Forensic Audit Shows Ely Rail Road Clean

the so called “forensic” audit may reveal some sloppy bookkeeping and business practices but there will be no smoking gun suggesting a crime said a source very close to the investigation.

Speaking on the condition of anonymity the source revealed that nothing criminal was discovered in the audit and that at most some of the business done in the name of the railroad was sloppy and done to general accepted accounting principals.

Spurred by allegations of fraud by Councilman Marty Westland the Ely city council voted to budget $10,000 the forensic audit at over the strenuous objections of the Rail Roads director Mark Basset and the Rail Road Management Board.

According to Westland said the committee hasn’t help answer the council’s questions.

“We haven’t gotten answers to the questions we had from the committee,” Westland said.

“The trustees have never given a written request of concerns to the management board, so how are we supposed to give answers when we don’t even know the questions,” Bassett said. “What Westland forgot to mention was that there were no city council members in attendance at the last ad-hoc committee meeting.”

The Ely City council is currently involved in what can be described as a power struggle with the NNRR.

Officially the dispute is over irregularities in the NNRR audit and the council has run what critics call a full court press for more extended over sight of the Nevada Northern Rail Road operations.

According to both sides last year’s audit of the NNRR revealed a $72,000 loan by NNRR director Mark Bassett to the NNRR comprised of uncompensated business expenses to the railroad.

While it is against general accounting practices for an employee of a company to “loan” money to the same company NNRR supporters claim that the so called red flag raised in the audit is but an excuse in a long grudge match against Bassett and Ely city councilman Marty Westland.

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.

“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 at the time. “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.”

So far audits of the railroad have found far from stealing from the railroad, its employees particularly Executive Director Mark Bassett have leant the organization money when they should not have.

In fact it was those improper loans to the railroad the council first used as its reason to assert its control over the railroad and ‘clean house’.

What is troubling may Ely residents is that after the “cleaning” there might not be much of a house left.

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.

F or 30 years since the railroad was created and about half that time under the direction of Bassett, the Nevada Northern Railway has built an international web of supporters both in government and from private corporations and individuals. That support whether in the form of governmental grants, private donations or out right gifts turned what was once a nice collection of obsolete engines and cars into one of the few operating historic railroads in the world and a significant money maker for Ely. Without that on going support many locals fear the Nevada Northern could easily revert to a quaint pile of junk.

That could happen especially if the council not only replaces the entire board and if the new board fires Basset.

“You are talking about years if not decades of carefully cultivated relationships being destroyed in one fell swoop,” said one current director. “Who on the new board will know who to talk to the next time a grant request comes along or an endowment is up for renewal? People like to know who they are dealing with and it is not like there is a shortage of good causes to donate to.”

In the worse case scenario that criminal fraud is found in the forensic audit, funding to the railroad would dry up immediately. However even if nothing serious is found the bitter relationship between the city council and the railroad could give many previously generous donors reason to look elsewhere to give their money.

As predicted the railroad board pointed its finger squarely at former employee and current city councilman Marty Westland as using his position to wreck revenge on the rail road.

NNRR Board members and Bassett have long accused the Ely City Council and most particularly Westland of using the audit issues to get back at the organization and Bassett, the man who fired Westland several years ago.

In the suit 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 is enumerated including the 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.

In an interview with the Advocate Westland openly questioned whether some of the expenditures listed in a  $72,000 loan Bassett made to the rail road 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.

In the last city election the self described reform movement took the majority on the Ely City council. What is striking about the reform movement was that very few if any of its candidates lived in Ely for more than 10 years if that.

“That the real shame of it all,” said one long time Ely resident. “These new guys come into town raise hell, break everything and then leave and we who have lived here all our lives have to pick up the pieces.”