GEORGETOWN — Transit Safety Management, Inc., was sentenced Thursday to making a false statement to the government in connection with its certification for "favored contracting status."

The Georgetown firm's president, Susan Madigan, pleaded guilty earlier this year to one criminal count of lying to a state agency about the firm’s status as a disadvantaged business enterprise. 

The company was sentenced by U.S. District Court Judge Nathaniel M. Gorton to five years of probation and a fine of $84,000.

In order to qualify for favored status, a company’s management must be controlled by a socially or economically disadvantaged individual such as a woman or minority. The purpose of the program is to give an economic advantage to minorities and women who run their own companies. However, the manager   cannot also engage in employment that would prevent him or her from devoting sufficient attention to the affairs of the company. In this case, investigators discovered that TSM’s purported owner, Madigan, was a full-time employee of a federal agency and the business was really operated by her husband making it ineligible for certificatio.

Her husband is James R. Stoetzel, who oversaw commuter rail service for the state as its general manager in the 1980s, and as a consultant played a key role in helping the French firm Keolis gain its contract to run the MBTA commuter line.

TSM provided consulting services to the railroad industry, focusing on safety and operations management. Shortly after it was founded in 1999, TSM's owner certified the company as a "disadvantaged business enterprise." As such, TSM was able to take advantage of federal regulations aimed at promoting the participation of minority and disadvantaged businesses in federally-funded public construction contracts.

In order to maintain its certification, TSM had to make yearly affirmations that it was still eligible and that nothing had changed that would affect its eligibility for the favored status. Despite this, TSM lied about whether it met the criteria, the court decided. According to court documents, Madigan was hired as a full-time employee with a federal agency in 2005. As a full time federal employee, Madigan could not control TSM under the regulations.

TSM admitted to making approximately $160,000 in profits.

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