Former Keolis engineer indicted in scheme to steal $8M meant for commuter rail

A former Keolis employee is accused of scheming with the manager of an electric company to steal millions intended for the MBTA’s commuter rail system, U.S. Attorney Rachael Rollins’s office announced Wednesday. 

A federal grand jury indicted John P. Pigsley — formerly the assistant chief engineer of facilities at commuter rail operator Keolis Commuter Services — on 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, according to the U.S. Attorney’s Office. 

Pigsley, 58, was arrested Wednesday morning and will appear in federal court this afternoon, Rollins’s office said in a press release. Boston.com has reached out to a federal public defender assigned to represent Pigsley for comment. 

His alleged accomplice, New Hampshire resident John Rafferty, 69, has agreed to plead guilty to one count of conspiracy to commit wire fraud, according to the release. 

“The $8 million they stole could have been used to ensure significantly safer, faster and more reliable transportation for riders,” Rollins said in a statement. “Instead, these men lined their pockets for their own selfish gain.”

Prosecutors say the men allegedly devised an invoicing scheme

In his Keolis role, Pigsley was responsible for the maintenance of commuter rail facilities and their engineering operations, the U.S. Attorney’s Office said. Rafferty, meanwhile, was the general manager of LJ Electric, Inc., a vendor to which Keolis paid more than $17 million between 2014 and 2021, according to the release. 

Between July 2014 and November 2021, Pigsley and Rafferty allegedly worked together to defraud Keolis through a false invoicing scheme, prosecutors said. According to the U.S. Attorney’s Office, Rafferty would purchase vehicles, construction equipment and supplies, and other items for Pigsley and his construction company, Pigman Group, then submit fraudulent LJ Electric invoices to Keolis to cover the costs — plus a profit that Rafferty allegedly pocketed.

“These men are accused of crossing the line from fixing our broken rail system to defrauding it when they devised a plan to pad their paychecks by stealing more than $8 million that was meant for repairs and routine maintenance at a time when overall needs on the commuter rail are so deep, funding sources are so strained, and the need for better service is so crucial,” Special Agent Joseph R. Bonavolonta, who heads the FBI’s Boston division, said in a statement.

He called theirs a “clear-cut case of greed.” 

Pigsley also allegedly made more than $4.5 million in cash on his own by having Keolis purchase copper wire, then stealing it and selling it to scrap metal businesses for cash. 

He’s further accused of defrauding the IRS by failing to withhold and pay federal taxes on the income he received through the invoicing and copper wire ploys, the U.S. Attorney’s Office said. Pigsley allegedly filed a false tax return in 2016 and structured some of his cash deposits to evade financial institutions’ reporting requirements, according to the release. 

In a statement to Boston.com, Keolis said it identified “project anomalies linked with the practices of an employee” in late 2021 and took immediate action to investigate and ultimately suspend, then terminate that employee. 

“Our priority was to ensure that our partners at the MBTA were not harmed in any way, and we reimbursed them for any related goods and services,” Keolis said. “We remain committed to transparency with the MBTA and to delivering our contract safely, reliably and with integrity.”

In an emailed statement, MBTA spokesperson Joe Pesaturo confirmed that Keolis credited the T for the funds identified in the alleged scheme, adding that the transit agency is “grateful to the U.S. Attorney’s Office for its diligent investigation.”

If convicted of wire fraud and wire fraud conspiracy, Pigsley faces up to 20 years in prison, up to three years of supervised release, and a fine of up to $250,000. His other charges carry additional fines and varying sentence lengths. 

In Rafferty’s case, the conspiracy to commit wire fraud charge carries a sentence of up to five years in prison, up to three years of supervised release, and a fine of up to $250,000. 

Abby Patkin

Staff Writer

Abby Patkin is a general assignment news reporter whose work touches on public transit, crime, health, and everything in between.

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