Justice and his wife and son are named as plaintiffs in the lawsuit against Carter Bank & Trust, filed Friday in the U.S. District Court for the Southern District of West Virginia.
Gov. Jim Justice and several of his companies, including the Greenbrier Resort, have sued a Virginia bank that’s one of their biggest lenders.
Justice and his wife and son are named as plaintiffs in the lawsuit against Carter Bank & Trust, filed Friday in the U.S. District Court for the Southern District of West Virginia.
The Justices seek damages of $1 billion from Carter. The suit alleges that the bank engaged in a predatory scheme to prevent Justice’s companies from doing business with other banks.
It also alleges that Carter made the loans to Justice impossible to repay and that the interest on those loans were the bank’s biggest source of profit.
“Because of Carter’s significant control over their businesses,” the complaint states, “Plaintiffs have had little choice but to endure Carter’s oppression until they can escape it by paying off their loans.”
The suit says the relationship between the Justice companies and Carter fell apart after the 2017 death of the bank’s founder, Worth Carter.
By then, Justice had a portfolio of $740 million in loans with Carter to his coal, agriculture and hospitality businesses.
The U.S. Justice Department is suing 13 companies owned by the family of Gov. Jim Justice over unpaid fines and fees.
Updated on Wednesday, May 31, 2023 at 3:15 p.m.
The U.S. Justice Department is suing 13 companies owned by the family of Gov. Jim Justice, alleging they failed to pay fines and fees for more than 100 mine reclamation violations from 2018 to last year.
The DOJ seeks to recover $7.6 million in civil penalties, administrative fees and interest from coal companies owned by the Justice family.
The DOJ alleges that the companies are in violation of the Surface Mining Control and Reclamation Act and the Abandoned Mine Land program.
Justice, a Republican, is seeking the U.S. Senate seat currently held by Democrat Joe Manchin.
In a briefing Wednesday, Justice suggested the suit could be politically motivated, with Democrats holding a narrow Senate majority.
“There’s a lot at stake right now,” he said. “The entire U.S. Senate could be flipped. And that’s what I intend to help make happen.”
Justice first faces a Republican primary with Rep. Alex Mooney next year. Manchin has not said if he’ll run for re-election.
Roman Stauffer, Justice’s U.S. Senate campaign manager, said in a statement that the DOJ complaint was political and that Democrats would prefer to run against Mooney.
“Joe Biden, Chuck Schumer, and the Democrats have seen the polls that show Jim Justice winning this race, and they’re panicking. So now the Biden Justice Department has decided to play politics. We will see a lot more of this as the Democrats work to help Alex Mooney because they know they can easily beat him,” Stauffer said.
Many of the Justice family companies are based in Roanoke, Virginia. The DOJ complaint was filed in the U.S. District Court for the Western District of Virginia.
Christopher Kavanaugh, the U.S. Attorney for the Western District of Virginia, was nominated by President Joe Biden in 2021 and confirmed unanimously by the Senate.
“Over a five-year period, defendants engaged in over 130 violations of federal law, thereby posing health and safety risks to the public and the environment,” Kavanaugh said in a statement. “Today, the filing of this complaint continues the process of holding defendants accountable for jeopardizing the health and safety of the public and our environment.”
A 2016 NPR investigation found that Justice’s coal empire owed $15 million in taxes, fines and fees in six states.
The Justice family coal companies’ legal troubles have continued well into his time as governor of West Virginia. Here are some recent examples:
The plant had been cited for years for hazardous pollutants from its coking ovens. The health department in Jefferson County, Alabama, went to court in 2021 alleging Bluestone violated its permit and the federal Clean Air Act.
Justice’s coal business centers primarily on metallurgical coal, the kind that’s used to make steel.
An NPR investigation in 2016 found that Justice’s coal companies owed $15 million in taxes and safety penalties across six states, including nearly $7 million in Kentucky.
Justice was elected in 2016 as a Democrat, but later switched parties.
Justice spokesman Jordan Damron didn’t immediately respond to a request for comment on the sale.
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.
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.
In apparent anticipation of a federal lawsuit seeking recovery of overdue penalties, coal companies owned by the family of West Virginia Gov. Jim Justice have filed a lawsuit of their own against federal surface mining regulators.
The suit, first reported by WV MetroNews, is an apparent preemptive strike against the federal government, which is preparing to sue the companies over over unpaid fines associated with more than 100 environmental and reclamation violations at mines in West Virginia, Virginia, Tennessee and Kentucky.
According to lawsuit, negotiations between officials from the Department of Interior’s Office of Surface Mining, Enforcement and Reclamation (OSMRE) and the Justice companies, including the governor’s son, Jay Justice, to settle unpaid fines abruptly fell apart earlier this month.
The Justice companies contend the civil lawsuit by MSHA and the Justce Department was surprising, and argue in the newly-filed litigation that it may have pushed officials at the OSMRE to back away from a proposed $250,000 settlement agreement.
However, in a May 15, 2019 letter to lawyers representing the Justice companies that was included in the lawsuit, John Austin, the field solicitor in the Department of Interior’s Knoxville office, wrote that the believed settlement, and any settlement over $100,000, could not be approved without approval from the Justice Department.
“Therefore, notwithstanding your clients’ assertion about a deal they believe they made with OSMRE, there is not nor has there been an authorized agreement with the United States to settle the monetary debts of your clients for $250,000.00, or for any other amount,” Austin wrote.
The lawsuit describes a month-long effort by representatives from the Justice companies to settle fines from more than 100 violations at Justice mines dating back to 2017 as well as fines assessed against Jay Justice personally. The dollar amounts of the fines associated with the violations were redacted in the lawsuit.
Problem Properties
Credit Sydney Boles / Ohio Valley ReSource
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Ohio Valley ReSource
The October flood damaged the road near the Thacker house.
Unreclaimed mines can present hazards to public safety and property for those living nearby.
In October 2018, floodwaters washed away the road to Elvis and Laura Thacker’s home, located about a quarter-mile downhill from the mine, trapping them inside. A similar June 2016 flood caused mold and about $148,000 in damages.
Despite a history of reclamation violations and complaints by residents, the mine, owned by Justice-controlled Kentucky Fuel Corp., remains the subject of a years-long dispute between the Justice family and regulatory agencies.
Last fall, Kentucky officials said the the Justice companies owed $2.9 million in reclamation penalties. Representatives for Kentucky Fuel Corp. dispute the amount and say they have made significant progress addressing violations at Bevins Branch.
Still, last October, OSMRE issued an immediate harm cessation order for the site, and Bevins Branch appears to be one of the mines with unpaid fines included in the new lawsuit.
Timeline
According to the suit, on April 8, 2019, Jay Justice and Justice Mining Entities COO Tom Lusk met with Michael Castle, the field office director of the OSMRE Knoxville and Lexington field offices and OSMRE official Mark Snyder in Knoxville.
During the meeting, according to the lawsuit, Jay Justice proposed that his companies would prioritize completing mine reclamation work “in lieu of the penalty assessments and that the penalty assessments be reduced by the cost of the reclamation work.”
According to the document, Castle, with OSMRE, said that because the delinquent mines were not currently operational and “the companies are not obtaining any financial benefit through non-compliance” he believed he had the authority to create a settlement agreement.
The group agreed that if the total amount of penalties owed was not reduced below $250,000 after this reclamation work, the Justice companies would pay that amount over a year to satisfy the remaining debt.
Later that day, the parties returned for a second meeting, this time with their lawyers present, including Austin, DOI’s field solicitor based in Knoxville. Austin asked the Justice companies to provide collateral that they could satisfy the agreement, to which the Justice companies agreed.
Later, at another meeting, the question of whether the Justice companies would need to provide collateral was left unresolved, according to the lawsuit.
Justice company representatives said they left the April meetings believing an agreement was in place. They said a letter to Austin sent in late April, invited him to ask for any additional financial information from the Justice companies, went unanswered.
During that time, the Justice companies said they began doing reclamation work.
“In the week of May 6, 2019, the government’s attitude toward the Justice Mining Entities noticeably soured,” the lawsuit states. That week, MSHA and the Justice Department filed a lawsuit seeking $4.7 million in unpaid mine health and safety fines and fees from the Justices.
Days later, after agreeing to “suddenly renewed” requests for collateral and more financial information from the Justice companies, the lawsuit states they received the May 15 letter from Austin stating that the settlement agreement had not been made. Instead, he wrote that a letter authorizing the DOJ to file suit against the Justice companies on behalf of the Interior Department had been issued.
“We have suggested on more than one occasion that a showing of good faith will benefit your clients if they intend to pursue settlement,” Austin wrote, adding that includes the Justice companies “continuing to abate the environmental violations that exist in Tennessee and by making good on a settlement agreement negotiated on their behalf in 2017.”
A request for comment to OSMRE was referred to the Justice Department, which did not immediately reply.
In a statement from Justice company Bluestone Coal Corp., Jay Justice said the companies are still seeking a settlement agreement with the federal government, but the “incident with MSHA” made an impression.
“We don’t want to have to go to court to get the government to do the right thing and live up to its end of the bargain, but we can’t sit back and let the government take advantage of our good faith efforts to resolve this matter,” he said.
Pattern of Behavior
The Justice companies have a documented history of racking up mine safety fines, failing to pay taxes, and inadequately completing reclamation work.
The companies have also repeatedly failed to pay suppliers. A review of court documents by the Ohio Valley ReSource last fall 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.
These cases, dating back to 2013, include a failure to pay for a range of common coal industry needs, such as parts for mining equipment, coal barge services, insurance, and the royalties due to mineral property owners. The debts the Justice family companies owed in these cases ranged from just under $150,000 to a little more than $3 million.
In all five cases the courts authorized U.S. Marshals to seize assets from the Justice family companies’ bank accounts in order to recover the debts. However, in some cases officials discovered the bank accounts were empty or closed.
