California High-Speed Rail's CEO resigned. Will new leadership investigate the contracts he left behind?
California's High-Speed Rail Authority has a new CEO. But what happens to the questionable consultant contracts, millions in disputed billings and unanswered questions his predecessor left behind?
On Oct. 28, CBS California Investigates took those questions directly to the High-Speed Rail Board of Directors, after weeks of unsuccessful attempts to get answers from CEO Ian Choudri and his administration.
Hours later, Choudri submitted his resignation, effective immediately, citing personal and family priorities.
The next day, the board appointed Gov. Gavin Newsom's Department of Finance director, Joe Stephenshaw, as interim CEO.
The shakeup comes amid a series of CBS California Investigative reports on questionable consultant spending, contracting practices, and ties between highly paid consultants and the former CEO.
The board chair called for an independent inspector general investigation following our reports.
Authority executives, meanwhile, have proposed changes to how the agency manages its financial consulting agreements, changes that could reduce outside oversight.
That leaves a series of questions for new leadership: Who approved the spending? Who enforced the contracts? And what happens to the consultants and executives responsible for managing hundreds of millions in taxpayer dollars?
The inspector general warned the project could run out of money by the end of 2027 without new financing.
The "$4 billion mistake"
Our investigation began when High-Speed Rail Authority insiders tipped us off to what they called a $4 billion mistake.
Court records and federal documents show the authority repeatedly missed deadlines to buy the trains it had promised the federal government, taxpayers and a federal judge it would buy. The Trump Administration cited the first missed "trainset milestone" deadline in 2024 when it withdrew $4 billion in funding.
Newsom called the withdrawal a political attack. California sued, arguing it could still meet the final deadline if it purchased the trains in 2025 — setting a new "trainset milestone" deadline, which it swore to a federal judge it would meet.
It didn't.
California quietly dropped the lawsuit, forfeiting the $4 billion.
If the Authority had met its deadline and the lawsuit had continued, legal experts tell CBS California, the funds would have been frozen until a judgment or a new administration. Instead, the Trump administration spent that money elsewhere.
The board finally authorized a trainset contract at the Oct 28th meeting, just hours before Choudri resigned. They're buying the same type of wide-body trains from the same manufacturer the former CEO chose not to purchase two years ago.
But now, without $4 billion in federal funding, Californians will foot the bill. Without the Buy America agreement, the trains will be manufactured in Germany. And by cutting the train order in half, from six to three trains, each train costs more even though they will now have stock interiors.
Asked why the former CEO delayed the trainset purchase in 2024, the authority said it had "no additional comment beyond what has already been discussed publicly through the Board process."
Insiders pointed to highly paid consultants advising Choudri on decisions that they claim contributed to the delays.
Late-night rides from the CEO's home
We turned to consultant spending after High-Speed Rail Inspector General Ben Belnap identified nearly $600,000 in wasteful and unallowable travel expenses, including luxury rideshares and trips to nightclubs, gyms and other destinations seemingly unrelated to the consultants' work.
The High-Speed-Rail Authority was paying four major consulting firms nearly a quarter-billion dollars over two years. Those consultants weren't laying track or building trains. They were advising the CEO and his team.
When the Authority delayed the public records we requested, whistleblowers began providing documents and receipts, asking us to expose what they couldn't, citing fear of retaliation.
The records showed two highly paid consultants repeatedly billed taxpayers for late-night rides from Choudri's Folsom home and nearby restaurants, roughly 30 minutes from their Sacramento hotels. They were KPMG Managing Director Thierry Prate and legal consultant Brent Butzin, who also billed through the KPMG contract.
We later confirmed that both men were subjects of the inspector general's travel investigation, which did not publicly name the consultants or their firms.
We asked the Authority to explain the questionable consultant expenses with connections to the CEO. Who authorized them? Did consultants bill taxpayers for their $460-$580 hourly rates during late-night dinners, cigar-lounge evenings, and other outings with the CEO??
The High-Speed-Rail Authority did not answer. Neither did the three men.
The Sacramento promise: taxpayers pay consultants to commute
Our next report revealed that a high-speed rail engineering firm promised to relocate six key employees to Sacramento as part of a contract worth up to $131 million.
Instead, key employees billed taxpayers for air travel and hotel expenses while commuting from Denver and Texas to the Sacramento office.
Taxpayers paid for one key executive's weekly commute between Denver and Sacramento. Records indicate his billing rate also increased 23% after Choudri became CEO.
Receipts CBS California later obtained through a public records request reveal Choudri also billed taxpayers to "commute to work" from Denver. An auditor flagged those expenses, and the state later clawed them back.
The inspector general flagged more than $76,000 in travel involving out-of-state key personnel.
Why were taxpayers paying consultants to commute when their firms had promised to staff the project locally? Who approved the expenses? And who was enforcing the contracts?
The High-Speed-Rail Authority did not answer. Neither did the consultants or the CEO.
The $2 million question: low bids, much higher bills
Then we examined the consultant contracts themselves.
The High-Speed-Rail Authority awarded consulting giant KPMG a $24 million contract. Records show the Authority knew the winning bid relied on "artificially low" rates that the consulting firm never intended to charge.
A competing bidder protested the award, accusing the Authority of allowing KPMG to manipulate its bid. State officials dismissed the allegation as speculation but explicitly warned the Authority not to pay higher rates for work assigned to those $35-an-hour positions.
They did.
Records show the firm billed taxpayers up to ten times the contracted rate for the positions assigned.
Our review of four months of invoices found about $2 million more in billing than the winning cost proposal indicated.
KPMG did not deny our findings. The company emphasized that the Authority knew its staffing plan when it awarded the contract, and said it was reviewing the procurement and contract and would address any identified policy violations.
Shortly after we published, the Board Chair called for an independent Inspector General investigation into the contract, the billing practices and the Authority's oversight.
But that investigation could take months, and questions remain about who approved the higher rates and whether the Authority enforced the contract.
The CEO wouldn't answer. So we asked the board.
For weeks, Choudri and his administration declined to answer questions about our findings, in writing or in person when we caught up with him after a board meeting. The Authority also delayed providing public records we requested back in September.
So, we traveled to Los Angeles and raised the questions directly with the board during public comment.
"High-speed rail has not been responding to our repeated requests for responses, answers to questions, and they've not provided the public records that we requested," Watts told the board.
She asked whether executives knew consultants billed taxpayers for late-night rides from the CEO's home and nearby restaurants, and whether taxpayers also paid the consultants' nearly $600 hourly rates during those outings.
"Our recent investigation ... found high-speed rail is paying those same consultants through a contract that's billing taxpayers up to ten times the rates allowed in its winning bid and its contract," Watts told the board.
She also asked what the board was doing about existing contracts, not just proposed changes to future ones.
The board did not directly answer during the meeting, though members acknowledged the need for changes going forward. Hours later, Choudri resigned.
In his letter, Choudri said he was stepping down to focus on personal and family priorities and described his tenure as a successful turnaround of the project.
What happens to the consultants under investigation?
Multiple independent sources tell CBS California Investigates that the two consultants at the center of our reporting have been removed from the project and are no longer billing under the KPMG contract.
In response to our questions, the Authority confirmed both are leaving the project. Thierry Prate, it said, "who has served as principal in charge, is transitioning off the program." It added that Brent Butzin's "work is also wrapping up, and he will be transitioning off the program as well."
The inspector general's team is now tasked with examining the contracting and billing questions at the center of our investigation.
Unlike journalists seeking records through the California Public Records Act, the watchdog can compel internal agency records. That review could answer who authorized the disputed spending and whether the Authority followed state contracting rules.
But findings and any corrective action could take time.
What's next for California High-Speed Rail?
In announcing Choudri's departure, board Chair Stephen Kawa said Newsom had appointed new board members to strengthen accountability, oversight and transparency.
"Californians deserve a project they can trust, and the governor will continue to insist on that from everyone working on it," Kawa said.
The board unanimously appointed Stephenshaw, Newsom's budget director for the past four years, as interim CEO. He inherits a project facing major financial challenges, a pending investigation into consultant contracts, and questions about the oversight of hundreds of millions in taxpayer spending.
He also inherits the questions his predecessor declined to answer to CBS California Investigates: Will the new administration investigate the contracts and billing that led to our findings? Will it enforce existing agreements and recover any improper payments? Will it strengthen independent oversight, or change the contracting structure in ways that could reduce it?
The CEO has changed. The questions haven't.
CBS California Investigates will continue following the money.
