CHARLESTON — Figuring out the shape of Jim Justice’s business organization isn’t easy, but a back-and-forth in the transcript of a deposition gives a pretty good sense.
Lawyers for the U.S. Department of Justice asked Stephen Ball, general counsel for various businesses owned by Justice’s family, about the business structure.
Justice Energy, Ball began, operates the Red Fox Surface Mine in McDowell County. That is the only mine it runs.
“So when we talk about Justice Energy, who owns Justice Energy?” asked U.S. Attorney Fred Westfall.
Ball: “Its parent company is JCJ Coal Group LLC.”
Westfall: “And who owns JCJ Coal Group LLC?”
Ball: “Blue Stone Mineral Inc.”
Westfall: “And who owns Blue Stone Mineral Inc.?
Ball: “Blue Stone Resources Inc.”
Westfall: “And who owns Blue Stone Resources Inc.?”
Ball: “James C. Justice II and James C. Justice III.”
The first is the governor of the state of West Virginia, and the second is his son, Jay.
The layers of company bureaucracy came up last week because the lawyers from the U.S. Department of Justice made a proposal to “pierce the corporate veil” on the Justice companies.
They were intervening in a $1.23 million civil contempt case in federal court. Their job was to determine if the defendant, Justice Energy, could afford to pay what the court said it owed.
The case first filed Nov. 6, 2013, was only for $148,496.14. James River Equipment alleged Justice Energy failed to pay for parts, equipment and service.
After years of entanglements, Justice Energy wound up in contempt and owing much more. U.S. District Judge Irene Berger declared a deadline last week to pay up or at least offer a payment plan.
The federal prosecutors initially made a motion to declare the corporation a sham and hold Jim Justice and Jay Justice personally responsible.
“As these facts establish, JEC has no real separate corporate existence,” they wrote. “The corporation is dominated by James C. Justice II and James C. Justice III through their corporate and limited liability entities.”
But a day after that was filed, they joined with Justice Energy to propose a different resolution, payment by yet another Justice company, Bluestone Resources.
Nevertheless, the original motion by the federal prosecutors — and the 300-some pages of deposition transcript accompanying it — shines a light on how the many overlapping Justice companies work.
All that material also leaves questions unanswered.
At one point in the depositions, Westfall couldn’t wrap his mind around what he learned about Justice Energy.
He asked an existential question.
“I’m not sure how to phrase this but I’ll do the best I can,” he said. “Why does Justice Energy exist if it’s not really owning anything? What’s the purpose of Justice Energy?”
The federal prosecutors who looked closely at Justice Energy for the contempt case in federal court described it as a shell corporation.
That conclusion was drawn from financial records, as well as the depositions of Stephen Ball, Jay Justice and James Miller, a Justice Energy executive who, the federal prosecutors concluded, has almost no role with the coal operations but a significant role in trying to hold together The Greenbrier resort and its related properties.
They each spoke to federal prosecutors in the presence of Mike Carey, a lawyer representing Justice companies. Carey is a former U.S. attorney himself and also represents the Governor’s Office in a case about whether Justice’s residency in Lewisburg, rather than at the seat of government, violates the state Constitution.
Ball’s deposition revealed Justice Energy does not own any true real estate, does not have its own office and does not have its own corporate headquarters.
It also doesn’t have any money.
“Currently,” Ball said, “Justice Energy operates at a deficit. It’s losing money each year. So its shortfall is made up by Bluestone Resources.”
He went on to say Red Fox Mine was idle as recently as 2015, but the company began operating it again in February 2018. A main reason for keeping it going, Ball said, is a collective bargaining agreement with the United Mine Workers and legacy liability for workers’ pensions.
“To be honest with you,” Ball said, “That’s the real reason why Justice Energy continues to operate.”
Westfall: “At a deficit?”
Ball: “There would be a larger deficit if they stopped operating.”
Justice Energy’s only functioning officers are Jay and Jill Justice. There are no meetings, just forms that are signed to signify agreements.
Ball explained in his deposition: “So I mean we have had not necessarily Justice Energy but the family will have a board meeting, but it’s not common. Typically, we dispense with the annual requirements via agreement in lieu of meeting.”
Westfall: “So they just basically sign a document that says more or less we had a meeting on paper?”
Ball: “Yes.”
Jim Justice, West Virginia’s billionaire governor, never placed all of his assets into a blind trust. He does produce an annual financial disclosure form that includes more than 90 businesses.
All along, he has said he put Jill in charge of The Greenbrier and Jay in charge of the coal operations.
Early in his time in office, he produced a letter to state employees. It said he would like to pursue a blind trust but the process was slowed by the size of his business portfolio.
“I’ve separated myself from my business holdings by putting my children in charge of our family’s business operations. Being Governor is a full-time responsibility,” Justice wrote in his 2017 letter.
“I want to put all of my assets in a blind trust; however, the process has been slowed down by the multitude of financial institutions that work with my family’s companies. I will continue to file very detailed ethics reports, just like during the election, which lets everyone know about my family’s businesses and investments.”
The prosecutors wanted to get at who really runs Justice Energy.
Westfall asked who calls the shots.
“Justice II and Justice III. If there’s going to be some decision about what’s going to happen with Justice Energy, would they be the ones that would ultimately either approve or disapprove a decision of what’s going to happen with that particular company?” he asked.
Ball wanted clarification, asking if Westfall meant who would decide if the company should have to wind down or consider a major operational decision.
Then, he answered, suggesting such matters would fall to Jay.
“To my knowledge, any operational decisions today would solely be made by James Justice III.”
In Jay Justice’s deposition, Westfall asked a similar question.
“If a decision had to be made about a future direction of the company or a major financial decision had to be made about Justice Energy Co., Inc., who would have the ultimate decision-making authority over such decisions?” Westfall asked.
Jay Justice said it would be him.
“I guess I would have the ultimate decision-making authority and I would certainly consult with the other people on our team, accountants, attorneys, our operations people,” Jay Justice said.
Westfall followed up.
“But if there was a major financial decision or some sort of a major direction for the company that in particular — the ultimate decision-making authority would rest with you? Is that correct?”
“I think so,” Jay Justice responded. “Yes.”
