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Red-Light Camera Company to Pay $20 Million Settlement to City of Chicago to Settle Fraud and Bribery Lawsuit

by Lonnie Burton

Redflex Traffic Systems, Inc., a red-light camera company located in Australia, agreed on February 3, 2017, to pay the city of Chicago $20 million to settle a "massive bribery scheme" upon which its contract with the city was built. Redflex, which admitted to its fraudulent activity, was still reeling from a separate $2 million bribery scandal which nearly brought down the company a year earlier.

City Hall manager John Bills was sentenced last year to 10 years in federal prison for his role in the Chicago scheme. He received $2,000 for each of the 384 red-light camera installed in the city, in addition to lavish vacations, condominiums, and a Mercedes. Former Redflex CEO Karen Finley, along with a company consultant who acted as the "bagman," were sentenced to shorter federal terms after they testified against Bills at his trial.

Chicago has since replaced Redflex with another vendor. The company later fired its top six executives, and now authorities are launching similar bribery investigations in other U.S. cities, too. Australian regulators are said to be investigating Redflex's activities in that country as well.

Chicago's lawsuit detailed the extent and nature of the scandal orchestrated by Bills and Redflex representatives. In exchange for the bribes and other perks, Bills coached Redflex on how to beat out competitors, orchestrated key votes at City Hall, manipulated field tests and covered up other problems with Redflex's camera systems. The lawsuit alleged that the scandal defrauded taxpayers with unfair enforcement practices that tagged thousands of drivers with unexplained tickets at malfunctioning red-light cameras. Ultimately, only about 200 drivers had tickets refunded. In total, the red-light camera system has raised more than $600 million in fines.

In a statement following announcement of the settlement, Redflex said it remains financially stable despite the $20 million hit, citing more than "150 existing contracts in communities across America." Redflex has also been convicted of charges in Ohio, and its stock price has plummeted to 21 cents a share from a peak of almost $4 a share.

Redflex earned more than $120 million from the Chicago contract, which it collected a percentage each time a driver was ticketed.

Chicago Mayor Rahm Emmanuel shut down many of the red-light cameras during his 2016 re-election campaign, and promised to improve oversight of a system that a Chicago Tribune investigation found issued tickets even when drivers passed through yellow lights. Emmanuel has since played down the significance of the newspaper's findings.

The settlement calls for Redflex to pay half of the settlement by the end of 2017, after which it has until 2023 to pay the remainder. "Today marks a new beginning for Redflex," said Mark Finn, the company's new president and CEO. "We are well-positioned for this new day." See: City of Chicago v. Redflex Traffic Systems, Inc., U.S.D.C. (N.D. Ill.), Case No. 15-cv-08271.

Source: Chicago Tribune

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Related legal case

City of Chicago v. Redflex Traffic Systems, Inc.