For the first time, federal court tries and a jury convicts a CEO on charges related to the death of miners
By Jennifer Jensen
On December 3, after two months and hearing testimony from 27 witnesses, a jury of 12 found former Massey Energy CEO Don Blankenship guilty of one misdemeanor charge of conspiracy to violate federal safety violations. He was also found not guilty of making false statements to the U.S. Securities and Exchange Commission (SEC) and securities fraud for allegedly lying to investors. The charges are related to the Upper Big Branch (UBB) mine in West Virginia where an explosion in April 2010 claimed the lives of 29 coal miners. UBB was owned and operated by Massey Energy, a now defunct Appalachia coal company. Blankenship was not charged with causing the explosion, but the charges were related to events leading up the explosion and statements made following the tragedy.
“The jury’s verdict sends a clear and powerful message: It doesn’t matter who you are, how rich you are, or how powerful you are, if you gamble with the safety of the people who work for you, you will be held accountable,” U.S. Attorney Booth Goodwin said. “The evidence overwhelmingly showed an enterprise that embraced safety crimes as a business strategy. It was reprehensible, and the jury saw it for what it was. Time and time again the defendant chose to put profits over safety. He got rich and the coal miners who worked for him paid the price.”
Blankenship will be sentenced on March 23 and could face up to a year in prison, as well as a fine of up to twice the gain or loss that resulted from his conduct.
Defense attorney Bill Taylor said the case against Blankenship, should never have been brought forward and he plans to appeal. “There was never enough evidence to justify convicting Mr. Blankenship of any of these offenses,” he said. “I’m confident we’ll prevail on appeal.” The appeal will be based on numerous aspects, Taylor told reporters outside the courthouse following the verdict, including “insufficiency” of the indictment, which he called “defective on its face.”
Blankenship was not the only former Massey official charged as part of a federal investigation into the company following the UBB disaster. Former Green Valley Coal Group President David Hughart was sentenced to 42 months in prison; the security director at UBB, Hughie Stover, was sentenced to three years in prison for making false statements during the investigation; and former UBB Superintendent Gary May was sentenced to 21 months in prison for violating mine safety regulations.
After being delayed four times, the trial began October 1 with jury selection. The prosecution and defense rested their case within minutes of each other, with the defense not calling a single witness. Blankenship’s fate was then in the hands of the jury, and on the seventh day of deliberation, the jury was still unable to come to a consensus. U.S. District Court Judge Irene Berger then issued an Allen charge to the jury, which is an instruction to encourage a deadlocked jury to continue deliberations to reach a verdict. Shortly after, the jury reached a split decision.
In opening statements, Assistant U.S. Attorney Steven Ruby described Blankenship as “the man in charge of the daily operations of the company,” and that handwritten notes and memos from Blankenship, as well as recorded phone calls, would show that he micromanaged mine President Chris Blanchard. Even as he learned about the hefty amount of safety violations occurring at UBB, he “pushed the mine harder and harder, the evidence will show, for more coal production, for more coal tonnage,” Ruby added.
Over the course of the trial, Ruby told the jury they would hear from numerous witnesses, including miners, who would testify that safety violations could have been prevented and were basic principles of mine safety. “More broadly, they’ll tell you that at UBB it was understood that breaking the safety laws was not just permitted,” Ruby said. “It was expected.” Ruby said miners would also describe a system that was in place to tip off areas of the mine before safety inspectors got there, and also about faking coal dust samples.
Taylor contested that “this call-ahead system at UBB had been in effect long before 2008, which was the beginning date of this so-called conspiracy. And I dare say that it would exist if Donald Blankenship had never been born.”
PROSECUTION BUILDS CASE BASED ON GREED
Ruby insisted that Blankenship’s main motivation behind his push was money for more production, because “a quarter of more of the defendant’s wealth was tied up in Massey stock.” He pointed out that UBB was the biggest producing mine and part of the group of mines with Massey Energy’s highest revenue, shipping more than $300 million worth of coal in 2009. “So when the stock went up, the defendant got richer,” Ruby said. “And the more profits Massey made, the more the stock went up.”
After the explosion on April 5, 2010, UBB’s safety violations were brought into the forefront and Massey’s stock started to fall, and according to Ruby, Blankenship lost about $3 million from his net worth in about two days after the explosion.
According to Ruby, at the end of 2009, Blankenship received a daily violation report that showed UBB was among the worst performers in the company with 466 safety violations. The top category of violations was for allowing combustible materials to accumulate in the mine.
Ruby also spoke to the statement to shareholders that was released following the disaster, which said, “we do not condone any violation of MSHA regulations.” He claimed Blankenship’s secretary would testify that he edited and approved it personally. For the defense, Taylor insisted that Blankenship did not pen the statement himself, but did see it. “But can you imagine the number of people who are convening to draft a public statement in the wake of…this disaster,” Taylor said.
Ruby said the jury would also hear recordings of Blankenship’s phone calls that were recorded by Blankenship himself. At the beginning of 2009, he had a recording system attached to his office telephone and he started taping many of his phone calls, Ruby added.
He also told the jury they would hear from a “whistle blower” named Bill Ross, a former MSHA employee who was hired by Massey shortly after he retired from MSHA. In June 2009, Ross sat down with a Massey lawyer and board member to go over his safety concerns at the mine. In his memo, he said, “Sooner or later, we will pay the price, especially if there is a serious injury or fatality.” Taylor insisted that calling Ross a whistle blower “may not be entirely accurate” because he was asked to give his candid opinion about the issues at the mine.
However, Ruby mentioned a recorded phone call from June 2009, where Blankenship referenced the Ross memo and said, “It’s highly confidential because I don’t know, I don’t know really what to do with it because I meant to keep it privileged and confidential but, Bill, his interview on our performance regarding MSHA’s safety is worse than a Charleston Gazette article.” [Editor’s Note: The Charleston Gazette is reviled by the coal industry in West Virginia for its relentless attacks over the years].
He then went to say, “It’s bad because like, for example, if that was a fatal today, or if we have one, it would be a terrible document to be in discovery.”
BLANKENSHIP’S DEFENSE STRATEGY
When defense attorney Bill Taylor started his opening statement, he acknowledged the fact that Blankenship was a tough boss and “wouldn’t win any popularity contests in the state of West Virginia.” He then also reiterated what the judge already told the jury that Blankenship was not on trial for causing the explosion at UBB.
In response to the Ruby’s argument that Blankenship’s micromanaged his employees and criticized their work, Taylor said, “Don Blankenship managed to make the people who worked for him accountable. That doesn’t establish that he told them to violate the safety regulations.”
To counteract the prosecution’s claim that Blankenship was only concerned about production, Taylor said Blankenship took on a company-wide campaign in 2009 to cut citations in all of its mines. “No one understood better than Don Blankenship that production and safety were linked,” he said. “So during the very period of time when the government said Mr. Blankenship is in a conspiracy to deliberately violate safety regulations, the evidence is going to instead show he imposed a program to do exactly the opposite, a program that involved spending a lot of money and putting a lot of people to work trying to fix this problem.”
However, Ruby claimed that the miners who would testify never heard of the hazard elimination program and the Safety First program “was a joke.”
Taylor contended that Blankenship was being singled out for “practices common in this coal mine.” He ended his opening statement by telling the jury that the trial was about truth. “This trial is about the truth, what you will find in the evidence in this courtroom and in the lack of evidence.”
PROSECUTION CALLS WITNESSES, ENTERS EVIDENCE
The 27 witnesses called during the prosecution phase included former UBB miner Bobbie Pauley; former Blankenship Secretary Sandra Davis; Hughart, who is serving time for his role in the events; Stanley “Goose” Stewart, a former continuous miner operator at the UBB mine; ex-Marfork Coal President Blanchard; and former Massey Chief Administrative Officer John Poma. Others that were called to testify included former UBB section foreman Rick “Smurf” Hutchens and Ross, as well as Tracy Stumbo, Tyler Childress, Brent Stanze, Gary Young, Karen Hanretty, Michael Smith, Brent Racer, Charles Justice, Clifton Stover, Rick Hodge, Larry Adams, Sean Ellison, Keith McElroy, Scott Halstead, Lisa Williams, Harold Hayhurst, Charles Lilly, Frank Torchio, and Jim Lafferty.
Pauley was one of the first witnesses called on October 8, and according to WV MetroNews, she testified that, at times, she was instructed to do things she had learned not to do during training and that Massey’s safety program S1-P2 (Safety first, Production second) was a “joke” to miners. WV MetroNews reported Pauley as saying, “We said it was P-1, S-2. I had no knowledge of what the whole program was about.”
She was also a dispatcher at UBB at one point and testified, as reported by WV MetroNews, that she would hear from security personnel when inspectors arrived and was told to contact those mining coal. Former UBB Superintendent Gary May told her “don’t let him hear you do that,” she said. However, under cross-examination she also admitted that she would radio when company officials arrived as well.
Numerous personal recordings of Blankenship were also heard during the trial, and his former secretary, Davis, was called to help authenticate them and testified that Blankenship put the equipment in place so that he could record all phone calls, according to WV MetroNews.
The jury heard 18 audio recordings during Blankenship’s trial. In one particular recording, Blankenship talked about the running of coal in a call with Chris Adkins, former Massey COO, and issues with the Mine Safety and Health Administration, according to WV MetroNews. In the recording, Blankenship said, “We do some dumb things.” And he also said that he thought if it weren’t for MSHA, “we’d blow ourselves up.”
The prosecution’s third witness, Tyler Childress, an MSHA program analyst, testified that between January 2008 and April 9, 2010, MSHA issued 836 total orders and citations and of those, 311 were considered substantial and 284 dealt specifically with ventilation, according to WV MetroNews.
According to a chart presented to the jury, UBB had 59 unwarrantable failure orders during that time period. MSHA stated that these occur if an operator has engaged in “aggravated conduct constituting more than ordinary negligence.” According to these documents, Childress compared that number to eight mines of similar production; the nearest mine on the list recorded 13, and several had zero.
Former miner Brent Racer, who began working at UBB in 2007 and remained there until the April 2010 explosion, testified that Blanchard would tell his boss to run more coal, including in an area that had been shut down because of air problems, as reported by WV MetroNews. This testimony connected with the prosecution’s argument that running coal was more important than safety to Blankenship.
Other miners testified as to not having the needed equipment and time to do their job and that codes were used to alert those underground when a mine inspector or higher-up was coming, according to the local news agency.
Early on in the trial, in an effort to counteract the prosecution’s argument that Blankenship was more concerned about production than safety, the defense fought to have 10 safety memos from Blankenship admitted into evidence and won. In one of the memos to Adkins dated October 23, 2009, Blankenship expressed his disappointment in the lack of structure and progress that had been made in regards to the company’s efforts on violations. “We need to be very serious about these violations because they’re going to come back to haunt us. We can’t be talking about what we’re going to do; we have to be talking about what we have done and how much improvement we’ve made.”
To further build its case that Blankenship put more emphasis on production, the prosecution’s 12th witness, Hughart, testified that if there was a choice between safety and production at Massey, production would win, WV MetroNews reported.
The jury also heard from a former UBB section foreman, former UBB superintendent and former UBB fire boss who testified that they could not meet coal production goals and didn’t have enough workers to do the job, according to testimony reported by WV MetroNews. One of these men, Halstead, a former UBB fire boss, also testified that he saw Blankenship at UBB in the early 2000s, which contradicts Taylor’s comment during opening statements that Blankenship had never been to UBB.
In Goodwin’s closing statements, he quoted Stewart as testifying that, “My experience there, the attitude was, the laws don’t apply to us. We don’t care.” He also spoke about the system of being tipped off when inspectors would be coming underground. “We knew they were coming and we would dress things up, make it pretty, make it as legal as we could,” Stewart was quoted as saying during Goodwin’s closing remarks.
McElroy, who was part of the MSHA team that investigated the UBB explosion, testified during the trial that eight of the 43 water sprays on the longwall shearer used at UBB were missing and several others were clogged up and not working properly at the time of the blast, according to WV MetroNews.
Another witness called by the prosecution was Blanchard, the former president of Performance Coal, which managed the UBB mine. He was on the stand for a week. In his testimony, he backed up the prosecution’s argument that Blankenship micromanaged the group presidents and those who worked under him. He told the jury that Blankenship was sent reports every half hour from UBB on the progress of its longwall mining, WV MetroNews reported.
According to Goodwin, in his closing statements, he pointed out that Blanchard also testified to there being an “understanding” to just run coal, break the law and then pay the fines. However, according to his testimony as reported by WV MetroNews, Blanchard said although Blankenship was demanding about production, he never told him directly to break any laws.
ROSS TESTIMONY AND MEMO
Ross was the 24th witness called by the prosecutor and testified that during a meeting with Blankenship in the summer of 2009, he told Blankenship that some of Massey’s problems could be solved by adding an extra miner to each mining section, according to WV MetroNews.
During his testimony, Ross reportedly said, “When the meeting was over and I was ready to leave I said, ‘One thing you can’t afford to happen, sir, is a disaster — because most mines can’t survive a disaster.’”
In June 2009, Ross was asked to give his opinion about Massey’s violations and penalties, as well as its relationship with MSHA. The memo was confidential, and so was a report from a meeting Ross had with former Massey board member Stan Suboleski and legal counsel Stephanie Ojeda. It was sent to Blankenship and several other upper-level executives in the company.
In the memo, Ross said, “the attitude at many Massey operations is, if you can get the footage, we can pay the fines.” Ross claimed that the biggest complaint was lack of manpower. “He is told that the people in production at Massey are multitaskers. They are given four or five jobs to do, but they are never given the time to do any of them well. Most say that if they had the opportunity, they would leave because of the long hours and because they are given more to do than they can reasonably get done,” the memo said.
“The biggest complaint of the foreman is that they are continually forced to operate with skeleton crews. In addition to being a boss and an examiner, they are forced to also act as a worker. If they need nine men, they are given five and are still expected to produce big footage,” the memo continued. He added that Massey suffered from four big violations: ventilation, clean up, roof control and electrical.
According to Ross, mine workers said, “We are like robots. Everything is laid out for us, but we aren’t given the manpower to actually do it.” And “we are told to run, run, run until we get caught; when we get caught, then we will fix it.”
In the memo, Ross also said Massey was clearly cheating on dust samples. “Sampling is run by the face foreman, many or most of whom do not even know what is in the ventilation plan. They are told to run dust samples today, and to do whatever is needed to come into compliance.” He said MSHA sent out letters in 2006 stating dust was a problem and in 2007, follow-up letters went out and still nothing was done.
In speaking to the relationship with MSHA, the memo said Ross said MSHA was frustrated with Massey because “it doesn’t appear that Massey takes them seriously, as evidenced by presidents and upper managers never coming to the inspection closeout meetings.”
The memo stated that Ross believed the company presidents or mine superintendents could change things, but “he feels that people at the mines don’t believe that Don Blankenship or Chris Adkins really are serous about following the law.”
According to WV MetroNews, in June 2009, following the memo, Ross said he was optimistic and he thought positive steps would be taken. He added that if any of the suggested reforms to enhance training, add more personnel and improve the relationship with MSHA were put in place on a bigger scale, he was not aware of it.
SHAREHOLDERS, SEC AND UNTRUE STATEMENTS
One of the last witnesses for the prosecution, former Massey CAO John Poma, was there to speak mainly about the statement released to shareholders and filed with the SEC following the UBB disaster. Blankenship was charged with lying to the SEC in the statement. The prosecution focused on the portion that said, “We do not condone any violations of MSHA regulations and we strive to be in compliance at all times with all regulations.” The prosecution claimed that he knew the statement was untrue.
According to WV MetroNews, Poma testified that he was in charge of putting out the official company response following the disaster. He also said that Blankenship knew how the company operated more than anyone else and the process of putting the statement together was done to get Blankenship’s approval.
The prosecution’s last witness was FBI Special Agent James Lafferty, who started investigating the UBB disaster four days after it happened. He told the jury, according to WV MetroNews, that in August 2009, Blankenship started receiving daily violation reports, including those for UBB. From that time until April 2010, he testified that 587 specific citations were issued for UBB, including ones related to its ventilation plan, rock dusting and clearing of combustible materials.
THE PROSECUTION RESTS
Prior to the prosecution resting its case on November 16, defense attorney Eric Delinsky filed a motion for acquittal, arguing that the prosecution had not presented enough evidence to convict Blankenship. Shortly after, the prosecution rested its case and surprising many, the defense rested its case just minutes later without calling a single witness.
During closing statements, Goodwin painted Blankenship as the “drug kingpin” of the “criminal conspiracy” happening at Massey Energy and whose only concern was to “run coal” and make money. He said Massey didn’t need to know the details about every violation in order to be guilty of a conspiracy. Like “a drug kingpin who doesn’t need to know about every drug sale that is made by one of his street corner drug dealers.”
“The defendant, Don Blankenship, ran a massive, massive criminal conspiracy,” Goodwin said. “The plan and understanding that Blankenship dictated to all and which all knew had to be agreed to or face the consequences was designed to operate the UBB mine and Massey as a lawless enterprise.”
Most of the testimony from witnesses called by the prosecution focused on Blankenship’s prioritization on production over safety. “You saw memos and meetings and speeches and slogans about safety,” Goodwin said. “But you heard miner after miner tell you that never did they receive the personnel and the time necessary to comply with the safety law unless, of course, to comply would affect production.”
And after the UBB mine disaster, Goodwin said, “the defendant’s conspiracy lied and misled the SEC and the public about what was really happening, thereby falsely stating that Massey did not condone any violation of the mine safety laws and strived to, did strive to be in compliance with all laws at all times.
“Under his leadership, Massey was an organization that year after year was cited for thousands upon thousands of preventable violations of mine safety laws,” Goodwin said. “And, in fact, year after year, Massey was the worst in the country and the defendant knew it.”
According to Goodwin, who referenced testimony from Blanchard and miners, Blankenship’s method of operation was to “run coal” and break the law and then pay the fines later. At least until the operation was threatened with being shut down by MSHA. “He would then hire contractors, clean up the mine until the inspectors withdrew the threat. Then he would immediately go back to the old ways of, ‘run coal.’”
CLOSING REMARKS FROM THE DEFENSE
During the defense’s closing argument, Taylor told the jury that there wasn’t any solid proof that Blankenship agreed to commit violations, came up with the system of alerting those underground about an inspection or caused Massey to issue a false statement to the SEC.
“The government called 27 witnesses in this case. Do you want to know how many of them ever met Don Blankenship? Seven. Of those seven, did any of them testify that Mr. Blankenship committed a crime or told him or her to commit a crime? That’s proof. That’s evidence. But there isn’t any of that,” Taylor said.
He added that the state built its case on “the maybe approach” and that there wasn’t any proof to support its claims against Blankenship. “In this country, we don’t convict people, rich or poor, on the basis of ‘maybes,’” Taylor said.
Once the case was finally handed off to the jury, it took them 10 days to reach a verdict and find him guilty of the misdemeanor charge to willfully violate mine safety standards. Although the jury found him not guilty of the more severe charges, Goodwin felt the verdict sent a message to other mining companies that they should follow mine laws or they would be held accountable.