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SEC: Big Dig's former chief failed to disclose $1.4B overruns
milford daily news ^ | Friday, August 1, 2003 | Steve LeBlanc

Posted on 08/04/2003 2:29:54 PM PDT by AmericanMade1776

BOSTON -- The former chief of Boston's massive Big Dig highway project negligently failed to disclose $1.4 billion in cost overruns to the public, according to a Securities and Exchange Commission settlement announced yesterday.

James J. Kerasiotes and the Massachusetts Turnpike Authority have agreed to the settlement of fraud claims, but are not admitting or denying the findings, SEC officials said.

Kerasiotes ran the highway project until he was fired in 2000, when reports surfaced that Big Dig officials were keeping the public cost of the project artificially low.

Neither he nor the Turnpike Authority were fined as part of the settlement. The authority was spared because a fine would put an even greater burden on taxpayers and tollpayers, according to SEC district administrator Juan Marcel Marcelino.

Kerasiotes was not fined, Marcelino said, because he was a public servant trying to manage costs on a massive public works project.

"We're pleased to have this issue behind us," said Turnpike chairman Matthew Amorello. "It represented black days for the authority."

Kerasiotes did not immediately return a call from the Associated Press.

Joseph Savage, a lawyer representing Kerasiotes, said the settlement -- while criticizing Kerasiotes for not announcing the overruns -- acknowledged that the decision not to make those overruns public was part of Kerasiotes' management efforts to keep costs under control.

"We're glad to have this behind us," Savage said. "The commission concluded that Jim tried in good faith to save the taxpayers and tollpayers money."

The Turnpike's five-member board of directors unanimously agreed to the settlement during a closed-door executive session on June 26, according to Amorello.

Amorello said the Turnpike has already adopted steps to make sure that any future cost overruns are quickly made public. Those steps include monthly project updates and annual cost revisions.

The SEC probe began more than three years ago when Kerasiotes acknowledged that the highway project's costs would exceed its $10.8 billion budget.

Kerasiotes had long insisted the project could be finished for that amount. Critics said he should have revealed the cost overrun when state officials briefed bond rating agencies on the state's fiscal condition in 1999.

Under a deal agreed to by Amorello's predecessor at the Turnpike, Andrew Natsios, the agency and Kerasiotes agreed to a joint legal defense with the Turnpike picking up the legal tab.

To date, the Turnpike has spent about $3.5 million in legal bills defending itself, Kerasiotes and former project manager Patrick Moynihan, who was later dropped from the investigation, according to Turnpike general counsel Michael Powers.

Powers said the agreement prevents the Turnpike from trying to recoup any money from Kerasiotes.

Amorello estimated it could have cost another $3 million if the investigation had continued. The settlement concludes that investigation, including the deposition of Turnpike officials.

Also yesterday, Amorello announced that for the third year in a row the estimated cost of the project is remaining steady at $14.625 billion. The project is about 92 percent completed.

The Big Dig project is burying two miles of Interstate 93 underneath downtown Boston, replacing an elevated highway. It is expected to be completed by 2005, making it one of the largest and most expensive public infrastructure projects in U.S. history.

(Excerpt) Read more at milforddailynews.com ...


TOPICS: Business/Economy; Crime/Corruption; Miscellaneous; US: Massachusetts
KEYWORDS: artery; central; project
THIS GOVERNMENT PROJECT..ONLY 92 PERCENT THRU...FOR TWO MILES OF BOSTON ROAD....COSTING....AT THE MOMENT.... $14.625 BILLION AND GROWING....WILL PROVIDE THE BACKDROP FOR THE DEMOCRATIC CONVENTION IN SUMMER OF 2004.
1 posted on 08/04/2003 2:29:55 PM PDT by AmericanMade1776
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To: AmericanMade1776
Will the freaking thing be done by the time of the convention? Have visited Boston area twice in the past two years, and can't believe what a highway nightmare that area still is after all this time. Am flying in and out of Providence in a few weeks because I can't bear to go through the Logan and downtown logjams again.
2 posted on 08/04/2003 4:37:42 PM PDT by litany_of_lies
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To: litany_of_lies
No. A good short analysis of the Big Dig can be found in this paper, which is a lot more honest than anything you'll see from the rogues in Boston or Bechtel.

Bottom line: it was 76% complete on 1 October 2001; it is 92% complete today. At that rate, construction will be finished in May 2004. Add time for checkout, troubleshooting, approval and handover - tasks for which no project plan as yet exists, in spite of the urgent recommendations of the National Academies review - and you'll be lucky to see the thing open before mid 2005.

If Tip O'Neill wanted a legacy, couldn't he have just built a Great Pyramid?

3 posted on 08/04/2003 6:09:06 PM PDT by John Locke
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To: John Locke
I downloaded the report after correcting your link (it has two addresses in it, one for FR.com and then the right one).

Anyway, "fascinating," in a way. I didn't know that so much of Boston is built on garbage, and I had no idea of the problems that caused.

Something tells me that traffic in Boston will STILL suck even after the Big Dig is 100% done.

Whadda mess. In a way, a fitting monument to Tip O'Neill.
4 posted on 08/04/2003 6:41:37 PM PDT by litany_of_lies
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To: litany_of_lies
Something tells me that traffic in Boston will STILL suck even after the Big Dig is 100% done.

I visited Boston for a meeting about 4 years ago; saw a PBS documentary on the Big Dig
maybe two years ago.

My guess, from looking at the film footage of the dig...and guestimating from
what I'd guess it replaced...
I also have an amateur's feeling that traffic will be just as bad or worse after the
Big Dig is done...as it was before it started.
5 posted on 08/04/2003 7:19:06 PM PDT by VOA
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To: AmericanMade1776; Liz
Kerasiotes was not fined, Marcelino said, because he was a public servant trying to manage costs on a massive public works project.

Just more evidence of laws for them and laws for us.

6 posted on 08/04/2003 8:58:18 PM PDT by razorback-bert
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To: litany_of_lies
Thanks for fixing my bad links. Boston still remains one of my favorite US cities, in spite of the traffic.
7 posted on 08/05/2003 12:19:05 AM PDT by John Locke
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To: John Locke
Funny..the Great pyramid.......yep.....I live in this state , so I am well aware of what the project has looked liked from start to now. And I think they are pushing it, if they think it is going to be ready in May 04.
8 posted on 08/06/2003 3:37:15 PM PDT by AmericanMade1776
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