Peter, thank you. I actually don't need to change a directory. I might want to do it in the future but for now a directory where psftp.ext is sitting is fine.

I ran the same command I generat inside the code but manually by opening the psftp and I was able to copy the file.

Since I was able to copy a file from my machine to the server, I don't think the problem is with the credentials/accounts used (me vs. SSIS). I am stumled upon this really.....