Businesses owned by West Virginia Gov. Jim Justice took part in fraudulent transfers of property in an attempt to keep a Kentucky company from collecting on a multimillion-dollar court judgment, a lawsuit filed this week charges.
Many of the transfers were to affiliates of the Justice Companies with no cash changing hands, the lawsuit alleges.
Other transactions raked in tens of millions of dollars for Justice’s companies, but the intent of the companies “has been and is to convert real property to cash or other assets that will be difficult to trace or that can be dissipated or hidden …,” the lawsuit charges.
Justice has not responded to the lawsuit in court.
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However, the Justice organization has reviewed the complaint and feels the claims are “baseless and completely false,” said Barry D. Hunter, a Lexington attorney who represents Justice’s companies.
“They intend to vigorously defend the allegations in the latest suit” but will not comment further, Hunter said.
Justice was elected governor of West Virignia last year as a Democrat, but announced last month during an appearance with President Donald Trump that he would switch his registration to Republican.
Justice made a fortune mining coal in West Virginia, Kentucky and other states. He also has interests in agriculture and other pursuits and owns The Greenbrier, a historic resort in West Virginia.
Forbes magazine calculated Justice’s net worth this month at $1.74 billion and rising.
Still, his coal companies — including Kentucky Fuel in Eastern Kentucky — have faced persistent allegations in recent years of failing to pay suppliers, failing to complete reclamation as required and not paying taxes and environmental and safety fines in a timely way.
The complaints mounted as a severe downturn sapped demand for coal from Eastern Kentucky. Production and jobs dropped sharply beginning in 2012.
Kentucky Fuel is making payments on delinquent property taxes in several Eastern Kentucky counties.
The plaintiffs in the new lawsuit against Justice are the New London Tobacco Market and Fivemile Energy.
The defendants are the James C. Justice Companies; affiliates Justice Farms of North Carolina LLC, Oakhurst Club LLC and Southern Minerals LLC; and Justice’s son, James C. “Jay” Justice III.
The lawsuit says Gov. Justice is not a defendant, but is a member of companies that are. Justice, his son and his daughter, Jill Justice, are the shareholders of the Justice Companies, according to the complaint.
The new complaint relates to an earlier one filed in 2012.
In that one, New London Tobacco Market and Fivemile Energy argued they had leased coal in Breathitt County to Kentucky Fuel and that the company did not carry out the contract terms.
The plaintiffs won a default judgment against Kentucky Fuel and the Justice Companies, and an order for them to pay $60 million.
Justice’s companies cried foul, arguing the amount of damages was “absurdly overblown” and not supported by evidence.
Justice’s attorneys said a judgment that size would bankrupt the companies.
U.S. District Judge Gregory F. Van Tatenhove put the award on hold and ordered a hearing on the amount of damages. That hearing has not been held.
The new lawsuit is an effort to make sure Justice’s companies don’t get rid of assets that could be used to pay the judgment in the earlier claim.
The new complaint says that after the first lawsuit was filed, Justice’s companies began carrying out a series of transactions designed to “hinder, delay or defraud” creditors.
The complaint lists more than a dozen instances in which Justice Companies allegedly transferred land or mineral rights to related entities for no payment.
For instance, in August 2014, Justice Companies transferred 1,559 acres in Orange County, Va., to Justice Farms.
The land was valued at $7.2 million, but no cash changed hands, the lawsuit says.
The complaint also says Justice Companies agreed in 2014 and 2015 to sell more than 24,000 acres of land in North Carolina, South Carolina and Virginia for a total of $115 million.
Justice’s companies are in the process of selling three farms in Virginia that include a total of nearly 3,900 acres and three large houses. The house at one, Flowerdew Hundred Plantation, has 14,000 square feet of space, the lawsuit says.
The properties previously were listed for sale for a total of $40.2 million, according to the complaint.