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Insurer Flees Traffic-Cam Firm’s Misconduct

CHICAGO (CN) - The insurer for Chicago's red-light camera operator, Redflex, which is accused of bribing city officials to win the contract, asked a judge to absolve it of responsibility for paying any bribery-related judgment against Redflex.

In 2014, Aaron Rosenberg, a former Redflex executive, sued the company on behalf of the City of Chicago, claiming it had paid bribes to city officials to rig the bidding system in order to land the city's red-light camera contract.

Rosenberg, who represented Redflex in negotiations with city officials, says the company paid millions to John Bills, Chicago's former Department of Transportation manager, disguising it as the salary and bonuses paid to a friend of Bills' hired to work as a phony consultant. The bogus invoices were allegedly approved by Redflex's former CEO Karen Finley.

When Bills retired from his city post, he went to work with Resolute Consulting, a public relations firm that works extensively with Redflex, according to the suit.

Finley pleaded guilty in August 2015 to a charge of conspiracy to commit bribery.

In her plea agreement, she admits that she "knew that Redflex was paying certain personal expenses for Bills in order to influence Bills to assist Redflex in keeping and expanding Redflex's business with the City of Chicago."

The company landed Chicago's red-light camera contract - a contract worth $100 million in 2003. Redflex kept approximately 20 to 25 percent of the $500 million in ticket revenue realized by the city between 2003 and 2012. A red-light infraction during this period cost a driver $100.

Rosenberg's complaint demands Redflex pay the city $300 million, triple the value of the contract.

His suit remains pending in federal court, as does a driver class action that relies on Rosenberg's allegations.

Redflex's insurer, RSUI Indemnity, filed suit last week in Delaware seeking to dump the responsibility for paying any judgment against Redflex related to the bribery scheme squarely on the company itself.

Finley signed a warranty letter in 2011 with boilerplate language agreeing that she had no knowledge of any act that could result in a claim within the scope of the insurance policy.

RSUI says Finley's admissions indicate that "Ms. Finley signed the warranty letter, of a 'fact, circumstance, situation, act, inquiry, investigation, error or omission' which it had reason to believe could result in a claim within the scope of the RSUI policy.

"In light of the above, RSUI has no duty to defend or indemnify Redflex under the RSUI policy."

The insurer is represented by James Emple with Cooch and Taylor in Wilmington, Delaware. Redflex did not immediately respond to an email request for comment on Wednesday.

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