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Feds frown on Net sales of commuter benefits

Undercover report finds federal employees fraudulently claimed at least $17 million last year in transit checks--some of which went up for sale on eBay and Craigslist.

At least $17 million was wasted by Uncle Sam last year on federal employees who intentionally collected excess public transit benefits--at times, only to turn around and pawn them off illegally on eBay and Craigslist.

A new Government Accountability Office report (PDF) documented numerous instances in which employees at nine agencies in the Washington area admitted to falsifying their applications to receive extra benefits, continued receiving the passes even during extended absences, and earned thousands of dollars selling the wares online.

Established in 2000, the government's transit program requires that federal agencies in the Washington area offer their permanent employees up to $105 per month in tax-free public transportation hand-outs. Nationwide, about 250,000 people had claimed about $250 million in benefits as of July 2006, according to the Department of Transportation.

When they sign up, employees are supposed to attest that they won't ask for more benefits than they truly need, and the checks come inscribed with warnings that they cannot be used by anyone except the person to whom they were rightfully issued. Failure to comply could result in criminal prosecution, the GAO report said.

But that didn't stop 20 federal employees interviewed by GAO from selling more than $21,000 of the paper transit checks, known as MetroCheks, on eBay during the past two years, the GAO discovered during an undercover investigation. Of those employees, which GAO found while monitoring eBay for a three day period and posing as potential buyers, the majority admitted they did not even use public transportation regularly to get to work and said they did not report income earned from the MetroChek sales on their tax returns.

In another case, a GAO investigator posing as an interested buyer corresponded with an Air Force captain who posted an ad on Craigslist offering $420 worth of MetroCheks for $350. The captain, who said he usually caught a ride with someone else to work, told the buyer that he would meet him at the Metro station of his choosing, clad in "my Air Force service dress uniform," complete with "all the awards and everything on it." He later refused to back down on his posted price because he angered his wife by doing so on a previous occasion.

Some of the fraud may be resolved as the Washington Metro Area Transportation Authority, which issues the transit passes, phases out the paper-based MetroCheks in favor of plastic SmartCards, which are tied to a person's name and "less negotiable," in the GAO's words. Even so, the auditors urged federal agencies to be more vigilant about punishing abusers of the system.