The federal government has officially weighed in on the controversial binational railroad, also known as the Desert Line.
On October 30, congressman Duncan Hunter sent a letter to U.S. Attorney Laura Duffy requesting that her office launch an investigation into allegations of investment fraud that have plagued the defunct railroad for more than seven years.
In 2012, Pacific Imperial Railroad entered into a 99-year-lease agreement with the Metropolitan Transit District to haul freight on the 70-mile line stretching from Tecate, Mexico, to Plaster City, California. The transit agency drafted the lease despite the fact that Pacific Imperial Railroad was made up of all the same people from the previous company (Carrizo Gorge Railway), who had run the railroad since 2007. During that seven-year-span, the company has not moved any freight. Despite the inactivity, the company managed to rack up $2 million in legal judgments for unpaid bills and a $1.6 million penalty for smuggling 202 pounds of marijuana from Mexico; the company also owes more than $240,000 in back-taxes.
The poor track record recently caught the attention of Congressman Hunter. Earlier this year, Hunter sent several letters to transit agency chief Paul Jablonski listing his concerns. Jablonski did not waver in his support of the company. Now, Hunter has taken the next step.
“The evidence that has accumulated against [Pacific Imperial Railroad] and Desert Line lease is troubling,” said Hunter in an October 30 statement. “The railroad is a public asset and anytime there are allegations or there is evidence of unlawful activity in a situation like this — it is necessary that the proper legal authority determines the facts through its ability to obtain relevant documentation and testimonial evidence. Among other things, [Pacific Imperial Railroad] has falsified and misrepresented its assets to attract investors while the company remains on the profitable side of the lease agreement."
Continued Hunter, “Whenever a public asset is either being misused or mismanaged, or as allegations are presented, it is critical that the necessary steps are taken to ensure the public trust is upheld and the asset in question is neither a liability nor exists to perpetuate unlawful activity.
“The Desert Line will be an international railway on a troubled land border. An operational Desert Line, even with security protocols in place, can still facilitate criminal activity, including drug smuggling, into the U.S. A functional Desert Line must be safe and secure — and it is absolutely necessary to fully determine the capability of [Pacific Imperial Railroad] to effectively maintain and operate the railroad.”
Metropolitan Transit System spokesman Rob Schupp issued the following statement in response: ""If the U.S. Attorney undertakes an investigation of this issue, MTS will cooperate fully. MTS followed appropriate procedures in its lease with Pacific Imperial Railroad and we continue to protect the public interest by enforcing its terms."
For more on the allegations and the history read the September 10 cover story in the Reader
(reposted due to technical error)