What do you say to the people who want to know where their money is . Plus, this man once prominent on the sheriffs board now accused of stealing more than a Million Dollars from investors. Why he is now doing time after we investigate him. Here is chief Investigative Reporter tony kovaleski. Thank you for joining us. For the next 30 minutes, we investigate. Its asking tough questions, uncovering government waste, and holding those in power accountable. We begin with the safety of public transportation. In the south bay, its a popular choice for commuters, and a new choice in getting to levis stadium. Tonight questions about the light rail system paid with tax dollars and run by the valley transportation authority. We dug into inspection records and uncovered safety concerns. Investigative reporter vicky nguyen found faulty wheels, potential for headon collisions, and other issues that records show the vta has been slow to fix. Reporter vta trains travel at a top speed of 55 Miles Per Hour carrying 34,000 riders a day. And sharing the roads with thousands of cars. They are letting some trains run that shouldnt be running. Reporter a vta insider of how these trains are maintained and operated asked to be disguised for fear of being fired. Is safety a priority at vta . Only when they get caught by the state or the federal government. Then it is a priority. Reporter through a series of public records request, the Investigative Unit obtained these state inspection reports that reveal vta has failed to properly maintain critical signals and many of its trains. The reports detail safety hazards that could lead to derailments and trains colliding headon. From a report in tuition, inspectors wrote vta has knowingly and willfully violated procedures and vta does not have the capability to repair and maintain safe vehicles. In one unannounced visit that month, state inspectors found multiple wheel defects and worn out tread on four different trains. What kind of safety risks does that pose to people who are riding these trains or operating these trains . Its a risk of derailment. Reporter paul king is the States Deputy director for rail safety. When your inspectors found these problems, what did they instruct vta to do . Not run those vehicles. And we found that they did run them after that. Reporter king says as recently as last month, more than a year after inspectors first cited problems, vta was still sending out trains with condemned wheels. Would vta at any time operation trains with defective wheels . No. Reporter Michael Hirsh is in charge of operations at vta. He says he didnt know that vta was running trains on wheels that didnt meet Safety Standards until we showed him the inspection report thinking report says that one of the vehicles they expected departed for service with condemned wheels. Im not aware of that. Reporter last may the state instructed vta to remove 29 trains from service to replace wheels that were out of compliance. Thats nearly a third of the entire fleet. But thats not vts only problem. Did they have multiple incidents last year where trains were headed toward each other on the same track . No. Except that i will tell you that we operate signal track sections. So there r there are places where trains will have to wait for a train to go in the opposite direction, if that makes sense. Reporter cpuc said on multiple occasions there were concerns about signals being crossed and those trains potentially colliding headon. Are you saying thats not true . The cpcu may have that concern. We do not have that concern. Reporter inspectors had this concern because of this. Multiple incidents in 2012 and 2013 where inspectors found problems with signals that were allowing trains to head toward each other an on a single track in potential headon collisions. There would be signals between the trains there would be other places where the train would be required to stop. Should that happen at all ever, even if there are signals in between, should two trains be heading toward each other . No. Reporter the reports various reasons for failure to defective parts to deficiencies that cause confusion for controllers. In one instant they said they were very concerned that the trains were both traveling at a high rate of speed, 55 Miles Per Hour and 45 Miles Per Hour toward each other before they stopped. It happened here on the line between fruitdale. Lets give you a better look from the sky. This is a 1. 5 mile stretch of track that north and southbound trains have to share. If they continue traveling at those speeds, they would have collided in less than a minute. There has never been an incident where vta trains, an accident where vta trains were in a headon collision. It disturbance me. He is minimizing the problem. Theyre just lucky. Reporter Russell Quimby is a rail safety expert who spent 20 years as an inspect were the National Transportation safety board. We asked him to review the state inspection reports. It tells me that this maintenance problem has been going pon on for a long time to the point now where its going to take a major fix to come back up to speed and make sure the cars are up to standards. Reporter inspectors say they are now asking the state commission for the power to issue citation when transit agencies dont fix their safety violations. Time has run out. They have had plenty of time to fix this. It hasnt gotten fixed. Reporter meanwhile, they say the agency is working to fix the signal and wheel agencies. Vta is a very safe operation. We have very professional operators. And i encourage everyone to ride vta. Vta was running a little more than 50 of its existing trains earlier this summer. The agency now tells us its added trains to its route, but cant confirm just how many. Also, as early as next week, the cpuc will look at a plan that allows inspectors to issue site tagtss when safety problems arent fixed. Coming up, we investigate trucks and drivers hauling fed ex goods on fed ex routes, but not official employees. Why it could be putting other drivers on the road at risk. Thats next. You used to sleep like a champ. Then boom. What happened . Stress, fun, bad habits, kids, now what . Lets build a new, smarter bed using the dualair chambers to sense your movement, heartbeat, breathing. Introducing the sleep number bed with sleepiq™ technology. It tracks your sleep and tells you how to adjust for a good, better and an awesome night. The difference . Try adjusting up or down youll know cuz sleep iq™ tells you. Only at a sleep number store, mattresses with sleepiq™ start at just 999. 98. Know better sleep with sleep number. Youve probably seen them on the road. Were talking about fed ex trucks. We have learned not all those trucks and drivers belong to fed ex. Instead, Third Party Contractors get paid to transport fed ex goods on fed ex routes. The Corporation Says its vetting them, but Investigative ReporterElise Kirschner found thats not always the case. And some contractors operate illegally, potentially putting other drivers in danger. It begins here. A Federal ExpressDistribution Center in sacramento. A major hub in National California of where over hundreds of trucks come in and out every day. Some with the recognizable purple and green fed ex logo plastered on the side. Others with names you have never heard of like tiris trucking company. It was a Third Party Contract were fed ex smart post, which is a subsidiary of fed ex ground, transporting only fed ex goods. Thats what tiris driver was doing on august 8th, 2011. After picking up packages from the Distribution Center just outside of sacramento, quinteros failed to stop his 25,000 pound box truck for stalled traffic along interstate 5. He crashed into donald taylors parents car at around 70 Miles Per Hour. Their bodies were burned beyond recognition. The High School Sweethearts were killed instantly before their vehicle burst into flames. The accident also killed a toddler, injured seven others and totaled six cars. There is a guy rolling out of the vehicle who just got out before the whole car went up. Reporter the truck driver survived. I cant stop shaking right now. Reporter according to this accident report, quinteros had no valid license, let alone a commercial license to deliver fed ex packages. And tiris was doing business without a valid operating authority. Just a multitude of violations, things that should have been redflagged by the department of transportation. Reporter quinteros was found guilty of vehicular manslaughter and other charges. He was sentenced to 14 years in prison. But because quinteros was considered an independent contractor for fed ex smart post, not an employee, taylor says the corporation was not held responsible. Federal express did not want to discuss the situation, didnt want to talk about it. We made several attempts to talk to them. Reporter we reached out to fed ex about the accident. We were told that a freight forwarder, fed ex smart post contracts with Third Party Vendors for Transportation Services who agree to maintain their own d. O. T. Operating authority, and as a result, are responsible for any claims related to their operations. Meaning fed ex had nothing to do with the tiris accident. They basically told us not our problem. Go away. Reporter fed ex says it also make showers the Third Party Contractors are operating legally. It uses a Third Party Software vendor to monitor the department of transportation website for operating authority, insurance, and safety compliance. But remember, tiris did not have the required operating authority, and records show they also had safety violations against them before that deadly crash in 2011. Even so, drivers continue transporting fed ex goods. What has to happen is strengthening of good strong rules effective enforcement, accountability by the companies that are operating the equipment and contracting for the services of these companies. Reporter anne pharaoh is the departing head of the federal motor safety transportation. She argues the penalties are stiff when Safety Standards are poor. The highest penalty is we shut them down. Reporter why do they do the contractor thing . They save a lot of money. Reporter but we found another that appears to have slipped through the cracks. Back at the Distribution Center, we spoke to this contracted driver who talked about trchting fed ex goods. Only fed ex. Just fed ex. Yes. You know we go everywhere. Reporter we looked up the department of transportation number on the side of the companys truck and discovered they have no insurance. And in may, the government revoked their operating license. Fed ex told the Investigative Unit they stopped using that Third Party Contractor in june after finding outette lost its operating authority. But over several days in july we saw them transporting fed ex goods in and out. Do wow think its safe . Yeah. Yeah. Anger. Just flatout anger pissed off. Reporter its a Business Model that taylor says allows fed ex to distance themselves when things go wrong. His route is only a fed ex route. He does not do anything outside of Federal Express. Therefore they have and should have immediate control. A couple of notes for you. Donald taylor decided not to sue fed ex after his lawyer advised him that California Law allows companies to hire Third Party Contractors. Tiris trucking which only had a few employees is no longer in business. And finally, the government tells us they are now looking into that Third Party Contractor we found operating without valid permits. When we return i just dont think that thats proper use of taxpayer funds. We investigate why these designs and 2 million dont necessarily add up. We dig into the debate over tax dollars, a private clubhouse, and one bay area community. Using public money for a private clubhouse. Its a proposal that sparked an intense debate in one bay area community. Here is the idea and the conflict. Use residents tax dollars for a facility that would be mostly offlimits to many of those paying for it. Its a small town story with big implications for anyone living in a special tax district in california. Stephen stock investigates. Reporter take a look around. Next to the recently renovated exclusive swimming pool, the Sleepy HollowHomes Associations clubhouse built in the 1950s is showing its age. Its in dire need of replacement. This Facility Needs to be replaced. Something needs to be done because it is falling apart. Reporter while almost all of these people agree this clubhouse needs replacing, they disagree about how to pay for it. I just dont think thats a proper use of taxpayer funds. These tax dollars are going to build an emergency facility. Reporter tax dollars from the Sleepy HollowFire Protection district. The 2500 or so residents in the district pay 17 of their base property tax to cover fire and emergency services. The Fire Districts threemember board is now considering using 2 million of its tax reserves to help build a new already planned 2. 5 million clubhouse to replace the old one. But while everybody has to pay the fire tax, not everyone is a member of the Homes Association, and that means they dont have full access to the clubhouse or the pool. Private citizens we have raised about 500,000. Reporter john grubb serves as chairman of the sleepily ohollow Charitable Organization to raise money and oversee the construction of the facility. 2 million from the Fire Protection district. Reporter let me ask you, how critical is the 2 million to your project . To this project as it currently stands, its very critical. Reporter so critical if the charitable foundations website tracking donations has already assumed its getting the 2 million funding, even though it hasnt been approved yet. I just think the money could be better spent. Reporter and thats the rub for residents like john who lives across the street. He does not pay to be a member of the Homes Association or the pool. Yet his tax dollars would go to rebuild the new facility if tax district officials approve the deal. Its taxpayer funds, and it should be used for taxpayer purposes, not for building somebodys dream clubhouse. I think its a misuse of the taxpayer dollar. Reporter neighbor eric has lived in Sleepy Hollow all his life. He is a dues paying member of the Homes Association and the pool. Many more ways that we can utilize that money than putting it into a structure that is not going to be used for the Fire District. Reporter Fire District officials call this project, quote, an shelter. They point to the pages showing a permanent Fire District office there. What your tax dollars are going for, which you have complete use of as a member of the public is the public components of this building. Reporter richard serves as a part of the threemember Fire Protection board. All three members are also members of the Homes Association thinking facility would be available for any Public Safety purpose for anybody who wants to come to it for free. There are people who are not members who pay taxes to your tax district, right . Right. Why it is appropriate for them to have to use their tax dollars to rebuild this clubhouse . Were not building a clubhouse. Reporter but take a look at this. The official plans on marin countys website call it a clubhouse, and a community center, not an emergency center. The plans show an elaborate layout including a library, a coffee bar, a wraparound porch, even a bocce ball court. All recreational parts of the building off limits to anyone who is not a dues paying member. So again, is this an appropriate use of tax dollars . It is an appropriate Publicprivate Partnership to improve the safety for all the residents, all the members of the Sleepy Hollow protection. Its very difficult to distinguish cleanly between private purposes and public purposes. Reporter dave teaches tax law at uc berkeley. He estimates there are as many as 5,000 special tax districts like this in california. And there is very little oversight. These districts dont answer to the governor. Or to anybody else in the state directly. Its using taxpayer funds for a private organization. Reporter some residents maintain even if the new building serves emergency functions once in a while, thats not enough to merit their tax dollars footing 80 of the construction bill. There is many other ways we can use that 2 million to better serve the residents, all the residents of Sleepy Hollow. By the way, the Fire District board already paid 25,000 for an architect to draw up those plans. The Fire District had another meeting earlier this month, but made no progress. And expert says voters only have a few recourses in a special tax district. They can organize a recall election or file a lawsuit in court. Up next will you explain, will you explain . Sir, please stay away from him. Please dont touch the camera. Please do push. [ bleep ]. Results from the Investigative Unit. Why this man accused of stealing millions in a ponzi scheme is now behind bars after we investigated. Stay with us. Turn around every now and then i get a little bit hungry and theres nothing really good around turn around every now and then i get a little bit tired of living off the taste of the air turn around, barry finally, i have a manly chocolatey snack and fiber so my wife wont give me any more flack i finally found the right snack he is a former highranking member of the Santa Clara County sheriff Advisory Board and a wellknown bay area car dealer. He investigated, and tonight he is behind bars. The d. A. Says he swindled money as part of a ponzi scheme. A few weeks back, ron battistella entered a no contest plea connected to 1. 3 million of missing money he took from bay area investors. Were just overwhelmed with emotion of hearing that finally justice is going to be done. Reporter she is one of nearly two dozen victims. She asked us to hide her identity. She is reacting to ron battistellas decision. He has essentially entered a guilty plea. He is going to prison for what he did. Your reaction. Im stunned. Im very stunned. Reporter in Santa Clara County court, battistella told a judge he was responsible for nine felony crimes stemming from 1. 3 million in investor money that disappeared. The defendant was running a ponzi scheme essentially. He was lying to investors. Reporter back in 2012, our investigation pointed a bright light on battistellas business dealings, investments that started with ads like this one in several bay area newspapers. Promising a 10 return on investments into his car dealership. Mr. Battistella, tony kovaleski, nbc bay area. Reporter after collecting 1. 3 million from bay area investors, he stopped making interest payments. And he didnt want to answer our questions about their money. Will you explain, will you explain . Sir, please stay away from him. Please dont touch the camera. Get the [ bleep ] out of here. Pleasant dont push me, sir. Get away from here. Excuse me. Mr. Battistella . What do you say to the people who want to know where their money is . Why do you think he entered that guilty plea . He looked at the evidence against him and realized he cant defend this. Certainly there is a level of satisfaction when a person comes into a courtroom and admits what they did. However, i wont be satisfied until each one of those victims gets every dollar that they lost in this scam. Reporter satisfaction . There can never be any satisfaction in a situation like this. Its just been heartbreaking. I think he probably thought that he was invincible. Reporter by entering the plea and not taking it to trial, battistella now faces about four to five years in a state prison. On the phone, his attorney said he will not have a comment until after the sentencing that is now scheduled for september 5th. So if you see something wrong and want us to investigate, this is your invitation to call our tip line at 888996tips, or send an email to the unit at nbcbayarea. Com. We thank you for watching. If you like investigative jim, please join us regularly right here on nbc bay area. Why . Well, while some report, we investigate. Im tony kovaleski. Good night. Hi, everyone. Welcome to on the money. Im becky quick. Rising interest rates. Why theyre going up. Why you need to watch them and how they affect your money no matter where it is. And algorithms. The man who invented cupid explains how computers can find true love for you. Cutting up your credit cards are about as important as your cassette player at this point. The five best places to retire. Where to put your feet up when you hang up your work shoes. On the money starts right now. This is americas number one Financial News program. On the money. Now, becky quick. Heres a look at whats making news as we head into a new week on onhe