An old liberal legend dating back to mid-2011 holds that Florida Governor Rick Scott once turned up his nose at $2.4 billion in “free” federal money offered by President Barack Obama. All the president wanted was for Scott to use the funds to build a mythical bullet train that would magically transport passengers between Orlando and Tampa at a stupendous 170 miles per hour.
Today, Miami Herald reporter Mary Ellen Klas regurgitated parts of that old tale in an attempt to prop up a confusing narrative framed by a fake news headline which implies Scott purchased the Florida-based high-speed rail company called Brightline (see screenshot of fake news headline, below).
He has not, and is not, invested in Brightline. Nor is he invested in Brightline’s parent company, Fortress Investment Group.
But these critically important facts don’t deter Klas from trying to connect the dots between Scott’s actual investment in a credit fund by Fortress Investment Group and his decision to kill off ObamaRail.
Before we shoot holes in her conspiracy theory, we’ll first debunk the liberal fantasy of the mythical, high-speed bullet train, described by Klas thusly (emphasis mine):
As one of his first acts in office in 2011, Gov. Rick Scott canceled a $2.4 billion federally funded and shovel-ready bullet train from Orlando to Tampa because it carried “an extremely high risk of overspending taxpayer dollars with no guarantee of economic growth.”
So let’s dispense with each tidbit of fake news in sequence:
First, Scott didn’t “cancel” anything. He simply informed the federal government that Florida would not accept $2.4 billion in federal funding if we were being forced to accept the funds with federal strings attached. Those “strings” were signficant, and are explained below.
Second, the project wasn’t fully “federally funded,” because the state’s limited budget, required by the constitution to be balanced every year, would have had to cover all cost overruns related to high speed rail. Those cost overruns would have been substantial, and they would have eaten into other programs, including health care and education funding, to name but a few. But don’t take my word for it. Follow the money. Obama sent Florida’s “free” cash to California, which of course immediately wasted it on their own high-speed rail concept.
The initial price tag for California’s version of the magic train was $33 billion in 2011. Today, the estimate has, predictably, soared to nearly $100 billion. Even the famously liberal New York Times can’t decide whether to laugh or cry.
Finally, ObamaRail was never “shovel ready,” as Klas claims. When Scott took office, he was bombarded with sales pitches from vendors looking to land lucrative contracts to help plan out the high-speed rail concept. While the state had, in fact, made some preparations and completed a handful of studies for a high-speed rail line in between the east and westbound lanes along parts of I-4, nobody was ready to start “shoveling dirt.” There were concepts, yes, but no finalized plans.
So the opening premise of Klas’s story, on which the rest of her story is based, is without merit. But stick around, there’s a lot more debunking to do.
More from Klas:
Now, the idea has returned — revived by All Aboard Florida, a Coral Gables-based company that has heavily supported Scott — and the governor has reversed course.
No, he hasn’t “reversed course.” Saying so merely underscores the fact that Klas either doesn’t possess a basic understanding of the reasoning behind Scott’s rejection of the federal funding in the first place, or she’s deliberately trying to paint a misleading picture.
Scott is interested in any concept that might advance the economic power of Florida without overburdening taxpayers. This includes high speed rail. But being interested isn’t the same as believing it can be profitable. Virtually all of his public statements on the idea include caveats alongside his tentative support. Scott will always support any company that makes substantial investment in Florida with private dollars.
With that in mind, it’s worth repeating that Scott didn’t reject “high speed rail, per se. He rejected federal funding that came with signficant strings attached. In so doing, he rejected the complete disaster that the California project has become. To wit: aside from the obviously predictable cost overruns, the train won’t be operational until 2033, if ever. Worse, the politician who initially pushed for the project now says that it’s “almost a crime.” And of course, the so-called actual speed of the California train is much slower than initially promised, for many reasons, including right-of-way disputes and additional stops required for the project to turn a profit. These same issues also complicated the plans for Florida’s version of the boondoggle, which underpinned Scott’s decision.
Now that we’ve thoroughly thrashed the fantasy that was Florida High Speed Rail, we can move on to the real thrust of Klas’s story: that Rick Scott killed it off so he could somehow profit off his own high-speed rail venture.
You’ve already seen the fake headline. Here’s Klas’s nut graph:
Scott said in June he believes a high-speed rail line from Orlando to Tampa is a good idea and, in a quiet testament to his confidence in the project, he and his wife last year invested at least $3 million in a credit fund for All Aboard Florida’s parent company, Fortress Investment Group, according to recently disclosed financial documents.
Again, Mary Ellen Klas is just plain wrong, or worse, lying. There can be no “quiet testament” to any high speed rail project because he didn’t invest in high speed rail. He didn’t even invest money in Fortress Investment Group. He invested it in a credit company that is owned by Fortress. She initially manages to avoid another blatantly false statement alleging Scott owns a direct stake in Fortress Investment Group, merely implying it in the above graph. But later she can’t help herself, and swerves wrecklessly back into the falsehood:
The parent company of the FECI rail line hasn’t always been such an attractive investment for Scott and his wife.
Wait. What proof does Klas have that it’s an attractive investment now? None. Because neither Scott nor his wife have made any such investment.
In fact, Klas could have told the truth, that the high-speed rail project is called Brightline, which is owned and operated by All Aboard Florida, which is owned and operated by Florida East Coast Railway, which is owned and operated by Florida East Coast Industries (the FECI in her blurb above), which, finally, is owned by Fortress Investment Group, which also happens to operate dozens of other companies, one of which happens to be the credit fund in which Rick Scott and his wife invested their money.
In other words, Brightline is owned by a lot of companies. But one person who doesn’t own Brightline is Rick Scott. Another person who doesn’t own Brightline is Rick Scott’s wife. Nor do Scott and his wife own any of the subsidiaries that have anything to do with Brightline. Nor have they invested in the parent company of FECI.
How, exactly, can Scott profit off of a non-existent high-speed rail project he does not own? He can’t. Nor does Klas bother to explain her implication.
Instead, she is content to merely weave unrelated facts into a tapestry of innuendo, a subtle attempt to portray Scott as somehow profiting from high-speed rail, with zero evidence, and certainly no smoking gun. The entire story is based on conjecture, which in turn depends on clever wordsmithing designed to mislead.
Further undercutting the primary implication of Klas’s fabricated yarn, Scott’s decision to “endorse” privately-funded high speed rail in Florida started in 2012. But Scott’s investment in Fortress’s credit fund didn’t happen until 2017, so even if the credit fund did turn a profit on high speed rail based on a decision by Scott in 2012, Scott himself didn’t put his money into the company until five years after his decision was reported in the media.
Anyone, including Klas, could have read her own newspaper and decided to make the same investment Scott’s blind trust made (even five years earlier than Scott did), and it would be perfectly legal and entirely ethical because the information was in the public domain.
Another point lost on Klas: Brightline isn’t even turning a profit. The train company is hemorrhaging cash – which shouldn’t come as a surprise given all that we’ve already discussed about the ills of high-speed rail. Brightline lost over $28 million in the first quarter of this year alone, and counties across the state are killing off support. Klas tosses this fact in her story as an afterthought, failing to explore its significance, to explain to her readers that it undercuts the underlying thrust of her article.
Instead, she tosses in even more disjointed facts, drawing phantom connections faster than paranoid schizophrenic John Nash in the movie “A Beautiful Mind,” when she weaves together a tangentially-related tale of international intrigue which suffers from the same timeline problems outlined above. She even suggests Scott has a direct financial relationship to a “rail line,” when, again, just…no. His blind trust merely owns a stake in a credit company whose only connection to Brightline is that both are owned by the same parent company. And again, he didn’t make that investment until 2017, when the financial moves the rail company made began in 2014.
See if you can follow this twisted tale:
Meanwhile, federal trade documents show that Scott’s financial relationship to the rail line also crossed continents.
In 2014, All Aboard Florida awarded a contract to Siemens to build rail cars for the Orlando-to-Miami project. That same year, a company in which Scott and his wife were majority owners, Continental Structural Plastics, signed a deal for a 50/50 joint venture with Qingdao Victall Railway Co. of China. Quindao Victall makes components for rail cars, including passenger interiors that, the company says “use structural composite material similar to automotive exteriors.”
CSP was sold in 2017 to Japanese conglomerate Teijin, providing the Scotts with a massive increase in their financial wealth. According to securities disclosures in the U.S. and Japan, Scott and his wife received more than $550 million on the CSP sale.
U.S. Customs records show that Siemens has been importing components of train cars from Quigdao Victall Railway Co. in China from February 2015 to June of this year.
CSP’s former CEO, Frank Macher, told the Times/Herald that the primary goal of the partnership was to help CSP get into the domestic auto market in China and CSP is not currently supplying parts to the rail industry, but he didn’t rule it out as an option for the future.
Eh….what are we supposed to take from that?
Again, Scott has no stake in Brightline or All Aboard Florida, so the decision to award a contract to Siemens had nothing to do with Scott. Scott has no stake in the Chinese railway company. Nor does he have a stake in the Japanese conglomerate, Teijin. Finally, Scott has no stake in Siemens. Klas fails to establish any connection whatsoever between Scott and the decision by Siemens’ to award a contract to the Chinese subcontractor. Without that, we’re left with nothing more than a wink and a nod from Klas, meant to convey that Scott somehow masterminded an international trade deal between companies in Michigan, China, Japan and Germany without any direct connection to the companies’ board of directors, shareholders or executive leadership. And he pulled off these deals right under everyone’s noses while he was busy being governor of the 4th largest state in the nation.
Klas is fond of brushing off criticisms of her reporting by saying she’s just reporting the facts, that she has no agenda, and she isn’t implying Scott is somehow corrupt. But one only needs to read the comments of her story to know she is misleading many of her readers with her selective arrangement of facts, her false high-speed rail claims, and her newspaper’s laughably slanted headlines in an attempt to smear Scott by constructing a false narrative that attempts to connect his investments with his decision to reject Obama’s magic train boondoggle.
I could make equally bizarre conspiracy claims related to Klas, by pointing out that Klas’s husband is also a reporter. He works for GateHouse media, which owns a handful of newspapers that are competitors to the Miami Herald. GateHouse is in turn owned by New Media Investment Group, which is in turn owned by…drum roll please…Fortress Investment Group.
Is Klas, then, also implicated in this international high-speed rail conspiracy?
Perhaps she is the beneficiary of leaks from her husband, who obtains information about Scott’s investments from a concerned whistleblower inside the parent company of her husband’s newspaper?
Of course not.
But we live in the hyperconnected world, where rail companies and defense contractors and newspapers are all connected by common entities, and if so inclined, a conspiracy theorist can easily draw meanlingless connections with only the amount of effort it takes to peck on a computer keyboard.
Did you know, for instance, that the Miami Herald, which employs Klas, was once bankrolled by Henry Flagler? You know, the guy who founded Florida East Coast Industries, which owns Florida East Coast Railway, which owns All Aboard Florida, which owns Brightline, the Florida high-speed rail company, which…well, you get the idea.
Thank you for this. I read the original article with disgust. So many deceptions.
Send a copy of this to the Tampa Bay Times!!!!!
Thank you for your candid and truthful article regarding CSP, Victall, and the Rail saga. I was the Chairman and CEO of CSP for six years during Rick Scott’s time as Governor until the company was sold in January of 2017. The reason CSP ventured into China was at the insistence of our primary customer, Ford and GM, so we could support their increasing assembly operations and sales there.
I was, as CEO, responsible for strategy, and as such, we spent 18 months searching for a suitable partner. Victall, a manufacturer of components for passenger rail cars, became a top choice because of its experience in composites for interiors, making it easier to transition Chinese employes into similar processes for CSP’s composite business for automotive.
It is interesting to note that I never met the Governor until two months after the sale of the business. And I have not talked to him since. It is also of note to realize that the windfall return the Governor experienced is due to the people employed in the business. The old adage about blocking and tackling is true……to a point. Initially much effort was placed on operational excellence, getting the basics right, and satifying your customers with quality and delivery.
Companies in automotive do not succeed on cost alone. CSP allocated resources to its key competitive advantage, material development and engineering solutions. We invented a family of light weight composite solutions that now adorn the bodies of all Corvette C7, the roofs of all Jeep Wranglers, the housings of all Mercury outboards, the truck box for Honda and Toyota, and many front ends of Commercial Trucks like Peterbilt, Freightliner.
Our new lightweight materials for which there currently is no competitor have allowed the company to grow and improve margins. This is why Teijin, our new owner paid 10.25 x EBITDA. And By The Way, there were a number of other offers in that range. The company transformed from parts supplier based on cost to solutions solver, based on customer needs and providing answers where others only have questions.
The Scott family did garner significant returns from the sale. No hanky panky, not hidden assest, but a whole lot of good old American blocking and tackling, ingenuity, technology, and being the best.
Thanks for letting me brag about CSP and its great people!
Not that I’m a Brian Burgess fan because we all know who his good buddy’s are, but I found this article highly entertaining…
Mary Ellen Klas is know for selective arrangement of information to sensationalize her story…I wonder if Harvard really knew who they picked…or is that what it’s about today..lying is the norm…intentional destruction of people’s, character and careers…that’s fine too…..oh and loved ones are not out of bounds either..pretty damn pathetic!
Can you tell me where you explain the financial strings from the federal money in your article because I do not see it. I would like to better understand.
All I know is that the people of Florida VOTED for that High Speed Rail system and Scott decided to veto our VOTES. Is that a democracy or WHAT ???? I KNOW because I was one of the majority who had VOTED for it!
I find this article very interesting as it is the ONLY article that speaks to the contrary where investment money from Rick Scott is concerned. Whether it’s in Brightline directly, indirectly, to a parent, or sister company, investing in ANYTHING or ANYONE even 1% tied to Brightline is STILL an investment. And there are NO OTHER articles anywhere that corroborate what is found in this article, which reads more like an OP-ED.