Coal Tattoo

5 more things about the Don Blankenship indictment


Gazette file photo by Chip Ellis

There’s been a lot written already about the indictment of longtime Massey Energy CEO Don Blankenship (see here, here, here and here for Gazette stories), but there are a few things that readers may have overlooked and are worth knowing:

1.  Prosecutors did not charge Blankenship with actually causing the April 5, 2010, explosion that killed 29 miners at Massey’s Upper Big Branch Mine.

Certainly, the 43-page grand jury indictment mentions the mine disaster, and it alleges that Blankenship was personally an “operator” of the mine who took part in a conspiracy to violate key safety standards that four different investigations (see here, here, here and here) said led to the explosion. But U.S. Attorney Booth Goodwin and Assistant U.S. Attorney Steve Ruby stopped just short of blaming Blankenship, of alleging that blowing up the mine was one of his crimes.

Doing so avoids any eventual criminal trial turning into a “battle of experts,” and may remove some of the ability of Blankenship’s defense team to trot out his much-promoted theory that the explosion was basically an “act of God,” caused by an unforeseeable inundation of natural gas.  Also, U.S. District Judge Irene Berger has not exactly been impressed thus far with the testimony of U.S. Mine Safety and Health Administration witnesses in previous Upper Big Branch cases (see here and here), and in at least one previous coal-mining disaster cases, the MSHA experts on explosions certainly could have done better.

2.  Financial crimes carry much longer maximum sentences than those for violating workplace safety standards.

Most news reports made clear that the total maximum sentence Blankenship would face if convicted on all four counts of the indictment would be 31 years. Of course, that’s the statutory maximum, and if doesn’t take into account federal sentencing guidelines.  But it hasn’t really been made clear that 20 years of that 32-year maximum sentence would come from Count 4 of the indictment, which charges Blankenship with a violation of 15 U.S.C. 78ff. The count alleges that Blankenship made untrue statements to the investing public when Massey defended its corporate safety record after the mine disaster.

Two other counts of the indictment — Count 2 charging Blankenship with conspiracy to defraud MSHA by advance notice of inspections and Count 3 charging him with making false statements to the U.S. Securities and Exchange Commission — each carry maximum jail sentences of 5 years. The allegation that actually involves unsafe mining practices is Count 1, which alleges a conspiracy to violate federal mine safety standards.  It carries a maximum sentence of 1 year in jail.

R. Booth Goodwin II

Southern West Virginia U.S. District Attorney R. Booth Goodwin II speaks to reporters Tuesday, Dec. 6, 2011, at the Robert C. Byrd federal courthouse in Charleston, W.Va.  (AP Photo/Brad Davis)

3. Prosecutors are getting some help from former Massey officials.

Of course, there have been other convictions in the Upper Big Branch investigation, and some of those individuals have said they are cooperating with investigators.  But the indictment also includes much discussion of someone identified as “Known UBB Executive,” who is cited for numerous allegations against Blankenship.  The indictment describes that person as having been president of UBB’s mining group. Massey’s disclosures to the U.S. Securities and Exchange Commission identify Upper Big Branch as being part of the “Performance Resource Group,” and investigation records show that at the time of the explosion, the president of Performance was Chris Blanchard. Alan Strasser, Blanchard’s lawyer, declined to answer questions about the case.

The indictment also cites information provided by “other UBB officials known and unknown to the grand jury.”

4. The Upper Big Branch Mine was “important to Massey’s financial performance.” As the indictment explains:

UBB produced a type of coal called metallurgical coal, which was used for manufacturing steel. During the Indictment Period, metallurgical coal sold for substantially more per ton than Massey’s other major product, which was steam coal used to generate electricity. Metallurgical coal from UBB was particularly important to Massey’s sale of metallurgical coal, because it was an essential ingredient in a blend of metallugical coal that also included coal from a group of other Massey mines near UBB. In 2009, this UBB-centered group generated revenues of approximately $331 million, which represented approximately 14 percent of Massey’s approximately approximately $2.3 billion in revenue — more than any of Massey’s numerous other mining groups.

For 2010, Massey projected UBB-group revenues of approximately $432 million, approximately 16 percent of Massey’s projected revenue of approximately $2.7 billion and more than the projected revenue for any other Massey mining groups.

5. Massey’s financial losses after the explosion were costing Blankenship a lot of money. The indictment recounts:

The explosion resulted in a substantial number of fatalities and, as a result, attracted national and international media attention. Some media outlets reported that Massey had engaged in a practice of routinely violating mandatory safety standards. By April 7, 2010, Massey’s Class A Common Stock price dropped approximately $9.15 per share, or 16.8 percent from its closing price on April 5, 2010. This decrease reduced Blankenship’s net worth by approximately $3 million.