The headline on the Alaska Public Media story said, “Alaska-Alberta rail project may have a problem: Regulators are investigating its financier.”

The story said the project has “hit a bump.”

That’s like saying, “Titanic may have a problem” or “Exxon Valdez hits a bump.”

All that’s left of the Alaska-Alberta rail project for its co-founders are problems.

For years now, Alaska news organizations and Alaska politicians, including the governor, have overhyped this as a serious project, claiming as evidence the assertion that co-founder Sean McCoshen, a “seasoned entrepreneur,” invested $100 million into the venture. His co-founder is David Sharpe.

“We got President Trump to sign a presidential permit for a Alberta to Alaska Railroad. And Yes, it’s not gonna to happen tomorrow, but nonetheless these are, this is another big move in the right direction,” Dunleavy said Wednesday.

It appears that Dunleavy and his staff were clueless about the unfolding scandal happening in Canada to Sharpe and McCoshen, the co-founders of the railroad project.

The Ontario Securities Commission alleged that during the same period in which Sharpe’s company, Bridging Finance, loaned more than $100 million to McCoshen’s ventures, Sharpe got back about “$19.5 million in undisclosed payments into his personal checking account” from a company controlled by McCoshen.

At first, Sharpe denied getting any money from McCoshen, but when presented with documents showing that millions had been given to him, he claimed they were loans that he didn’t mention because there were not “applicable.”

“I just want to put it squarely to you. Are these kickbacks that Mr. McCoshen is paying you in connection with extending loans to his companies?”, Carlo Rossi, a commission staff member, asked Sharpe in a deposition April 29.

“No, they’re not,” said Sharpe.

Within five days of getting loans from Bridging Finance, McCoshen transferred millions to Sharpe’s personal account. “Can you explain that?” Rossi asked Sharpe.

“It certainly does not look good,” Sharpe said. “That’s for sure. I wouldn’t characterize them as kickbacks, but Sean McCoshen is a person that has a lot of money and does well, so it may be one and the same monies, but I have no evidence of that.”

Sharpe said he had not disclosed the payments from McCoshen to anyone at Bridging Finance or to his wife, the chief investment officer at the company.

Sharpe and others refer to McCoshen as a wealthy man, but according to the forensic accountant who took part in Sharpe’s questioning, McCoshen’s major asset is the alleged $4 billion value of the Alberta to Alaska railroad that has not been built.

If you take the nonexistent $4 billion off of McCoshen’s list of assets, “we are roughly at $100 million,” which is in close to what he was loaned by Bridging, said forensic account Daniel Tourangeau.

He went on to ask Sharpe if he knew whether McCoshen took $19.5 million out of the $100 million loaned to McCoshen by Bridging Finance and returned it to Sharpe’s account.

Sharpe said he wasn’t sure where McCoshen got the $19.5 million and didn’t ask, but he has “a lot of wealthy friends who are billionaires that he does business with. . .”

Sharpe’s attorney said that the forensic accountant had presented a list of McCoshen’s assets, but “that’s not a statement of his revenues or income.”

The investigation of Sharpe’s activities has been going on for months. He was interviewed by government officials on Oct. 27 and asked about McCoshen. He closed the account four days later.

On Wednesday, the securities commission extended a temporary order halting trading in various Bridging Finance funds.

The commission staff claims that Sharpe made misleading statements and may have engaged in fraud. On April 30, the Ontario Superior Court appointed PricewaterhouseCoopers as a receiver for the company. Sharpe was fired.

McCoshen’s railway company was believed to be the largest borrower from Bridging, collecting a total of more than $180 million in Canadian dollars.

The latest loan was $20 million in February.

“D. Sharpe originally denied receiving the $19.5 million in undisclosed payments from 747 Manitoba, a company owned and controlled by McCoshen,” wrote forensic accountant Daniel Tourangeau last month.

Two days after the investment fund controlled by Sharpe gave $10 million to McCoshen’s 747 Manitoba account, $5 million was transferred to Sharpe’s personal checking account.

Carlo Rossi, a staff member of the commission, asked Sharpe in an April 28 deposition, “Has Mr. McCoshen ever transferred money to you personally?”

“To the best of my knowledge, no,” said Sharpe. He repeated the denial a few moments later.

“We’ve now identified a $5 million payment coming from a company that Mr. McCoshen owns and controls directly into a personal checking account of yours.” said Rossi. He added that in addition to the $5 million, $19.5 million was transferred to his personal account.

Sharpe asked for a break so he could speak to his lawyer. After the 10-minute break, Sharpe changed his story. “I’ve had some personal financial dealings with Sean McCoshen and in the way of loans from him,” Sharpe said.

Sharpe said McCoshen provided the money so Sharpe could make personal investments with the $19.5 million,

“And why is he willing to lend you $19.5 million to make personal investments?” Rossi asked.

“Just based on our relationship,” Sharpe said.

Sharpe said there was probably a loan agreement, but was unable to find it.

A day after the interrogation of Sharpe, the financial regulator moved against Bridging Financing, which was placed under receivership.

The railroad project has removed a reference to McCoshen as project chairman and founder from its website and said it was “disappointed” to learn of the allegations.

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