Ex-MBTA Commuter Rail engineer accused of stealing $8M in fraud scheme pleads guilty

The former engineer for Keolis Commuter Services accused of stealing more than $8 million that was meant for the MBTA Commuter Rail system has pleaded guilty.

John Pigsley, 59, the ex-assistant chief engineer of facilities for Keolis, pleaded guilty on Thursday to defrauding Keolis of more than $8 million and defrauding the IRS.

Keolis has operated the MBTA Commuter Rail system since 2014 under an annual contract of $291 million to $349 million.

Pigsley was responsible for the maintenance of MBTA Commuter Rail facilities and their engineering operations — including corrective repair and project management for assets and maintenance, and ordering and approving his subordinates’ orders of electrical supplies from outside vendors for Keolis.

Pigsley also operated a separate construction company called Pigman Group. His co-conspirator John Rafferty was the general manager of LJ Electric, Inc. — an electrical supply vendor that Keolis paid more than $17 million between 2014 through 2021.

“Between July 2014 and November 2021, Pigsley and Rafferty defrauded Keolis of over $4 million through a false LJ Electric invoicing scheme,” the U.S. Attorney’s Office wrote. “Specifically, Rafferty purchased vehicles, construction equipment, construction supplies and other items for Pigsley, Pigman Group and others, and Pigsley directed Rafferty to recover the cost of these items by submitting false and fraudulent LJ Electric invoices to Keolis.”

Rafferty spent more than $3 million on items for Pigsley and others — including at least nine trucks, at least seven Bobcat machines, at least $1 million in home building supplies and services, and a $54,000 camper — for which Keolis paid Rafferty more than $4 million based on false LJ Electric invoices.

Also, Pigsley directed Keolis to purchase copper wire — which he then stole and sold to scrap metal businesses, keeping the cash proceeds for himself.

To conceal the theft, Pigsley personally picked up the copper wire orders from vendors or had the orders delivered to his Beverly home.

Pigsley then personally transported the wire to scrap yards, where he traded it for thousands of dollars in cash several times a month and sometimes more than once a day. Pigsley obtained more than $4.5 million in cash by stealing and scrapping the copper wire.

In addition, Pigsley defrauded the IRS by failing to withhold and pay federal income taxes on income he received from the LJ Electric invoicing scheme and from scrapping copper wire. Pigsley also filed a false tax return for 2016.

Pigsley deposited more than $1.9 million in cash into his bank accounts between 2014 and 2021, and structured some of those deposits to evade currency transaction reporting requirements applicable to financial institutions.

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Pigsley pleaded guilty to five counts of wire fraud, one count of conspiracy to commit wire fraud, six counts of tax evasion, one count of filing a false tax return, and four counts of structuring financial transactions to evade reporting requirements.

U.S. District Court Judge Indira Talwani scheduled sentencing for April 17.

Rafferty has pleaded guilty to one count of conspiracy to commit wire fraud. Rafferty is scheduled to be sentenced on April 10.

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