Top DARTS official fined for false records before joining nonprofit

Falsified records. Delayed or ignored maintenance of buses used to transport the disabled.

These transgressions, unearthed in an audit of the Dakota County transit provider DARTS, resulted in the nonprofit organization losing its $13.7 million contract with the Metropolitan Council last month. The audit revealed that employees falsified trip records by Metro Mobility and Transit Link buses to "make the numbers look good."

DARTS leaders said they were stunned by the council's "rash" decision to sever a 25-year relationship. Yet, while they blame the problems on rogue employees no longer with the organization, still on staff is a top official who has been barred from working at public companies because federal regulators said he falsified documents.

In September 2012, Subramanian "Kris" Krishnan, now DARTS' chief strategy and operations officer, was prohibited from working as an officer or director of a public company for a five-year period and fined $60,000. The settlement represented a serious rebuke by the Securities Exchange Commission, and stemmed from Krishnan's tenure at Digi International Inc., a $195 million Minnetonka wireless products firm.

As Digi's chief financial officer, Krishnan filed inaccurate quarterly and annual reports from March 2005 to May 2010, according to the SEC's lawsuit filed in U.S. District Court. The suit claims Krishnan approved corporate travel and entertainment expenses that "appeared to have marginal, if any, business purpose."

Krishnan skirted Digi policy by submitting bills for hotel and entertainment expenses through the company's Hong Kong office — which he supervised, the complaint says. As a result, he reviewed and approved his own expense reports.

Krishnan, who left Digi in 2010, neither admitted nor denied the SEC's charges. Last week, he did not return several phone calls seeking comment.

"He's done a great job for us, and I think it's unfair to [say] there's a connection here," Konat said. "That was two or three jobs ago."

After departing from Digi, Krishnan was hired in October 2011 as chief financial officer at the National Marrow Donor Program (Be the Match), a Minneapolis nonprofit. He left in January 2013, but was placed on administrative leave the previous October, the month after the SEC filed suit.

Met Council spokeswoman Meredith Vadis said Krishnan's "conviction was discovered" in March and "was serious enough" to report to the Federal Transit Administration (FTA), a U.S. Department of Transportation agency that provides financial and technical assistance to local public transit systems. The FTA ruled that Krishnan's settlement was not in violation of federal regulations that prevent individuals or businesses from doing business with the government, she said.

"It did not impact the audit nor was the decision to cancel the DARTS contract impacted in any way by Mr. Krishnan's history with the SEC," Vadis noted.

The falsified DARTS records resulted in inappropriate billings to customers, who are not required to pay fares when a ride is late by 30 minutes or more. Konat said affected customers were sent a note of apology — and about $90 was refunded.

DARTS has sent layoff notices to 122 bus drivers, effective Nov. 9, when its Metro Mobility and Transit Link contracts expire. The organization, which has $8 million in annual revenue, has lost $2.8 million in Met Council funding.

Konat maintains that the Met Council's decision is part of a broader scheme to contract with for-profit companies — DARTS is the last remaining nonprofit group providing special-service transit for the agency. The Met Council denies this claim.

He said DARTS quickly remedied almost all the issues highlighted by the audit, and there are plans in place to fix the remaining problems. There's now a "zero tolerance" policy regarding falsifying trip records — employees could be fired for doing so, he added.

In addition, the audit noted that unsafe buses were kept in service, and vehicle repairs and maintenance were often delayed, or not performed at all. "This spans from minor issues to issues that are serious, could lead to engine failure or other costly repairs, and to issues that could threaten the safety of the driver and/or passengers," it states.

DARTS leases 52 small buses from the Met Council and is responsible for maintaining the vehicles. Konat said personnel changes on its maintenance team have been made to address these concerns.