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CHARLESTON - A creditor seeking to seize a helicopter owned by one of Gov. Jim Justice's companies questioned claims by another bank trying to stop the seizure.
Attorneys for Caroleng Investments Ltd., a British Virgin Islands-based holding company and the parent company of Russian mining and steel company Mechel, filed a response Wednesday to a rejoinder filed last month by Indiana-based 1st Source Bank in response to a stay issued by Senior U.S. District Judge James P. Jones of a writ of execution.
The U.S. District Court for the Western District of Virginia Abingdon Division issued the writ of execution on behalf of Caroleng Investments. The court ordered U.S. Marshals to seize a 2009 Bell Textron Canada Model 427 helicopter owned by Justice-owned Bluestone Resources.
The company is seeking the helicopter as payment toward a court-ordered award. The U.S. District Court for the District of Delaware issued a judgment in 2021 in favor of Caroleng Investments for $10.1 million including pre-award interest. The court also set a 9% interest rate retroactive to May 13, 2020, as long as the amount remains unpaid.
The same day the writ was issued, the helicopter was flown out of the federal district and a motion for a stay was sought by attorneys for Bluestone. Shortly thereafter, attorneys for 1st Source Bank joined Bluestone's motion for a stay.
According to the filing, 1st Source Bank and Bluestone entered into a loan and security agreement in 2018 for a $1.6 million loan.
As part of the conditions of the loan, Bluestone granted the bank a lien on certain personal property that could serve as collateral on the loan, including company-owned helicopters. According to filings, Bluestone owes 1st Source more than $5 million, with the helicopter worth approximately $1.2 million.
In Wednesday's filing, attorneys for Caroleng questioned the validity of 1st Source's claims on the specific helicopter in question.
"1st Source Bank's joinder suffers from the same deficiency as the motion itself, zero evidence and zero legal authority," wrote Caroleng attorney Zachary Mazur. "It does not present any evidence that this entire balance is secured by its purported lien on the helicopter... Nor is it clear to the petitioner that 1st Source Bank has placed the helicopter loan (or any other loan to the judgment debtor) in default."
Mazur said the court needs to probe the relationship between Bluestone and 1st Source Bank to determine which would get proceeds from the sale of the helicopter. Mazur accused 1st Source of over-collateralizing and perhaps working with Bluestone to thwart Caroleng's efforts to seize the helicopter.
"This over-collateralization, possibly to the tune of millions of dollars, may be an intentional scheme to frustrate judgment creditors like Caroleng," Mazur wrote.
Also Wednesday, attorneys for Bluestone filed a consent motion to transfer the ongoing legal case brought by Caroleng from the Western District of Virginia Abingdon Division to the Roanoke Division where Bluestone's corporate headquarters is located.
Justice sold his coal mining interests in Bluestone Resources to Mechel in 2009 for $578 million in cash and stock. Justice bought Bluestone Resources in 2015 for $5 million. Justice agreed to pay Caroleng Investments royalty payments as part of the deal to buy back the coal company from Mechel based on a per-ton of coal sold as well as a certain percentage of any future sales.
Caroleng Investments filed suit against Justice after his companies started withholding the royalty payments. Bluestone attorneys argued that the royalty payments were withheld because Caroleng was overpaid. Caroleng argued that its deal with Bluestone prohibited the company from holding back royalty payments.
The Caroleng case is one of many cases where Justice and his companies have been taken to court over millions of dollars owed to vendors from judgements and settlements. In a separate case ongoing in the federal courts in Kentucky, WV MetroNews reported Wednesday attorneys for Justice's companies claim there is no money, income or non-encumbered assets available to pay settlements and judgements.
Justice, in his final term as governor, is seeking the Republican nomination for the U.S. Senate seat held by Sen. Joe Manchin, D-W.Va. While his son Jay and daughter Jill run the day-to-day operations of his businesses since taking office in 2017, Justice's business issues continue to be fodder for his campaign opponents.
Speaking during his weekly administration briefing Wednesday, Justice said the public should not be concerned with the condition of his businesses.
"Jim's neighborhood will be fine," Justice said. "You can worry about it and jump up and down about it and everything else, but really and truly, Jim's house will be fine...you need to quit worrying about Jim's stuff."