State Rep. W. Keith Hall, D-Phelps, secretly paid $46,343 to a Kentucky mine inspector from May 2009 to December 2010 to ignore repeated violations at Hall's Pike County surface coal mines, according to an indictment filed Thursday.
Hall, 55, was indicted on a bribery count in U.S. District Court in London and could face up to 10 years in prison if found guilty. The inspector, Kelly Shortridge, 54, was indicted on charges of bribery, extortion and lying about his involvement in the alleged scheme to FBI agents during an interview in July. Shortridge, who resigned his state job in February, could face up to 20 years in prison on his most serious charge.
"The conduct alleged in the indictment is an unacceptable breach of public trust," U.S. Attorney Kerry B. Harvey of Lexington said. "Such conduct undermines the public's faith in our institutions of government and makes the job harder for the vast majority of public officials who honorably discharge their duties on behalf of the public they serve."
A judge ordered Hall and Shortridge to appear in court in Pikeville on Nov. 5.
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Hall narrowly lost the Democratic primary in May to Chris Harris, a Pike County magistrate. He first was elected in 2000. During this year's legislative session, Hall was chairman of the House Tourism Development and Energy Committee and vice chairman of the House Natural Resources Committee, posts that allowed him to help regulate the coal industry in which he owns companies.
Hall and Shortridge did not return calls Thursday. House Speaker Greg Stumbo, D-Prestonsburg, an Eastern Kentucky friend and political ally of Hall, said he would not comment on the indictments.
Hall's ex-wife, Stephanie Keene, said the lawmaker and the mine inspector were on good terms until they fell out a few years ago.
"Kelly was the inspector on Keith's mines," Keene said Thursday. "I remember one time when we were in Frankfort, Keith said he had paid Kelly $10,000 already, but Kelly was saying Keith owed him another $10,000, or $20,000 altogether. Keith said Kelly was just aggravating him to death about it, he just wouldn't drop it. And then I knew they weren't friends anymore."
The Herald-Leader first reported in June 2013 on a history of unresolved safety and environmental violations at Hall's mines and on his dealings with Shortridge. Hall complained in 2012 to Billy Ratliff, the state's director of mine reclamation and enforcement, that he had paid Shortridge an undisclosed sum, but the inspector was demanding more.
"Hall informed Ratliff that he had given a 'small fortune' to Shortridge for the Millard Little League basketball team even though Shortridge does not have any children in the league. Hall conveyed that Shortridge 'liked the Benjamins' but would not elaborate," according to a subsequent report filed in March 2013 by the inspector general of the Kentucky Energy and Environment Cabinet.
Cabinet officials chose not to pursue the matter further or forward their report to state ethics agencies or law-enforcement officials. After the Herald-Leader disclosed the report's existence, federal prosecutors requested a copy from the cabinet and opened their own investigation.
"I don't know why it wasn't referred. I couldn't speculate," cabinet spokesman Dick Brown said Thursday.
According to the indictment, Hall and Shortridge hid the bribes by funneling them through a newly created shell company, DKJ Consulting, and a bank account, in both instances using the name of Shortridge's wife. Most of the bribes were disguised as business payments made by two of Hall's companies, S&K Properties and Beech Creek Coal.
The indictment does not say what sort of violations Shortridge allegedly ignored. Last year, the Herald-Leader reported on unresolved citations at Hall's mines for dropping rocks on nearby homes; mining outside of permitted areas; water pollution; failing to obey regulations on blasting, reclamation and maintaining slurry ponds; and allowing rocks, dirt and trees to slide down slopes.
In late 2010, Shortridge sent a message warning Hall that, unless he paid more money, Shortridge "would use his professional influence to cause reclamation violations to be issued against Hall's mine sites, resulting in financial penalties in excess of $25,000," according to the indictment.
In 2012, Shortridge allegedly committed extortion by threatening Hall with "economic harm, in that (Shortridge) did threaten to cause the issuance of citations for surface mining reclamation violations," according to the indictment. On July 30, Shortridge allegedly lied to FBI agents in Lexington by denying any association with DKJ Consulting and any payments from Hall or Hall's companies, according to the indictment.
Carl Campbell, the state's natural resources commissioner from 2008 to 2011, told the Herald-Leader last year that he ordered Short ridge removed from Hall's mines in 2011. Campbell said he worried after Hall called and asked him to promote the inspector to a supervisory post in Pikeville.
"I told him, 'I appreciate your putting in a good word for Mr. Shortridge, but I make my own decisions for my own reasons,'" Campbell said. "Keith was pushing to get Kelly Shortridge in charge of the Pikeville office, and I did not want that. When things get too chummy, it's not good business. Our job was to enforce the law equally for everyone."
Shortridge was angry about his reassignment, according to state records. He threatened workplace violence, resulting in a 15-day suspension without pay, according to Shortridge's disciplinary file at the state Personnel Board. Shortridge initially challenged his punishment but later dropped it, failing to appear for an appeal hearing in Frankfort.
Controversy long has dogged Hall. In 2011, the Legislative Ethics Commission fined him $2,000 after one of his companies won $171,000 in no-bid sewer line projects that he had voted to include in the state budget.
"I had every right to negotiate professional services," Hall told the Herald-Leader in May, before the Democratic primary. "Professional services is engineers, plumbers, electricians, CPAs, architects, those types of people. I didn't have to bid that project."
Hall served on the Pike County Board of Education during the 1990s. He was suspended for eight months and ultimately forced to resign in 1999 during a state investigation into his alleged attempts to improperly influence the awarding of school district jobs. He and two other school board members, both of whom also resigned, were called the "Gang of Three" by the Kentucky Office of Education Accountability, which investigated them.
The next year, Pike County voters elected him to the House.