Is the recent Ely City Council query into the Northern Nevada Rail Road finances an example of one public board exercising its fiduciary duty or that of a bitter ex-employee seeking to bring down the boss who fired him with visions of taking over the rail road himself?
Probably a little bit of both.
While adopting a much stricter financial procedures after the yearly audit of the NNRR revealed the director Mark Bassett had a $72,000 loan comprised of uncompensated business expenses to the railroad, NNRR Board members and Bassett have accused the Ely City Council and most particularly former NNRR employee Marty Westland of using the audit issues to get back at the organization and Bassett, the man who fired Westland several years ago.
To back their up allegations Bassett and board members released a long list of Westland actions both before and after he was elected to the city council in 2011 where he inserted himself into NNRR operations including setting up a rival corporation, using the NNRR logo, writing up unfounded safety violations, and interfering in a grant application that may have cost the rail road over $10 million.
Perhaps in response to that attack the Ely City Council will consider calling for a forensic audit of the NNRR in its next meeting.
In an interview with the Advocate Westland openly questioned whether some of the expenditures listed in the $72,000 loan could be justified and should be paid back.
But while the $72,000 loan and an additional $95,000 from Bassett to the NNRR raised a justifiable red flag to the corporations auditors Westland’s troubled history with Bassett and the NNRR management board begs the question if the brouhaha over the audit is real or an excuse for revenge.
“I think it is odd that no one said anything about the previous year’s audit that had some of the same issues,” Bassett said. “It was only after the last election where Marty got some of his cronies elected to the council that it comes up.”
In the last city election the self described reform movement took the majority on the Ely City council.
“During the election they complained that the so called Good Ol’ Boy network was using the city council to pursue personal vendettas,” said NNRR board chairman John Gianolli. “Now they are doing it.”
While admitting that he had indeed set up a corporation in 2008 that would seem to be in competition with the NNRR, Westland said that now defunct enterprise existed only to run the northern non-historical part of the rail road.
That plan was abandoned Westland said after plans for two coal fired power plants were quashed by environmentalists and Senator Harry Reid.
While admitting that he used the logo of the NNRR, Westland said that he broke no law since the logo was not copy writed.
“Does he know how much money we had to spend to defend our logo?” Bassett asked. “Thousands of dollars.”
Bassett and other NNRR board members also alleged that Westland’s “bogus company” using the NNRR logo may have contributed to the denial of the NNRR $12 million grant application for upgrades to the northern line that would have made it able to ship ore from area mines to the Union Pacific line at Shafter about ten miles east of Wendover.
“…Once I requested the money all of a sudden my phone calls started being ignored. You don’t think that this statement from Marty’s website had anything to do with do you?” Bassett wrote in an email. “’The Nevada Northern Railway Company is a transportation company dedicated to bringing safe, affordable transportation of nuclear waste to Yucca Mountain.’ From Marty’s bogus Nevada Northern Railway website.”
Westland’s past interference with the NNRR still does not absolve Bassett of not keeping better books.
“I know you must think I am crazy,” Bassett said in an interview with the High Desert Advocate. “But since I came here in 2002 my passion and my wife Joan’s passion has been keeping this rail road afloat and getting it in the best possible shape.”
The Bassetts came to Ely and the NNRR a dozen years ago after running their own business in Elko.
But while owners of small businesses often loan their enterprises money, that is simply not done for public non-profit corporations. In fact it could be construed as a major accounting violation. Coupled with the fact that Joan Bassett is also the rail road’s head bookkeeper the red flag in the audit was also accompanied by bells and whistles.
While no one is at least publicly defending the loans Bassett made to the NNRR, he is not without supporters primarily because he is a money making machine for the NNRR.
From grants, gifts and donations Bassett’s efforts annually raise around a million dollars a year to the NNRR between 80 to 90 percent of the non-profit’s budget. Under his direction the NNRR also hosts wildly popular special events such as the Polar Express Christmas Train Rides, photo shoots and “Be the Engineer” events where train enthusiasts pay hundreds if not thousands of dollars just to drive an old steam locomotive.
This article is due for an update. Since this was published in February, more financial NON-disclosures by the railroad have been documented before the Court, and the forensic audit commissioned by the City of Ely (which bears financial burdens for the railroad now, and could be ultimately responsible for the unpaid bills and contracts that have been apparently unaddressed by the railroad’s own management board) has proceeded with court approval.
Sadly, it is not the oversight of the City of Ely Trustees that has put the taxpayers and railroad at risk. It is the intransigence of the management board, including at least one with competing/conflicting board appointments and financial investments that increases the hazards.