I-Team: Monorail Officials Made Millions While Train Struggled
LAS VEGAS -- The troubled Las Vegas Monorail, now in bankruptcy, is bleeding money and losing millions every year. It has never turned a profit, but certainly has been profitable for the insiders who sold the idea to the public.
Monorail executives have always been cagey about salary numbers. While the monorail itself is organized as a non-profit corporation -- and got state-issued bonds and tax exemptions as a result -- the private company that managed the monorail has operated with more secrecy. Salaries paid to executives who oversaw construction were never revealed publicly before -- until now.
The Monorail transports thousands of passengers each year along the east side of the Las Vegas Strip, but it is a financial failure for one simple reason -- it's founders greatly exaggerated potential ridership. The actual number of passengers is too low to service the debt. But for a select few, the Monorail has been a gravy train.
Chief among those who profited was Bob Broadbent, the former Clark County Commissioner who oversaw the Monorail project from its inception until his death in 2003. His former right-hand man, and son-in-law, Cam Walker, also profited handsomely.
In 2000, Broadbent and Walker purchased a company called Transit Systems Management, or TSM, from the MGM Grand and Bally's. They paid a mere $1,000 each.
TSM oversaw the extension of the Monorail from a one-mile route between MGM Grand and Bally's all the way to the Sahara hotel.
Their modest $2,000 investment paid off. The I-Team has learned that just before they purchased the company, Broadbent and Walker got a $1 million bonus from the casinos. Half went to Broadbent and $400,000 went to Walker.
That fact wasn't made public at the time.
Investigative Reporter George Knapp asked Walker about the issue in 2004. He defended his compensation, but refused to say how much it was. "I can answer the question that we haven't hid that from the board. They're very much aware of it and the board has taken necessary steps to make sure it's reasonable within the industry in which we work. And they're to be commended in that regard. And that's also flowed through to the state, so the state's aware of that. Everything is reasonable and consistent within the industries we operate."
Walker refused to release the salaries, not even to the Nevada Legislature. In 2003, then-State Senator Dina Titus wanted an audit of Monorail finances, but lobbyists for the train derailed her plan, instead agreeing to give lawmakers a financial statement that omitted salaries.
"Do you know what they're making? I don't. That's not in the report," said Titus.
But it's no longer a secret. The I-Team obtained a deposition Walker gave in the Monorail's bankruptcy case, outlying financial benefits that flowed to Walker and Broadbent. While Walker didn't want to appear for an interview, he confirmed many of the details contained in his sworn deposition.
Broadbent was paid a salary of $200,000 each year in addition to a portion of a $250,000 management fee. Walker confirmed he was paid about $240,000 annually, but there was more.
In 2005, the Las Vegas Monorail Company purchased TSM for about $1.5 million. Walker got $500,000 in that transaction. All told, Walker made nearly $2 million in the five-year period between 2000 and 2005, when he left the company.
However, Walker told the I-Team the budget for TSM was actually set by a former MGM Grand official before he and Broadbent purchased the company. Everything from salaries to how much the non-profit Monorail would pay for TSM was set out in those budgets, Walker said. Neither Broadbent nor Walker changed those budgets, even after they bought the company.
Walker said it was a matter of principle to keep to the spending plan outlined by the Monorail's original owners, including the generous salaries.
Walker says he earned the money by juggling many tasks -- marketing, interacting with his casino partners, and overseeing construction, which underwent several delays. He was also in charge when the train was repeatedly shut down shortly after opening because of serious mechanical problems.
When Walker finally left the Monorail, he says it had $126 million in the bank, although, by then it was clear the ridership projections Walker and Broadbent used to sell the project to the public were ridiculously exaggerated. There was money in the bank, thanks to state-backed bonds, but the train under Walker had already begun losing money.
Today, the Monorail is negotiating with its bondholders under Chapter 11 bankruptcy protection. When it will emerge from bankruptcy and who will run it when it does is yet to be decided.
Current Monorail CEO Curtis Myles made $347,000 last year.
Monday, September 1 2014 6:06 PM EDT2014-09-01 22:06:07 GMT
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