The Bullet Train to Nowhere Made Great Time to the Nightclub

The one thing in California that runs on schedule turns out to be a consultant’s Uber Black, pulling away from a Sacramento nightclub at 2:30 in the morning. On the taxpayer’s dime. First class, naturally.

That’s the picture from this week’s report by the Office of the Inspector General for the California High-Speed Rail Authority, released Tuesday. Investigators reviewed about $1.15 million of more than $2 million in travel billed by four outside consulting firms, and found nearly $600,000 in charges the state should never have paid. Roughly $680,500, about 60%, went out the door with no documented approval before anyone boarded a plane. The report reads like an expense-account fever dream: premium rideshares to a tiki bar, a cigar lounge, an escape room, and a nightclub, repeated runs to Planet Fitness, and one consultant who flew his private plane from Washington and billed it at a first-class fare. One flagged charge was a roughly $40 premium car for a trip of less than a mile through downtown Sacramento, walking distance at limousine prices. Another slice, about $118,000 worth, was international travel the contracts flatly forbade.

Here’s my thesis, stated plainly because busy readers deserve it up front: this isn’t a receipt problem. It’s what one-party rule looks like when nobody’s left in the room to say no. Sacramento hit the gas as the budget exploded and the promise shrank. The labor unions got paid. The consultants got their nightcap. You got the bill.

I’ve spent three decades in investment management, and I’ve sat in the witness chair as an expert on fiduciary duty in state and federal court. When a money manager spends other people’s money the way this Authority spends yours, we don’t call it a paperwork lapse. We call it a breach of the duty of care, and juries tend to agree. I’ve testified in disputes where far smaller sums, documented far better than this, still cost defendants their credibility on the stand.

Let’s set the odometer. Voters approved this thing in 2008 under Proposition 1A, sold as a roughly $33 billion electrified line whisking riders from San Francisco to Los Angeles in two hours and forty minutes, with trains running by 2020. Eighteen years later, the full system now carries a price tag of up to $128 billion, not one mile of high-speed track moves a passenger, and the Inspector General warns the money could run dry as early as December 2027. The backbone got whittled to a stub between Merced and Bakersfield. We were promised the Millennium Falcon. We’re financing a layaway plan on a golf cart.

Now, about those receipts. The detail that ought to end careers isn’t the nightclub. It’s how the money moved. Authority staff often didn’t know consultants had traveled until the invoices arrived. Contract managers who were supposed to approve or deny trips had, in practice, no power to do either. Expenses got paid because a senior executive was assumed to want the travel, and the stated justification was sometimes as thin as a typical work week. Read that again. The people guarding the vault were handed a rubber stamp and told to look busy.

That’s the tell. Fraud is a person. This is a design. A system that can’t tell state business from a 2 a.m. bar crawl wasn’t broken by a few bad actors. It was built not to ask. Milton Friedman mapped this out decades ago: spending other people’s money on other people is the one quadrant where nobody watches the price and nobody watches the value. High-speed rail is that idea poured into concrete.

To be fair, the report doesn’t prove every firm committed fraud, and it stops short of accusing KPMG, Nossaman, AECOM-Fluor, or SYSTRA/TYPSA of knowingly padding a bill. The finding is control failure, not criminality. I’d argue that’s worse. A crook you can prosecute. A bureaucracy that reimburses an escape room without blinking is a chronic condition, and it doesn’t stop when the news vans leave. It just books the next flight.

And the travel is the rounding error. The same watchdog found a $9.5 billion hole just to finish the Central Valley stub, with the state now weighing whether to borrow against its cap-and-trade revenue to plug it. We’d be mortgaging pollution credits to pay for a train that doesn’t run, so consultants can expense the cigar lounge while everyone figures out how to afford the rails. Pink Floyd wrote the anthem for this back in 1973. It’s called “Money.” Cue the cash register.

Why did it get this bad? Because for the better part of two decades, nobody in the building was paid to fight back. California didn’t seat its first High-Speed Rail Inspector General until 2023. That’s fifteen years of a megaproject with no independent cop on the beat, in a state where the governing party hasn’t faced a real check at the ballot box in my adult lifetime. Single-party rule doesn’t just win the arguments. It prevents having them.

So what now? Three fixes, and none of them need a supermajority. Claw the money back: Assembly Republican Leader Alexandra Macedo has already called on the Governor to recover every improper dollar, and she’s right. Give contract managers real authority to kill a trip before it happens, with consequences for the executives who assume their way around the rules. And, I know this is heresy in Sacramento, stop digging. A project that can’t fund its own stub and can’t police its own Ubers has flunked the only test that counts: whether it can be trusted with the next dollar. It can’t.

Epictetus taught that wisdom starts with knowing what’s within your power. We can’t make this train run on time. We never could. But we can still decide whether to keep buying the tickets. That choice belongs to us. For now.