The Register-Herald, Beckley, West Virginia

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January 16, 2013

Massey civil suit hits snag

Federal prosecutors seek another delay

OAK HILL — Federal prosecutors want to further delay their involvement in a long-lingering civil lawsuit filed by former Massey Energy shareholders who say the coal company lied about its safety record to inflate stock prices.

Last summer, U.S. District Judge Irene Berger issued an order that allowed prosecutors to keep secret the evidence they’ve been gathering in a continuing criminal investigation of the Upper Big Branch mine disaster.

Investors led by the Massachusetts Pension Reserves Investment contend that Massey repeatedly lied about its safety record, artificially inflating stock prices between 2008 and 2010. They say shareholders had no idea of the company’s abysmal record and history of violations until after the southern West Virginia mine exploded, killing 29 men in April 2010.

Massey has since been bought out by Virginia-based Alpha Natural Resources.

The criminal investigation of the blast has spawned three prosecutions so far, and U.S. Attorney Booth Goodwin argues it needs to be protected until he’s finished.

Prosecutors have previously said in court filings that some individual defendants in the civil case “may be or may become” targets of the criminal probe. Among those individual defendants are former chief executive officer Don Blankenship, his successor, Baxter Phillips, and former chief operating officer Chris Adkins.  

Berger’s order was set to expire Tuesday, or when the government concluded its investigation.

Goodwin filed a motion late last week saying his team has made “significant progress” in the criminal case and secured the cooperation of several witnesses. Those witnesses, including former UBB superintendent Gary May and the former president of another Massey coal company, have in turn led to other witnesses, he said.

Former superintendent Gary May is set to enter a plea before Berger on Thursday in Beckley. He’s charged with defrauding the federal government through his actions at the mine, which included disabling a methane gas monitor and falsifying records.  

Former security chief Hughie Elbert Stover, meanwhile, is in prison in Kentucky, convicted of lying to investigators and ordering a subordinate to destroy documents during the investigation.

And former White Buck Coal Co. President David C. Hughart is set to enter a plea to two federal conspiracy charges on Feb. 28.

He’s accused of working with unnamed co-conspirators to ensure miners at White Buck and other, unidentified Massey-owned operations, got advance warning about surprise federal inspections many times between 2000 and March 2010.     

Prosecutors say that gave workers time to conceal life-threatening violations that could have led to citations and shutdowns.  

Goodwin argues the criminal and civil cases “overlap heavily,” and he has previously argued that waiting for the criminal evidence could benefit the shareholders. But he also contends the public interest in “unimpeded progress” on the criminal investigation outweighs their concerns.

“Some individual civil defendants may be or may become subjects of the criminal investigation,” he wrote. “When civil discovery goes forward, the civil parties will gain information not otherwise available to them, allowing them to anticipate in detail the direction of the criminal investigation.”

Attorneys for the investors don’t oppose the extension, he said, requesting a new date of July 15 or when his investigation is done.

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