Larry Salci
Consulting Services
Friday, September 29, 2023
Wells Fargo & Company
Management Consultant

In February 2008 I was retained as an expert consultant witness by Wells Fargo & Company who was involved in a lawsuit (Tax Refund Suit) with the U.S. Department of Justice involving a number of lease transactions for passenger railcars, locomotives, and buses. Wells Fargo was the equity participant in lease transactions with the California Department of Transportation (Caltrans), the Washington Area Metropolitan Transportation Authority (WMATA), New Jersey Department of Transportation (NJ Transit), and Harris County MTA (Houston Metro). I was retained by Wells Fargo to provide an analysis of the lease transactions to determine if it was reasonable for Wells Fargo to believe, at the time the lease transactions were entered into, that there were no market or regulatory issues that would compel any of the lease participants to exercise any of the end of lease term options available to them. The end of lease term options included a purchase option, service contract option, and a return option.

My analysis included a general review of all transaction documents, and site visits to the respective properties that were participants in the lease transactions for the purpose of performing a limited review of the preventative maintenance record history of the vehicles identified in the lease transactions. I conducted a limited visual physical inspection of the vehicles. The purpose of these site visits was to evaluate whether the vehicles involved in the leases were being maintained in accordance with industry standards. I had meetings with maintenance management of the respective properties responsible for the management of the preventative maintenance programs for the vehicles identified in the lease transactions. I examined a statistically representative sample of at least (10%) of the equipment under lease for each respective property for the purpose of reviewing the preventative maintenance records of the specific vehicles in the various lease transactions. I inspected the records and reviewed the documented compliance with preventative maintenance practices for daily inspections and periodic inspections (daily, 30-day, 90-day, 180-day, and 360-day periods). I reviewed the written scope of the preventative maintenance program of each transit authority (or maintenance contractor) and compared each maintenance program with standard industry maintenance practices as identified and recommended by the FRA, FTA, APTA, and the Original Equipment Manufacturer (OEM).

My report included an analysis and summary of the funding sources for transit and intercity services, i.e., local, state, and federal, and a thorough analysis of the safety regulations promulgated by the FTA, FRA, and APTA. In addition, I provided a detailed analysis of the history and consolidation of the vehicle equipment manufactures and major sub-system suppliers as related to market presence. As part of my analysis of the transit vehicle transfer option feasibility and cost I identified and documented compatibility by two general categories, infrastructure compatibility and vehicle compatibility. Infrastructure compatibility included the ability for a given vehicle to operate on a given infrastructure requiring examination and documentation of track gauge, dynamic envelopes, operating vehicle voltage, vehicle width, vehicle length, and floor/platform configuration. Vehicle compatibility included the capability of different vehicles to operate within the same consist requiring both technical and physical similarities such as intercar connections, couplers, anti-climbers, and performance requirements for acceleration and braking.

My work scope included the development of a detailed written report, rebuttal reports to the DOJ expert witnesses, deposition, and court testimony.

"The Court was impressed with the transit industry experts of both parties, particularly Wells Fargo's Mr. Larry Salci".

Thomas C. Wheeler
United States Court of Federal Claims
Opinion and Order, January 8, 2010