Pacific Imperial Railroad

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===Carrizo Gorge Railway=== ===Carrizo Gorge Railway===
-McHaffie was on the losing side of another court battle, one brought against him by the federal government for failing to pay $360,000 in payroll taxes when he was the principal for Carrizo Gorge Railway.+# McHaffie was on the losing side of another court battle, one brought against him by the federal government for failing to pay $360,000 in payroll taxes when he was the principal for Carrizo Gorge Railway.
 +# James Warner onetime CEO and attorney
===Pacific Imperial Railroad=== ===Pacific Imperial Railroad===

Revision as of 15:20, 19 July 2014

This page is about the Pacific Imperial Railroad.

Contents

news

Updates

2014

July 18, 2014 Trouble ahead, trouble behind. Uncovered document tells of desert railway drug-smuggling bust in 2010. http://www.sandiegoreader.com/news/2014/jul/18/ticker-sort-grateful-deads-casey-jones/

July 18, 2014 The National Government of Mexico owns ALL the railroads in Mexico, it gives concessions to companies to operate the different railroads. Example, KCS/KCSM has most of the eastern portions of the system, UP/Ferromex operates the western portions! The SD&AE/Tijuana y Tecate was always operated by SP, then later after MTS bought the line from SP and brought in Kyle, pretty much the same situation, but with a percentage of the revenues going to Mexico. The MOW was done by the Mexican track crews and paid by the Federal Government. SDIV had an exclusive agreement with Mexico to operate that portion of the line, again with Mexico paying the wages, SDIV would supply track materials . When Railamerica took over, the situation was in flux as the Federal Government nationalized ALL the rail lines in Mexico under the FNM banner, by the mid 90s, Mexico decided to offer concessions to private operators. Mexican law prevents non citizens/corporations from owning more then 49% of any companies working in Mexico and US corporations had to partner with Mexican corporations. When Mexico put ALL the lines up for bidding, all lines were snapped up except for the TyT!! A Mexican Corporation bid $10 million and SDIV bid $2 million! The Mexican corporation was the winner but never came up with the money and after 8-10 years the line was rebid and only SDIV bid at less then $1 million and the bidding was halted and the existing agreement with SDIV was continued on a monthly basis. When this happened the Federal Government stopped all payments for MOW and dumped that responsibility on Railamerica/SDIV, who objected to that without renegotiating the agreement. This is where, during the late 90s CZRY entered the picture and got an operating agreement with SDIV to haul sand from Lindero, just south of the border, to Campo. Railamerica refused to do the MOW and Mexico dropped the operating agreement to a day by day basis. CZRY went to Mexico offering not only to operate the line, but also do ALL the MOW and marketing of the line as well! Mexico then pulled the operating rights from Railamerica and awarded them to CZRY! CZRY was under-capitalized from the start and was looking for outside investment, when the hostile takeovers were begun and moving forward to today, the people who took over CZRY and essentially ran CZRY into the ground, not paying payroll taxes, equipment leases and the like! They are also the principals in PIR and we know that situation as it exists today!! Mike http://www.westcoastrailforums.com/thread-7684-post-85736.html#pid85736

July 16, 2014 James Warner, the criminal defense attorney who yesterday pled guilty to stashing $100,000 in drug money for a client of his, has played a role in other allegedly fraudulent endeavors in San Diego County. Warner was not only the attorney for Carrizo Gorge Railway, the binational railroad that has made headlines in recent weeks, but for a short period of time served as the railway's chief executive officer as well. In addition, Warner represented Charles McHaffie in a lawsuit filed by Gina Seau, the wife of the now-deceased football player, Junior Seau. In her lawsuit, which has since been dismissed, Seau accused McHaffie of scamming her out of $2.5 million with promises of cash windfalls from the Carrizo Gorge Railway — McHaffie is currently involved in Carrizo Gorge Railway's offshoot, Pacific Imperial Railroad, now at the center of numerous allegations of fraud. http://www.sandiegoreader.com/news/2014/jul/16/ticker-lawyers-money-train-seems-be-stopping/#

July 16, 2014 At an executive meeting this week of rail line executives, project leader and businessman Charles McHaffie made it clear the most recent $500,000 payment had been made and there was more where that came from. MTS Chief Executive Officer Paul Jablonski half-jokingly told McHaffie that he could make the next payment early if he wanted. McHaffie declined, saying he would milk this one a bit longer.Other members of the MTS board defended Pacific Imperial and the agency. Board member Bob McClellan, of the El Cajon City Council, said Pacific Imperial had a reason for making its payment late and he “understand(s) their position.” “Of course it concerns us that a congressman is concerned, but we’ve got our own information, so it’s not like he’s telling us anything we don’t already know,” said George Gastil, a Lemon Grove councilman, in response to an inquiry from Reps. Duncan Hunter and Jeff Denham about the line. But in a new letter to MTS Wednesday, Hunter wrote that it appears “MTS does possess the ability to control the lease terms.” Hunter also said a property in Mexico that Pacific Railroad has used as “cornerstone asset” for its involvement in the project “might not be owned or controlled by PIR or any of its principals – and never has been.” Oh, that, and he says the property — which he believes Pacific Imperial touts as worth $563 million — may only be worth $1.4 million. http://voiceofsandiego.org/2014/07/16/mts-almost-got-off-easy-on-the-desert-line/Cryptically, he wrote in parenthesis: “It is my understanding that this issue is being examined by federal authorities.”

July 16, 2014 Hunter still troubled by MTS record on border railroad. http://j.mp/1tSxSQI [pdf]

July 13, 2014 A group of border-region business interests are eager to see the dream of rebuilding the Desert Line become reality, but the project is now mired in conflicts involving its latest owners and the Metropolitan Transit System. http://voiceofsandiego.org/2014/07/14/the-desert-line-mirage-lives-on-for-now/

July 13, 2014 Hear that train a com in'? Railway company makes overdue lease payment. http://www.sandiegoreader.com/news/2014/jul/13/ticker-hear-train-comin/

JULY 11, 2014 The company that has a contract with the Metropolitan Transit System to rebuild and operate a border rail line made a $500,000 payment to the agency Friday, ten days after the deadline to do so. The payment from the Pacific Imperial Railroad is required under the terms of a 99-year lease it has with MTS to run the Desert Line, a 70-mile length of track that runs from Campo to Plaster City in Imperial County. The lease requires the company to pay MTS $1 million per year in two installments. The first was due on July 1 but the company, which has been the subject of accusations from former executives of fraud and whose key leaders have been involved in numerous lawsuits and bankruptcies, did not make the most recent payment at that time. The company said it was holding the payments until a query about the validity of the lease that was raised in a June 27 letter from Rep. Duncan Hunter, R-Alpine, could be answered by the agency. In a response this week to Hunter, the agency stood by the 2012 lease, saying it was a better deal for taxpayers than a previous agreement that was in place. It also said the award complied with state law and the lease protects taxpayers in the future because it requires the company to meet certain performance milestones that if aren’t met could result in the lease being terminated. http://www.utsandiego.com/news/2014/jul/11/pacific-imperial-railroad-makes-lease-payment/

JULY 10, 2014 MTS answers Congress on railroad. Agency says the lease was not subject to competitive bidding rules. http://www.utsandiego.com/news/2014/jul/10/mts-answers-congress-border-railroad/

July 9, 2014 Who owns Rancho Tembabichi? Metropolitan Transit System to face more questions about railroad deal. for MTS, the lease with Pacific Imperial was needed for several reasons: first, if Pacific Imperial is unable to get the rail company on track, the rights to the Desert Line would be returned to MTS without the restrictions placed on it in a 1984 agreement that allowed then-lessee RailTex an option to purchase the line for a fraction of its value. The other plus, according to MTS: even if Pacific Imperial was successful in getting the railroad operating, MTS would receive the $1 million lease payment that could go toward other transit improvements. "Leaving aside that this was not a procurement of services or goods, sole-sourced or otherwise, MTS's enabling legislation gives it broad, unrestricted authority to 'lease, mortgage, sell, or otherwise dispose of any real or personal property necessary to the full or convenient exercise of its powers,'" reads the July 9 letter from MTS. "MTS may contract with 'any person upon such terms and conditions as the board as the board finds is in its best interest.'" The transit authority's letter also addressed the congressmen's questions over Pacific Imperial Railroad's financial integrity, despite the numerous lawsuits and the fact that the people behind the company were the same people who were incapable of repairing the line and running freight after a stockholder takeover of the old Carrizo Gorge Railway Inc. "At the time the [Pacific Imperial Railroad] agreement was approved in 2012, MTS was aware that [Pacific Imperial] was financed by a small group of shareholders…. MTS was aware that [Pacific Imperial] was attempting to raise additional 'seed funding' to support a larger financing effort. [Pacific Imperial] informed MTS that it owned a large property in Baja California that its shareholders were willing to put up as collateral for a project loan, if this was something that was requested by investors/financial institutions. MTS did not take a position as to the appropriate financing method....” http://www.sandiegoreader.com/news/2014/jul/09/ticker-who-ons-rancho-tembabichi/

JULY 3, 2014 SAN DIEGO — The company granted a 99-year lease to operate the Desert Line railroad missed a mandated $500,000 payment to the Metropolitan Transit System that was due on Tuesday. In a letter to Donald Stoecklein, chief executive officer of leaseholder Pacific Imperial Railroad, MTS lawyer Karen Landers wrote that her agency could terminate the lease for nonpayment of the funds, and gave the company until July 14 to pay up. According to Landers’ letter, Stoecklein has told her that the company intends to make the payment next week and that the payment was late because of “delays and difficulties” stemming from a letter sent Friday by Rep. Duncan Hunter, R-Alpine, and another congressman. In that letter, the representatives demanded that MTS explain whether the lease violated state law against no-bid contracts, and whether the agency had thoroughly vetted the background of the company and its shareholders. In a response to Landers, Stoecklein said the company decided to “hold further payments” until its own independent expert reviewed the state law issue. The 70-mile Desert Line runs from the border near Campo to Plaster City in Imperial County, with a portion dipping into Mexico. It’s considered a potential driver of border commerce. The company got the lease in 2012, but has made little progress toward restoring service. http://www.utsandiego.com/news/2014/jul/03/tp-railroad-line-operator-misses-lease-payment/

JULY 1, 2014 CONGRESSMEN DEMAND BORDER RAILROAD INFO. Hunter questions MTS granting 99-year lease to troubled company. http://www.utsandiego.com/news/2014/jul/01/tp-congressmen-demand-border-railroad-info/

June 30, 2014 MTS chief Jablonski railroaded? Congressmen seek answers regarding backcountry railway deal. By Dorian Hargrove, http://www.sandiegoreader.com/news/2014/jun/30/ticker-mts-chief-jablonski-railroaded/

May 13, 2014 Reactivation of the “Desert Line” Given Boost. The South County Economic Development Council has voted to support the reactivation of the San Diego Arizona Eastern Railway. Support of the “Desert Line” followed a presentation by Karen Landers, general counsel for San Diego Metropolitan Transit System, owner of the right of way, and Donald Stoecklein, CEO of Pacific Imperial Railroad Inc., the operator of the Desert Line. The geographic location of the Desert Line impacts the northwest part of Mexico (primarily Mexicali and Tijuana) and Southern California, including South County, which sits in the heart of the California-Baja California bi-national region. This border region and the border crossings associated is considered the busiest border crossing in the world by some experts. The re-opening of the Desert Line should assist in the elimination of some of the inefficiencies at the border crossing, which, according to the recently published Global San Diego Export Plan, result in “an annual loss of more than $1.3 billion. scroll down http://www.sandiegometro.com/2014/05/daily-business-report-may-13-2014/

5/12/2014 Southern California economic development council backs Desert Line reactivation. South County Economic Development Council (SCEDC) board members recently voted in favor of supporting the reactivation of the San Diego Arizona Eastern Railway, or Desert Line, in Southern California and northwestern Mexico. The vote followed presentations by the San Diego Metropolitan Transit System (MTS), which owns the right of way, and Pacific Imperial Railroad Inc. (PIR), which would operate the Desert Line under a 99-year lease with MTS. The presentations reviewed the economic impact of reopening the line, and the status of ongoing inspections, certifications and reconstruction work on 57 bridges and 17 tunnels. To upgrade the 70-mile Desert Line — which runs between the U.S.-Mexico border at Division and connects with a Union Pacific Railroad line in El Centro, Calif. — track and ties also will be replaced. The border region and associated border crossings are considered the busiest in the world by some experts, said PIR Chief Executive Officer Donald Stoecklein in a press release. Reopening the Desert Line would help eliminate some of the inefficiencies at the border crossing, he said. "The support of SCEDC is another step in facilitating the rail project, which connects the Maquilatropolis region of Baja California, to the Eastern United States," said Stoecklein. Added SCEDC President and CEO Cindy Gompper-Graves: "Reopening the Desert Line will help expedite the import-export process for cargo without compromising national security." http://www.progressiverailroading.com/short_lines_regionals/news/Southern-California-economic-development-council-backs-Desert-Line-reactivation--40405

May 9, 2014 The proposed reopening of a old railroad line stretching from Imperial County through Mexico to San Diego won key support Thursday from South County Economic Development Council. Pacific Imperial Railroad is planning to reopen the old Desert Line to serve the Mexican manufacturing facilities, known as maquiladoras, that are host to major American and international exporters, including Toyota, Hyundai, Mattel, Bose and Samsung. The line runs from Plaster City in Imperial County to Tecate in Mexico. “South County EDC and its members have historically been champions of finding more effective ways to move people and goods across the border,” said Cindy Gompper-Graves, president and CEO of the EDC. “Reopening the Desert Line will help expedite the import-export process for cargo without compromising national security,” The EDC’s board of directors voted to support the project, and also heard a detailed presentation from the San Diego Metropolitan Transit System, owner of the right of way, about the steps necessary to re-open the line. Work is needed on 57 bridges and 17 tunnels, as wells as replacement of track and ties along the 70-mile track. In his April visit with the EDC, U.S. Customs and Border Protection Commissioner R. Gil Kerlikowske said that if the railway is reopened, the federal government would absorb the cost of staffing at the port of entry. “The support of SCEDC is another step in facilitating the rail project, which connects the ‘Maquilatropolis’ region of Baja, California, to the Eastern United States,” said Donald Stoecklein, CEO of the railroad company. The line originally opened in 1919, but fell into disrepair in the 1980s. It includes the 186-foot-tall, 630-mile-long Goat Canyon Trestle, a historic Civil Engineering Landmark. http://timesofsandiego.com/business/2014/05/09/reopening-cross-border-rail-line-gets-south-county-support/ http://www.rtands.com/index.php/freight/shortline-regional/desert-line-receives-support-from-south-county-edc-board-members.html

Tunnel-Infinity-3.jpg
http://www.pobonline.com/articles/97315-surveys-with-a-side-of-scanning

April 21, 2014 Would-be railroad barons face steep grade. Note to MTS: Backers of Pacific Imperial Railroad have controversial past. By Dorian Hargrove, April 21, 2014 http://www.sandiegoreader.com/news/2014/apr/21/ticker-would-be-railroad-barons-face-steep/ “[Pacific Imperial Railroad] asked us to renew the lease in order for them to raise funds and we did. And, as of this time, that lease is in good standing,” MTS CEO Paul Jablonski said at the April 15 board meeting of the San Diego and Arizona Eastern Railway, the nonprofit that manages the Desert Line. Also at the meeting were Pacific Imperial Railway’s newest CEO, Donald Stoecklein; former president and now self-professed “consiglieri” to management, Charles McHaffie; and Daren Barone, a large shareholder who has been tasked with working with Mexican officials. Earlier in the meeting, the trio reiterated their commitment to getting the binational railroad on track and to dispel any allegations of fraud and money laundering from former management. McHaffie and Stoecklein’s colleague Daren Barone, the man in charge of working with officials in Mexico, has also been involved in his share of controversy. In 2013, Pacific Imperial's boardmembers, including Barone, entered into an $8.5 million contract with Watkins Environmental Incorporated to perform environmental remediation and construction on the the line. “Under the agreement,” reads a press release from Business Wire, ”Watkins will provide needed reconstruction concurrent with the inspections provided by JL Patterson and Associates, which cover 57 bridges, inspect 17 tunnels and approximately 70 miles of track, in compliance with PIR’s agreement with the San Diego Metropolitan Transit System (MTS) and PIR’s plan to commence operations in 2014.” But the work never commenced. And, according to a receptionist at Watkins, no contract is in place. Barone is a longtime business partner of Watkins, dating back to the early 1980s.

April 14, 2014 San Diego and Arizona Eastern Railway to roll? Executive from company to address allegations of fraud. By Dorian Hargrove, April 14, 2014 http://www.sandiegoreader.com/news/2014/apr/14/ticker-san-diego-and-arizona-eastern-railway-roll/

Friday, April 11, 2014 San Diego Regional Chamber of Commerce President Jerry Sanders told local media, "That's one of our top priorities." He added, "It's very complex, obviously, when you have two governments, two state governments, two city governments, and MTS [Metropolitan Transit System]. But I think it can be done." Complications involving freight rail use also exist. MTS in December 2012 leased a portion of the route to short line Pacific Imperial Railroad, which could make temporal separation of freight and light rail operations a necessity to comply with safety requirements mandated by the Federal Transit Administration and, perhaps more important, Federal Railroad Administration. But Sanders said business leaders and political officials in both nations were actively urging establishment of cross-border LRT service, noting the San Diego-Baja rail line was also among the top concerns discussed during a recent trade trip to Mexico City sponsored by the San Diego Regional Chamber of Commerce. http://www.railwayage.com/index.php/passenger/light-rail/san-diego-tijuana-seek-cross-border-lrt.html

Tuesday, April 8, 2014 MTS, the Metropolitan Transit System, leased operation of the Desert Line portion of the rail — from Imperial County to the border near Tecate — to Pacific Imperial Railroad in December 2012. The company currently is assessing reconstruction-needs along the line. Tijuana business leaders are pushing for reconstruction of the rail line on the Mexican side of the border. Baja California governor Francisco Vega de Lamadrid has said its one of his priorities. The San Diego-Baja rail line was also among the top concerns discussed during a recent trade trip to Mexico City sponsored by the San Diego Regional Chamber of Commerce. Some 75 San Diego and Tijuana business and political leaders were on the trip. “We’re seeing more companies want to come here and work on both sides of the border,” chamber president Sanders said, “but the railroad’s really an important issue for almost all of them.” A rail link would improve the shipping potential for cross-border businesses, take trucks off the road and entice shipping firms to choose San Diego’s port over Long Beach or Los Angeles, Sanders said. Despite the business leader’s optimism for having the rail line operational by the end of this year, there’s much work to be done. Among them, an operating agreement must be worked out between the Mexican and U.S. lessees, and a rail station must be built in Mexicali. In addition, Pacific Imperial Railroad has been accused of wrongdoing by former company leaders, the U-T reported recently. Two former CEOs of the company quit after believing they uncovered misconduct. http://www.kpbs.org/news/2014/apr/08/san-diego-baja-rail-line-has-new-boosters/

Chasing the New PIR Locomotives from West Colton to El Centro Part 3 HD Aug 27, 2013 Location 3: We watched the manifest roll by for a final time at the Barioni Boulevard Crossing in El Centro. The train had slowed as it was about to enter the small El Centro Yard. I noticed that the engineer was cracking up as he went by; at this point, I guess it seemed absolutely ludicrous that WE were still chasing this same train after nearly five hours. The locomotives were delivered to their final destination in Plaster City a few days later where they are awaiting some minor repairs before they are put into service by PIR. https://www.youtube.com/watch?v=1T6KxmnT8wQ

April 03, 2014, Room for more freight in San Diego? San Diego & Imperial Valley Railroad (SDIY), a Genesee & Wyoming subsidiary, is the direct recipient of that international traffic. Its 13-mile line from San Diego south to the border terminal of San Ysidro, Calif., bridges the gap between BNSF and Mexico’s Baja California Railroad (BJRR). SDIY also handles minor freight traffic on a branch from San Diego northeast toward El Cajon. Both segments of SDIY’s operation are on trackage shared with San Diego Metropolitan Transit System light rail trains. BNSF interchanges an average of 15 cars per day with the SDIY. During 2013’s fourth quarter, SDIY moved 1,301 carloads, of which 1,119 were carloads terminating or originating in Mexico. Pacific Imperial Railroad says its Desert Line is “uniquely positioned to service approximately 800 manufacturing facilities in proximity to the rail,” including the Toyota factory near Tecate. Such commerce would enter the U.S. and move east via PIR to a connection with UP, or west via PIR’s connection with BJRR. Moving west would mean access to San Diego, as well as a potential reach to the Los Angeles area via BNSF. However, overhead trolley wire between San Ysidro and San Diego may pose a restriction against high-profile cars such as auto racks. http://www.railwayage.com/index.php/freight/short-lines/room-for-more-freight-in-san-diego.html

April 03, 2014 Pacific Imperial Railroad, Inc. (PIR) announced today that it has entered into a strategic advisory agreement with Diamond Capital Advisors, LLC (“Diamond”) in connection with raising up to $150 million. Under the agreement, the funds raised will provide PIR with the capital required to repair bridges and tunnels, and replace track and ties on the 70 miles of railroad track between the US/Mexico Border and connecting with Union Pacific Railroad at El Centro, California. “We are extremely excited to have Diamond, a recognized leader in capital formation, as a key advisor and an integral part of our PIR team,” said PIR CEO, Donald J. Stoecklein. Gary Ferrell, Managing Director at Diamond, stated, “We are very pleased for the opportunity to participate in what we consider one of the most important investment opportunities in the Southern California region today.” Mr. Ferrell additionally indicated that Diamond understands the significance of providing the required capital to the PIR project, creating an operational rail system on the old Desert Line, allowing for the economic transportation of significant volumes of freight from the Maquilatropolis® region of Baja, California. ABOUT DIAMOND CAPITAL ADVISORS, LLC Headquartered in Los Angeles, California, Diamond is a premier middle market investment-banking group that provides financial advisory and investment banking services to a diverse client base, with securities cleared through Aaron Capital Inc., a member of FINRA and SIPC. ( www.diamondcapadvisors.com ). http://www.marketwatch.com/story/pacific-imperial-railroad-inc-enters-into-150-million-investment-banking-agreement-with-diamond-capital-advisors-llc-2014-04-01?reflink=MW_news_stmp http://www.progressiverailroading.com/short_lines_regionals/news/Pacific-Imperial-Railroad-forges-pact-to-acquire-infrastructureimprovement-capital--39983

Mar 30, 2014 Critics worry railroad firm is off track. MTS has given 99-year lease to open Campo-to-Plaster City line. Four senior executives have left the company granted the 99-year lease. They include CEO Ernest Dahlman, hired in early 2013 to raise millions of dollars needed to get the line operating, and President David Rohal, a veteran railroad executive who was hired in December. Both quit after they believed they had uncovered wrongdoing, including $1 million in payments to a Nevada company that is owned by one of the principal shareholders in Pacific Imperial. Rohal was so disturbed that he contacted the FBI with the information, according to documents obtained under the Public Records Act by U-T Watchdog. The company’s current CEO, San Diego lawyer Donald Stoecklein, denied those allegations, saying the payments were legitimate loan repayments to the Nevada firm. He also said that the displaced managers are scheming themselves to take over the line. http://m.utsandiego.com/news/2014/mar/29/pacific-imperial-railroad-mts-contract-trouble/

Dahlman and Rohal first met and became interested in the Mega Region when originally recruited to form a management team for the dormant Pacific Imperial Railroad (PIR) in San Diego. Dahlman and Rohal left PIR in early February 2014 to form their own organization. Read more here: http://www.heraldonline.com/2014/03/24/5798896/veteran-industry-executives-combine.html

Jan 14, 2014 - San Diego Association of Governments http://www.sdmts.com/MTS/documents/2014-1-14SDAEFINALPKG_004.pdf

2013

June 21, 2013. San Diego, CA –The Pacific Imperial Railroad, which plans to revitalize the Desert Line from Imperial County to Mexico-based manufacturing sites, has reached several major milestones in its agreement with the Metropolitan Transit System. The latest milestone was a $500,000 lease payment to MTS for freight railroad rights on the 69.9 mile Desert Line between Plaster City, Calif., and the border with Mexico at Tecate. “We are encouraged by the progress this group has made to transform a historic rail line into a viable economic engine for the region,” said Paul Jablonski, Chief Executive Officer of MTS. Since the MTS Board of Directors approved the Desert Line operating agreement with PIR in December 2012, PIR has submitted a proprietary business plan and reconstruction plan. The $500,000 lease payment, which was due July 1, 2013, was submitted on June 11. PIR will now proceed with its reconstruction plan that includes an assessment of the condition of 57 bridges and performing necessary repairs. Upcoming milestones are the completion of initial repairs on the rail line (December 2013) and the testing of trains (January 2014). The line is expected to have limited operations within three years and have full scale operations in five years. MTS is scheduled to receive another $500,000 lease payment on January 1, 2014, and $1 million or 15% of gross operating revenue in every year of the lease, which can be up to 99 years. The Desert Line was originally built by John D. Spreckels beginning in 1906. It was completed in 1919 at a cost of $18 million. Once repairs are complete, the Desert Line will provide a much needed link for supply and finished products between the United States and Mexico. MTS operates more than 90 bus routes and three Trolley lines on 53 miles of double-tracked railway. The system generates about 300,000 daily trips. For more information on how you can use public transportation and save money, go to www.sdmts.com. http://sdmts.com/MTS/PacificImperialRailroadReachesMajorMilestonesPays500000LeaseforDesertLine.asp

May 17, 2012 MTS Board of Directors Meeting. see agenda item 9: assignment of CZRY to PIR http://www.sdmts.com/MTS/documents/2012-5-17BoardPkg.PDF

Feb 21, 2013 http://www.sdmts.com/MTS/documents/2013-2-21_000.pdf

Jan 15, 2013 - Report on San Diego and Imperial Valley (SD&|V) Railroad. http://www.sdmts.com/MTS/documents/2013-1-15FinalPkg_000.pdf

ref

http://en.wikipedia.org/wiki/Pacific_Imperial_Railroad#References

KUSI series

The Desert Line: PIR falls into default on its lease. Jul 03, 2014 7:25 PM http://www.kusi.com/story/25939826/the-desert-line-pir-falls-into-default-on-its-lease

The Desert Line: Congress demands answers. Updated: Jun 30, 2014 11:14 PM PDT http://www.kusi.com/story/25911257/the-desert-line-congress-demands-answers

The Desert Line: Experts weigh-in Updated: May 01, 2014 http://www.kusi.com/story/25398124/the-desert-line-experts-weigh-in

KUSI went to the man who run MTS, the landlord of the Desert Line, to ask him why. Paul Jablonski refused our efforts to get him to speak on-camera, but he did agree to speak with us on the record. What does he make of the owners of Pacific Imperial? Jablonski told us he sees McHaffie as a man with a grand vision for the railway, someone willing and able to wrest control of it from the prior group, the Carrizo Gorge Railway.

Jablonski went on to say leasing the line to McHaffie and Jory's company was, quote, "our best option." He explained it like this: "rather than stay embroiled in the back-and-forth of the prior company, we cleaned up the contract to have clear milestones of performance."

"Ultimately, you want to be able to move 400 cars a day," continued Stoecklein.

Jablonski's confidence in that promise seems firm. He says PIR has kept its promise to pay its first $1 million annual lease installment and it has met its milestones. As to the stories of misuse of funds, Jablonski says "we have no knowledge of an improper use of funds or any violation of law by PIR."

Indeed, MTS just ruled to reject Rohal and Dahlmen's request for a partnership to run a railroad on the Desert Line, stating "MTS will not negotiate new leases with anyone while its contract with Pacific Imperial is in force."

KUSI News just learned Pacific Imperial Railroad is now announcing it has entered into an agreement with a Los Angeles firm called Diamond Capital Advisors to raise up to $150 million to repair bridges and tunnels, replace track and ties on the 70 miles of railroad track between the U.S./Mexico Border, and connecting it with Union Pacific Railroad at El Centro, California. Under scrutiny, PIR appears to be acting quickly to raise the funds they need to keep the contract. Its detractors have so far lost on all fronts. And MTS sits back, collects its million dollars per year and watches to see whether the railroad to nowhere ever turns into the vision its builder - San Diego industrialist John Spreckels - had so many years ago. http://www.kusi.com/story/25149863/the-desert-line-railroad-to-nowhere-mts-weighs-in

At the end of KUSI's interview, Stoecklein reached across the table and handed over Pacific Imperial Railroad's confidential management report to its board of directors. Among other things, it's an indictment of the company's detractors. In it's 197 pages, the new PIR leadership lays out its case: the old leadership (Dahlmen and Rohal) abused their privileges, exceeded their authority, mismanaged money, and tried (and failed) a hostile take-over of the company - all while failing to meet self-imposed deadlines for bringing in investment funding. So there are the charges and counter-charges between people competing for control of the coveted Desert Line Railroad. http://www.kusi.com/story/25135742/the-desert-line-a-train-to-nowhere-part-two

Railroad bosses have spent most of the century trying to get the Desert Line up-and-running. Now, a pair of Las Vegas land-and-stock speculators have come to San Diego and, despite their checkered histories and the fact they (and their companies) have never run a single train, they somehow managed to persuade the Metropolitan Transit System to give them the lease for what may be one of the most valuable rail lines in all of North America. The company is called Pacific Imperial Railroad. You probably haven't heard of it because it has never run a single train. What's more, its owners are the targets of lawsuits dating back years.

The Desert Line; seventy miles of track; a century of trouble. It was 1904 when industrialist John Spreckles envisioned a rail line from San Diego Harbor to the rest of the nation, commencing at Campo, and crossing the barren desert, all the way to Plaster City near El Centro.

Beset by calamity after calamity, including World War I, it was known as the impossible railroad, engineered through some of the most treacherous terrain ever traversed. Fifteen years later in 1919, Spreckles drove the Golden Stake on the last transcontinental railway built in America.

For decades, hundreds of tons of freight moved along the line, but the Southern Pacific Railroad let it fall into disrepair and tried to abandon it - selling it in 1979 to what is now the Metropolitan Transit System. MTS bought the tracks for the trolleys that move people around San Diego, and with those tracks, the old Desert Line to be used for its original purpose: moving freight.

The Public Transit Agency granted a 99 year lease to a private company now known as Pacific Imperial Railroad, and that's where the story begins.

"It's an after-thought," said David Rohal, a Yale-educated career railroad man and former Senior Vice President and COO of Rail America. "It's seventy miles from San Diego. It's out-of-sight. It's out-of-mind."

Rohal came to San Diego in 2013 to run PIR from the rails up.

"San Diego is sitting on top of a neglected asset. It is ready to be rebuilt, it is ready to connect the economy of a mega-region with the markets of the United States."

Rohal joined forces with New York investment banker Ernie Dahlmen, whose resume includes building transportation businesses. Dahlmen says he signed on as CEO of Pacific Imperial to tap Mexico's economic growth.

"One of the things that is rattling the economic growth, is the fact that they have 3,000 trucks crossing the border a day, that are experiencing delays," stated Dahlmen. "So a railroad that could solve that, with logistics of rail versus truck, seem incredibly appealing."

Both men say it was the 99 year lease contract with MTS that attracted them and prospective investors.

"I went with (Dahlmen) to Wall Street, we met with the people who have the hundreds of billions of dollars to put to work and they were excited about the project, the management team. They wanted this vision to happen," said Rohal.

Within weeks though... signs of trouble.

"I had garnered a lot of institutional and individual interest in this railroad. A lot of it kept coming to a full stop. I didn't understand why," explained Dahlmen.

Dahlmen says a would-be investor sounded an alarm.

"It was the day before Thanksgiving; he was planning on funding, and he came back and said 'Ernie, I'm really sorry to tell you this, but we've looked into the ownership group and the stuff that we've found has raised some grave concerns. We're not sure if we'll be able to move forward.'"

Prompted by a private investigation firm's report, obtained by KUSI News, Rohal and Dahlmen turned their attention away from building PIR to investigating its owners. The report cites scores of lawsuits naming PIR and its owners, Charles R. McHaffie and Dwight W. Jory, from plaintiffs contesting McHaffie and Jory's control of the railway to its board's decisions, shareholders' voting rights, and distribution of stock. The report went on to reveal legal judgements against McHaffie for failure to pay federal payroll taxes, as well as failed real estate projects in San Diego and beyond. And there was one lawsuit, filed by the ex-wife of the late Chargers star linebacker Junior Seau. Gina Seau claimed she loaned McHaffie $2.5 million for the railroad and he spent the money somewhere else. The suit was dismissed, but Seau has reportedly never seen her money since.

"The background of the people that own the paper is terrible. They have never been a part of a successful business," said Rohal. "They have been responsible for dozens of businesses, all of which have failed.

There are potentially billions of dollars in international commerce at stake here, and critics say it is folly and foolish to put this railroad into the hands of these two individuals. What is Pacific Imperial Railroad's response to the accusations? Tuesday, on The KUSI News at 6 and 10 PM, part two of a three-part series of reports. A prominent San Diego attorney, who is the new CEO of the railroad, takes the tough questions. He also has some scathing accusations of his own. http://www.kusi.com/story/25124362/the-desert-line-a-train-to-nowhere

Special Report preview: Railroad to nowhere? The Desert Line. Built nearly a century ago, industrialist John Spreckles overcame treacherous terrain and countless calamities to open the last intercontinental railway in America. Decades of neglect allowed it to crumble and forced manufacturers to truck billions of dollars worth of product through a log-jammed border crossing. A new effort is rolling, to bring the Desert Line back to life. "San Diego is sitting on top of a neglected asset," said former company president David Rohal. "I don't think this opportunity would exist, either for me or the region of San Diego, had they not pursued it so tenaciously," said Donal Stoecklein, CEO of Pacific Imperial Railroad. The Desert Line's landlord -- the Metropolitan Transit System -- awards a 99-year lease to a new railroad company to rebuild the tracks and turn them into an international shipping line. The railroad company's owners use the lease as a calling card to attract tens of millions of investment dollars. Then, former corporate leaders make damning allegations against the owners. "I had garnered a lot of institutional interest and individual interest in the railroad" said former company CEO Ernie Dahlman. "A lot of it kept coming to a full stop and I really didn't understand why." "The background of the people who own the paper is terrible," said Rohal. Could the new railroad company itself become the next calamity to doom the Desert Line? "I think the business background of the owners and management always has an impact on raising funds, especially from institutional investors," Stoecklein said. "I don't think, in this case, it's going to be a significant issue." San Diego's public transportation utility, now responsible to decide whether a pair of Las Vegas speculators can bring the Desert Line back to life. http://www.kusi.com/story/25118456/special-report-preview-railroad-to-nowhere

History

East County Dirt Works

East County Dirt Works, Incorporated filed as a Articles of Incorporation in the State of California on Monday, November 02, 1998 and is approximately sixteen years old, according to public records filed with California Secretary of State. The filing is currently active as of the last data refresh which occured on Sunday, April 06, 2014.

Key People

Gary Sweetwood serves as the President and has interests in other corporate entities including Champion Diesel Sales & Service, LLC located in Lakeside, CA . Gary's past corporate affiliations include Cg International Aggregates, Inc., Elmer Sweetwood & Sons, Inc. , and Sweetwood & Shaw Combined Services, Inc.

Gary Sweetwood is also the registered agent for the company. Also known as a statutory or resident agent, the registered agent is responsible for receiving legal notifications regarding court summons, lawsuits, and other legal actions involving the corporate entity. http://www.corporationwiki.com/California/Lakeside/east-county-dirt-works-incorporated/43014896.aspx

Watkins Environmental Inc

http://www.bbb.org/san-diego/business-reviews/asbestos-removal-service/watkins-environmental-inc-in-san-diego-ca-172002455

Mr. Greg Watkins, President

Mr. Damon Barone, Chief Operating Officer

San Diego & Arizona Eastern (SD&AE) Railway

http://www.sdmts.com/MTS/documents/SDAEFactSheet.pdf

San Diego and Imperial Valley Railroad (SDIV)

http://www.gwrr.com/operations/railroads/north_america/san_diego__imperial_valley_railroad

Carrizo Gorge Railway

  1. McHaffie was on the losing side of another court battle, one brought against him by the federal government for failing to pay $360,000 in payroll taxes when he was the principal for Carrizo Gorge Railway.
  2. James Warner onetime CEO and attorney

Pacific Imperial Railroad

Key personel

  1. Donald Stoecklein, CEO of Pacific Imperial Railroad Inc.
  2. Charles R. McHaffie
  3. Dwight W. Jory
  4. Sheila LeMire, McHaffie's former girlfriend
  5. Daren Barone, a large shareholder who has been tasked with working with Mexican officials

Former officers

  1. Ernest Dahlman CEO, hired in early 2013
  2. David Rohal, President, a veteran railroad executive who was hired in December
  3. Gary Sweetwood, president

related companies:

  1. International Railroad Investment Fund (aka Camden Healthcare) established by Stoecklein in October 2011, Headquartered in Las Vegas, the company's first action was to issue 110,000,000 shares at a price of $.001 per share.
  2. Locati Global Holdings. incorporated around the time of Pacific Imperial Railway, was created by Dwight and Theodora Jory. Its home base is headquartered in Henderson, Nevada.
  3. Gold Mountain North LLC, also founded by the Jorys back in 2004.
  4. Public Private Equity Group LLC. June 2013, launched by McHaffie, Stoecklein, and Dwight Jory, among the company's first action was to issue 110 million shares, valuing them at $.001 per share.
  5. AC Funding, $1.1 million in payments made to A C Funding, a Nevada corporation with a corporate officer named Dwight Jory.
  6. CC Trust

Assets:

Stoecklein claims that one of those companies, Gold Mountain North LLC, a company started by Jory and his soon-to-be wife, Theodora, brought a major asset to the deal, a $550 million property in Mexico known as Rancho Tembabichi. The property, states Stoecklein, is "approximately 21,326.73 acres on the Sea of Cortex [sic] in Baja California, Mexico. The primary parcel is 5,685.30 acres, with 12 miles of ocean front, a natural lagoon with an estimated area of 12.36 acres, set on a gentle sloping site with a view of the Sea of Cortez."

About an hour and a half drive east of San Diego, on an unused stretch of track that is the eastern end of the old Desert Line, we found the only tangible evidence that PIR has done anything to build a railroad. The owners of PIR took $450,000 of investors' money and bought three locomotives from Idaho, Northern, and Pacific Railroad and had them towed there, where they've sat ever since. The only problem with them is: they don't work.

Videos

Carrizo Gorge Railkart http://www.youtube.com/watch?v=4wOKZHM0bpQ

Railroad Police (GoPro Hero3+) http://www.youtube.com/watch?v=GYzipfWfrV0

links

http://akronrrclub.wordpress.com/tag/pacific-imperial-railroad/

http://en.wikipedia.org/wiki/Pacific_Imperial_Railroad

http://www.westcoastrailforums.com/thread-7684-page-21.html

Crossing the Famous Goat Canyon Trestle. On March 1st 2014 the Pacific Southwest Railway Museum was given permission to access the Carrizo Gorge to Dos Cabezas at MP 110. We used vintage Fairmont A-5 motorcars. The journey was part of a ferrying move and pre-inspection trip. http://www.youtube.com/watch?v=z5HtxYMICG4&list=UUAFC_KrJHR-HdgNM40vFzNw

http://imperialbeach.patch.com/groups/business-news/p/investors-raising-funds-to-re-open-railroad-line-to-el-centro

http://pacificimperialrailroad.com/

http://www.youtube.com/watch?feature=player_embedded&v=FpzGPL47-hQ

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