more trips."

Riker said that through the Open Public Records Act, he requested bills and memos generated through the New York State Emergency Management Organization. The information he re­quested centered on the company’s Hoboken service to be beefed up after Sept. 11.

It showed that FEMA was becoming aware that the billing from NY Waterway was inflated, he said.

In a written statement released in August 2002, Riker said, "Leasing costs were billed for 10 boats each day when as few as seven boats were used. Every boat tour was billed for a captain and three deckhands even though crew costs were already included in some leasing costs. Vessel Maintenance costs billed are three times industry standard. Three deckhands were billed for each boat. Most boats used only two."

Riker said a memo from FEMA em­ployee Chris Lopez to NY. State Emergency Management Office em­ployee Marc Talluto confirmed his sus­picion.

"FEMA was becoming aware of the overbilling and sidestepping the issue," Riker said.

The memo, dated July 2, 2002, reads, "Waterway claims that projected major maintenance costs are not capital costs, but operating costs, and are typi­cal of what is incurred at other piers. However: a) FEMA is reimbursing the applicant for a new barge at WFC; therefore it seems unlikely that they would incur $1.5 million in ‘major main­tenance and reconstruction cost’ at this pier in the coming year. b) Pier 11 is city owned. How could Waterway ex­pect to incur $500,000 of major mainte­nance and reconstruction at this pier? Also FEMA is reimbursing the city for capital work at Pier 11 that will be completed in the next few months. c) FEMA is reimbursing the Port (Authority) for capital work at Hoboken and Pier A completed since 9/11."

According to the memo, reimburse­ment of these costs would mean "either a duplication of funding or a reimburse­ment for costs that the vendor will not actually incur."

Bill Bouffard, executive vice presi­dent and chief financial officer of NY Waterway, issued a statement denounc­ing every one of Riker’s claims based on the memos.

"Our company responds to whatever demands are made, and we do it skill­fully and professionally," the statement reads. "Our company’s performance on 9/11 and during the difficult days there­after should be applauded. The real ben­eficiaries of the FEMA program are the tens of thousands of daily riders that found themselves without a PATH sys­tem, the Holland Tunnel closed, and with all other forms of regional trans­portation out of capacity."

In the end, the money comes out of the taxpayer’s pocket, Riker said. If pri­vate industry benefits more than its share, the taxpayer pays dearly for those services it may or may not use, he said.

Riker said that if the case goes to court and the ferry service is found guilty of fraud, he predicts the now-booming service in Belford will fold.

County officials were unavailable for comment as of press time.