Railroad contractors indicted

Collection of money awarded for steam engine restoration is doubtful

By Eugenia Jones

Despite the McCreary County Heritage Foundation (MCHF) winning a court-ordered arbitration award of more than $700,000 last year from the Wyoming based Wasatch Railroad Contractors and its senior corporate officer, John Eldon Rimmasch, for breach of contract in failing to complete (to operational condition) the restoration of the K & T Railway No. 14 steam locomotive in Stearns, the Foundation now faces almost unsurmountable odds in collecting the substantial award.

Last fall, Wasatch petitioned for Chapter 11 bankruptcy indicating an intention that the company would reorganize and allow the Court to manage repayment of their debts.  Subsequently, after filing for Chapter 11 bankruptcy, consideration was given to converting Wasatch’s Chapter 11 bankruptcy case to a Chapter 7 (liquidation) bankruptcy.  Recently, Wasatch filed a motion for dismissal of the bankruptcy.  

As If the twists and turns of Wasatch/Rimmasch’s bankruptcy filings weren’t enough to lower expectations of collecting the award, Wasatch Railroad Contractors and John E. Rimmasch have now both been indicted (in November) by the United States of America on five charges, including four counts of wire fraud and one count of knowing endangerment.  According to the indictment, Rimmasch allegedly acted within the scope of his duties as corporate officer of Wasatch to devise a scheme to defraud the National Park Service (NPS) and obtain money from them.  As part of the scheme, Rimmasch allegedly induced the NPS to enter into a contract with Wasatch for restoration of the Central Railroad of New Jersey Suburban Coach #1021 in accordance with requirements of a Scope of Work.  Allegedly, Rimmasch did not intend for Wasatch to abide by all the requirements of the contract.  Furthermore, Rimmasch reportedly caused and permitted work to be performed without adhering to requirements of the Scope of Work, including the removal of asbestos from the coach by Wasatch employees without proper safety measures.  Additionally, Rimmasch allegedly then caused invoices to be submitted to the National Park Service seeking progress payments under the pretense of partial performance, when in fact, Rimmasch allegedly knew Wasatch had not performed and was not entitled to payment.  

A forfeiture notice has been attached to the indictment, and according to the notice, if Rimmasch and Wasatch Railroad Contractors are indicted on Counts 1-4 (wire fraud), they shall forfeit to the United States of American, any property, real or personal, which constitutes or is derived from proceeds traceable to the offenses.

The federal trial for Wasatch/Rimmasch is scheduled to begin in Wyoming on February 14, 2022.

Although the possibility of the MCHF collecting on the money awarded them through court-ordered arbitration from Wasatch/Rimmasch appears almost non-existent, the Foundation steadfastly maintains its pledge to continue developing tourism in Stearns and through-out McCreary County.

“The decision rendered from the Arbitration was an absolute victory for the McCreary County Heritage Foundation, but unfortunately it was a hollow victory,” MCHF Chairperson Ray Moncrief observed.  “There will be no recovery of monies from Wasatch, due to its filing bankruptcy, that would have been used to restore the steam locomotive that was to be the center-piece of the vision to build a robust tourism industry in McCreary County.  The MCHF will continue pushing forward using whatever tools that are available to build a strong tourism industry in McCreary County, Kentucky.”