Former high-ranking Keolis employee sentenced for stealing $8.5 million from MBTA commuter rail

A former top engineer for Keolis, which operates the MBTA’s commuter rail, has been sentenced to more than five years in federal prison for stealing $8.5 million meant to operate the commuter rail system.

John P. Pigsley, 59, previously worked as Assistant Chief Engineer of Facilities for Keolis Commuter Services. He was sentenced in a Boston federal court Thursday to 70 months in prison, followed by three months of supervised release, according to U.S. Attorney Leah Foley.

A federal judge ordered Pigsley to pay $8,580,311 restitution to Keolis and $2,689,206 to the Internal Revenue Service (IRS), forfeiture of three real properties, and a $7,687,083.70 money judgment.

Pigsley was arrested in April 2023 after a federal grand jury indicted him and his co-conspirator, John Rafferty, who worked as the general manager of LJ Electric Inc. He pleaded guilty in January 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.

Keolis has operated the MBTA commuter rail system since 2014 under an annual contract of $291 million to $349 million. Pigsley worked in his role at Keolis from 2014 to November 2021 and was responsible for the maintenance of rail facilities and engineering operations.

According to prosecutors, between July 2014 and November 2021, Pigsley and Rafferty defrauded Keolis of over $4 million through a false LJ Electric invoicing scheme. Rafferty bought vehicles, construction equipment and supplies, and other items for Pigsley, who then directed Rafferty to recover the cost of these items by submitting false and fraudulent LJ Electric invoices to Keolis. 

Investigators say Rafferty spent more than $3 million on items for Pigsley and others, including nine trucks, seven Bobcat machines, $1 million in home-building supplies and services, and a $54,000 camper. Keolis then paid Rafferty more than $4 million based on fraudulent LJ Electric invoices.

Prosecutors say Pigsley also stole more than $4.5 million by stealing and scrapping copper wire purchased by Keolis, selling it to scrap metal businesses and keeping the money for himself.

“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,” the U.S. Attorney’s office said in a press release.

Pigsley also defrauded the IRS by failing to withhold and pay federal income taxes on the cash he received from the LJ Electric invoicing scheme and from scrapping copper wire, according to the U.S. Attorney. He also filed a false tax return for 2016 and deposited over $1.9 million in cash into his bank accounts between 2014 and 2021. Investigators say Pigsley structured some of those deposits to dodge reporting requirements.

Rafferty pleaded guilty in June 2023 to one count of conspiracy to commit wire fraud. His sentencing is scheduled for May 15.