SAN FRANCISCO (CBS SF) – Cable car cash fare collection practices make it easy for operators to commit fraud and should be reformed, according to a San Francisco controller's office report released Monday.
An audit conducted in late December of 2016 found that cable car conductors failed to collect fares from plainclothes auditors on 11 of the 30 sampled rides, and also failed to collect from an estimated 178 other passengers during the rides. That failure resulted in lost revenue to the San Francisco Municipal Transportation Agency of as much as $1,323, the report estimates.
More than $10 million of cable car fares were collected in cash in fiscal year 2015-16, the report notes. The fares are collected by hand by conductors, who are required to give passengers a receipt with their ticket for the amount paid.
The audit uncovered some instances of conductors who failed to give out receipts for cash fares. After an additional investigation, two cable car conductors, David Reyes, 55, and Albert Williams, 61, were arrested and charged in April with embezzlement.
"The cash collection procedures for cable car conductors provide opportunity for fraud because SFMTA bases its estimates of how much cash it should collect solely on the number of receipts a conductor issues," the report said. "If a conductor does not issue a receipt, SFMTA does not know that a fare should have been collected, allowing the conductor to pocket (that is, embezzle) the money instead of reporting it and turning it in to SFMTA."
The report recommends that SFMTA move to a cashless payment system. If that is not possible, the report recommends implementing fare boxes and requiring passengers to pass through the area where they are located.
In addition, it calls for better training in cash handling for employees and periodic undercover operations to check on operators.
Muni officials said they are working to implement some aspects of a cashless system.
"We are making changes to promote cashless ways to pay for cable car service, including the use of MuniMobile and a pilot program for pre-paying fares at cable car turnarounds," Muni spokesman Paul Rose said.
However, in a formal response to the audit's recommendations, Muni officials indicated that a fare box system would not work due to the design of cable cars and cautioned that a fully cashless system might also not be possible, given the number of tourists that ride cable cars.
Reyes is due back in court on Aug. 14 and Williams on Tuesday. Both men face felony charges of misappropriation of public funds and embezzlement and are out of custody on bail.
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