James River Equipment Story Archives - West Virginia Public Broadcasting

Second Justice Company Steps in to Pay $1.23 Million Fine

Federal prosecutors have agreed to drop a motion seeking to hold West Virginia Gov. Jim Justice and his son, Jay Justice, personally accountable for a $1.23 million civil penalty levied against one of the family’s coal businesses, Justice Energy Company, Inc.

In an order filed Friday in the U.S. District Court for the Southern District of West Virginia, attorneys for Justice Energy proposed that another Justice company, Bluestone Resources, Inc., will pay the fine.

In exchange, federal prosecutors agreed to withdraw a motion seeking a court ruling that the Justices be held personally responsible for the civil contempt fine levied on Justice Energy because the company is, in effect “a shell corporation with no real independent and separate corporate existence.”

U.S. Attorney for the Southern District of West Virginia Mike Stuart in a court filing last week said after deposing company executives, including the governor’s son, federal prosecutors concluded the Justices were in practice “the alter egos” for the company and should be required to pay the fine.

In a statement regarding the settlement, Bluestone Resources CEO Tom Lusk expressed gratitude toward the U.S. attorney’s office and said “despite this disproportional penalty, the Justice Family has once again stepped up to pay an obligation.”

The Friday order, signed by U.S. District Judge Irene Berger, lays out a timeline for Bluestone Resources to pay the $1.23 million fine, which stems from a 2013 case over unpaid business debts to Virginia-based James River Equipment.

The company sued Justice Energy to recover roughly $150,000 in unpaid fees for mining equipment, services and parts. Two years after being ordered to pay the debt, and after company representatives repeatedly failed to show up for court hearings, Berger held Justice Energy in contempt of court to the tune of $30,000 per day, totaling $1.23 million. Justice Energy appealed the fines, but lostin 4th U.S. Circuit Court of Appeals last August.

Under the new order, Bluestone Resources will make three, $410,000 payments to satisfy the civil fine on behalf of Justice Energy.

The U.S. attorney’s office retains the right to refile the “alter ego” motion should Bluestone Resources fail to make the payments, according to the order.

The first payment is due June 17.

Federal Prosecutors Say WV Gov. Justice Responsible For Some Fines Against Family Company

U.S. federal prosecutors on Tuesday said they will seek a court ruling to hold West Virginia Gov. Jim Justice and his son, Jay Justice, personally accountable for a $1.23 million civil fine imposed on one of the family’s coal businesses, Justice Energy Company, Inc.

In a court filing, U.S. Attorney for the Southern District of West Virginia Mike Stuart said after deposing company executives, including the governor’s son, federal prosecutors concluded the company is “in reality, a shell corporation with no real independent and separate corporate existence.”

Stuart said the governor and his son are “the alter egos” for the company and is moving for the Justices to be held personally responsible for the civil contempt fine levied on Justice Energy.

The $1.23 million civil fine stems from a 2013 case over unpaid business debts. As the Ohio Valley ReSource reported in October, Virginia-based James River Equipment sued to recover roughly $150,000 in unpaid fees for mining equipment, service, and parts sold to Justice Energy.

Justice Energy had also agreed to a payment plan, but stopped making payments after just two.

Two years after being ordered to pay the debt company representatives repeatedly failed to show up for court hearings. U.S. District Judge Irene Bergerheld Justice Energy in contempt of court to a tune of $30,000 per day, totalling $1.23 million. Justice Energy appealed the fines, butlost in 4th U.S. Circuit Court of Appeals last August.

In the months since, Berger allowed federal prosecutors to depose Justice Energy employees to get a better picture of the company’s assets.

“Corporate Shell”

In the memorandum filed Tuesday, Stuart noted prosecutors deposed multiple executives including the governor’s son. Prosecutors also deposed James Miller, secretary and treasurer of Justice Energy, and Stephen Ball, vice president and general counsel for the company, referred to as JEC in the filing.

“JEC has no substantive assets, has not engaged in true corporate activities, and is dominated and controlled by a limited liability company and certain corporations that are dominated and controlled by James C Justice II and James C. Justice III (“the Justices”), the shareholders of the corporate entity that ultimately controls JEC,” the document states.

The filing was first reported by Taylor Kuykendall with S&P Global.

The memo cites portions of the interviews federal prosecutors conducted. In them, prosecutors said, Jay Justice, who took over control of the majority of the Justice coal companies, was “not involved in JEC’s day-to-day business.” Justice also told prosecutors all major financial decisions related to the company would be made by him personally.

Stuart noted Justice Energy’s sole stated purpose is to operate the Red Fox Surface Mine located in McDowell County. A review of the company’s finances showed it owns almost nothing associated with the mine. The mining permit is held by Blue Stone Coal Corporation, the coal reserves are held by Rowland Land Company, and Blue Stone Coal Sales Corporation sells the coal mined there. Jay Justice is listed as president for all of these companies, the document states.

Another company that supplies equipment to the site, Blue Stone Resources, also owned by the Justices, has liens associated with it. Stuart notes different Blue Stone companies pay employees and even file taxes on behalf of Justice Energy.

Furthermore, unaudited balance sheets for Justice Energy provided to the U.S. attorney’s office show “little to no available funds.”

“There is no doubt that JEC was and is nothing more than a corporate shell dominated and controlled by James C. Justice II, James C. Justice III, and their business instrumentalities,” the filing states, noting the company has no money, no assets and does not own the Red Fox mine it claims to be operating.

Last week, Berger gave Justice Energy a week to submit a proposal outlining how it will pay the $1.23 million fine by no later than Jan. 1, 2020.

Growing Legal Problems

This is the second time in a month that the U.S. Dept of Justice has taken action against the Justice family companies. In May, prosecutors filed suit to recover more than $4 million in delinquent fines for mine safety violations assessed by the Mine Safety and Health Administration.

Judge: Justice Family Coal Company Must Turn Over Financial Info

A federal judge today ruled that a coal company controlled by Gov. Jim Justice’s family must turn over financial information and make its employees available for questioning.

U.S. District Judge Irene Berger granted a motion submitted last month by U.S. Attorney Mike Stuart seeking additional infromation and the ability to depose Justice Energy Co. employees.

Federal prosecutors are seeking more information on the ability of the coal company to pay a $1.23 million court fine. They are asking for a list of all real estate, bank accounts, vehicles and other financial information.

Justice Energy, a company now run by Gov. Justice’s children James C. Justice III and Jillean Justice, was slapped with the fine after repeatedly failing to pay Virginia-based James River Equipment $150,000 for mining equipment, service and parts. The company sued in 2013 and won.

Two years after being ordered to pay the debt, and after repeatedly failing to show up for court hearings, Bergerheld Justice Energy in contempt of court, ordering the company to pay $30,000 per day.

In September, Justice Energylost an appeal of the civil contempt fines.

According to the request granted Wednesday, Stuart said Justice Energy may not be able to pay the fine, based on conversations he had with the company’s attorneys. But he said he needs more information.

The judge’s order gives Justice Energy until Jan. 25 to provide all requested financial information and requires the firm to make employees available for depositions by mid-Feburary.

An attorney for the Justice family companies did not immediately respond to a request for comment.

A review of court documents last year by the Ohio Valley ReSource found at least five cases in which judges ruled that Justice family companies failed to pay suppliers for goods or services. When compelled by courts to pay, the companies either refused or failed to meet agreed upon payments.

In all five cases the courts authorized U.S. marshals to seize assets from the Justice family companies’ bank accounts to recover the debts. However, in some cases, officials discovered the bank accounts were empty or closed.

Court Upholds $1.23M Fine for Justice Coal Company

A federal appeals court has upheld $1.23 million in civil contempt fines ordered against one of Gov. Jim Justice’s family coal companies.

The court says it lacks jurisdiction to hear an appeal of the $30,000 daily civil fines intended by Judge Irene Berger to compel the company to comply with her orders to provide documents and appear in court.

Justice Energy Co. was first sued in the case by James River Equipment, a Virginia-based company, in November 2013 for $150,000 for unpaid parts, service and equipment.

The parties reached a settlement for $180,000 last year.

The Justice companies’ attorneys argued that initial debt occurred when Russian company Mechel Bluestone owned the mining operation and they didn’t learn of the January 2015 civil contempt order for a year.