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School Bus Company Charged with Contract Fraud; Used Drivers with Criminal Records



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TRENTON – Attorney General Gurbir S. Grewal today announced criminal charges against the owner of a Paterson-based school bus company, its manager, and the company itself for allegedly providing false information to school districts in connection with contracts in order to cover up the fact that the company hired unqualified drivers, failed to conduct mandatory drug testing and criminal background checks for drivers and aides, and operated unsafe buses, all in violation of contract terms and state requirements.

The owner, Shelim Khalique, 51, of Wayne, N.J., the manager, Henry Rhodes, 56, of Paterson, N.J., and the company, A-1 Elegant Tours, Inc., d/b/a Eastern Star Transportation, LLC, (“A-1”), were each charged today by complaint-summons with the following offenses:

  • Conspiracy (2nd Degree),
  • False Representations for a Government Contract (2nd Degree),
  • Theft by Deception (2nd Degree), and
  • Tampering with Public Records or Information (3rd Degree).

Khalique and Rhodes were also charged with Misconduct by a Corporate Official (2nd Degree).

Personnel files seized last year during execution of a search warrant revealed that A-1 employed numerous drivers who did not have valid commercial driver’s licenses or required endorsements, had suspended licenses, and/or had criminal records. A-1 also employed bus aides with criminal records. A number of files were missing mandatory records of fingerprinting, background checks, and drug testing.

Two former A-1 bus drivers face pending criminal charges in Essex and Passaic Counties for allegedly driving buses with one or more children on board while under the influence of narcotics. The driver in Essex County crashed the bus. Another former driver is a registered sex offender under Megan’s Law.

“We have rightly focused considerable attention in recent years on improving safety and security within our schools, but we also must ensure that children are safe while being transported to and from school,” said Attorney General Grewal. “As a parent and public official, I have no higher priority than protecting our children. This bus company allegedly lied about its employees and equipment to secure contracts, and then had unqualified drivers, convicted felons, and those under the influence drive and supervise young children each day in what were frequently unsafe vehicles. This is an unconscionable case of contract fraud.”

“We are always determined to root out fraud in government contracts, because it represents a costly drain on public resources that can undermine important projects and services,” said Director Thomas Eicher of the Office of Public Integrity and Accountability. “But it was especially critical to expose the fraud in this case, because nothing less than the safety of young students was at stake. We are continuing our investigation to hold these defendants fully accountable for their egregious conduct.”

“It is painfully apparent that the operators of this company lost their moral compass, putting profit above safety by placing innocent children on buses unfit for the road, which were operated by unqualified drivers, who in many instances had criminal records,” said Colonel Patrick J. Callahan, Superintendent of the New Jersey State Police. “We will continue to work with our partners in this ongoing investigation to ensure that those responsible are brought to justice.”

Acting Essex County Prosecutor Theodore N. Stephens, II, said, “The criminal conduct alleged in this case came to our attention when there were incidents in Essex County of school bus drivers operating under the influence or without the proper credentials. The idea that anyone would allow young school children to be transported by drivers who not only lacked the proper credentials but, in some cases, were high on narcotics or had serious criminal records is extraordinarily troubling. Working with our partners in the Attorney General’s Office and the Passaic County Prosecutor’s Office, we are on a path to hold individuals and corporate entities accountable.”  

“A-1 put the lives of many children at risk with its illegal activities,” said Passaic County Prosecutor Camelia M. Valdes. “I am grateful to have worked with Prosecutor Ted Stephens and the Attorney General’s Office to help put an end to this unsafe operation.”

The charges were filed in an investigation by the AG’s Office of Public Integrity and Accountability, New Jersey State Police, Essex County Prosecutor’s Office, and Passaic County Prosecutor’s Office. From 2016 to 2020, A-1 had contracts with public school districts in Essex, Hudson, Passaic and Union counties. Today’s charges relate exclusively to contracts in Essex County, but the investigation is ongoing. In the aggregate, A-1 had contracts with a total value in excess of $1 million with various public school districts in Essex County during the time period in question.

New Jersey laws and regulations require that all school bus drivers possess a valid commercial driver’s license (CDL) with two additional endorsements to carry students as passengers. School bus drivers and bus aides are required to undergo drug testing and criminal background checks, and drivers or aides with criminal records or known substance abuse issues are prohibited from driving or working on school buses.

It is alleged that the defendants submitted false records and information to the contracting school districts and the New Jersey Department of Education, thereby misrepresenting that the company, its vehicles, and its drivers and aides were qualified under state, federal, and local law, as well as the terms of the contracts, to provide school busing services to students. Specifically, the defendants allegedly falsely represented the qualifications of their drivers and aides, including licensing and background check information, as well as the condition of the buses used to transport children.

The defendants allegedly submitted documents listing the names of certain drivers and aides to be employed on bus routes transporting public school students, when in reality other employees who were not properly licensed were transporting students on those routes. They also allegedly submitted false information concealing the criminal backgrounds of drivers and aides on such routes.

On May 31, 2019, investigators conducted surprise motor vehicle inspections of A-1’s buses at various schools after they dropped off students in the morning. Almost all of the buses failed inspection so badly that they were impounded and were not allowed to be driven off the school properties.

Throughout 2018, the Motor Vehicle Commission (MVC) cited A-1 and its drivers numerous times, including 22 citations for Allowing a Disqualified Driver to Operate a Commercial Motor Vehicle, nine citations for Failure to Possess a Valid CDL while Operating a Commercial Motor Vehicle, five citations for Failure to Possess Valid Endorsements, and one citation for Driving with a Suspended License. The MVC issued additional citations for failing to present appropriate documentation. These citations all arose from on-site vehicle inspections performed by MVC at A-1’s Paterson yard. A-1 allegedly used various methods in an effort to evade MVC inspections and citations, including diverting unlicensed drivers away from inspection sites and having drivers keep buses at their homes overnight.

The investigation is being conducted for the AG’s Office by the OPIA Corruption Bureau, under the leadership of OPIA Director Thomas Eicher, and members of the New Jersey State Police Official Corruption Bureau, in collaboration with the Essex County Prosecutor’s Office and the Passaic County Prosecutor’s Office. Deputy Attorney General Samantha McCluskey is prosecuting the case, under the supervision of Corruption Bureau Chief Peter Lee and Counsel to the Director Anthony Picione.

Second-degree crimes carry a sentence of five to 10 years in state prison and a fine of up to $150,000, while third-degree crimes carry a sentence of three to five years in prison and fine of up to $15,000. 

The charges are merely accusations and the defendants are presumed innocent until proven guilty.

Attorney General Grewal created the Office of Public Integrity and Accountability in September 2018 to combat corruption and strengthen public confidence in government institutions. In December 2019, the Attorney General issued a directive codifying OPIA and making it a permanent part of the Attorney General’s Office. That directive established the OPIA Corruption Bureau as the lead office within the Department of Law & Public Safety for the investigation and prosecution of state criminal violations involving corruption and abuse of public trust.

OPIA has a toll-free Tipline 1-844-OPIA-TIPS for the public to report corruption.  The AG’s Office has an Anti-Corruption Reward Program that offers a reward of up to $25,000 for tips leading to a conviction for a crime involving public corruption.  Information is posted at:

Defense Attorneys
For Khalique: Joseph Rotella, Esq., of Newark, N.J.
For Rhodes: Howard Lesnik, Esq., of Mountainside, N.J.