Criminal charges filed against a former top executive of Freedom Industries have raised new questions about whether officials overseeing Freedoms bankruptcy proceeding are looking for every source of money to fund the cleanup of the companys Elk River facility and compensate victims of the Jan. 9 chemical leak. <\/p>\n
Federal prosecutors allege that former Freedom President Gary Southern lied about his role at the company to protect his personal wealth from the bankruptcy court and from legal actions pursuing damages from hundreds of thousands of Kanawha Valley residents whose drinking water was contaminated by Freedoms leak of MCHM and other chemicals. <\/p>\n
But court records and interviews showed again this week that officials managing the bankruptcy proceeding have yet to even begin an investigation of the actions or the finances of any of the former Freedom officers to see if money could be recouped for site remediation, victim compensation or creditor payments. <\/p>\n
It seems as if no one was looking under the rocks, said Charleston lawyer Stuart Calwell. <\/p>\n
Calwells firm named Southern and another Freedom official, Dennis Farrell, in a lawsuit over the chemical leak, alleging that they are personally responsible, at least partly, for any damages suffered by victims of the incident because of their roles in directing operations at Freedoms Etowah Terminal, just up river from West Virginia American Waters regional drinking water intake in the Elk River. <\/p>\n
In the proceeding before U.S. Bankruptcy Judge Ronald Pearson, separate legal actions could be undertaken by the bankrupt company to produce funds to be distributed to creditors owed money by Freedom. Committees of creditors in bankruptcy court have broad power to perform investigations looking for such potential legal action. <\/p>\n
But at Pearsons urging, such investigations in the Freedom bankruptcy have basically been put on hold until Freedom completes the cleanup of contamination at its Elk River facility. <\/p>\n
Ronald Gold, a lawyer for the creditor committee in the Freedom bankruptcy, confirmed Tuesday that those investigations still have not commenced, but he said that, other than that, given whats going on, I would rather not comment publicly. <\/p>\n
Inaction by the creditor committee is briefly touched on, though, in an affidavit by FBI Special Agent Jim Lafferty that was filed in support of a federal criminal complaint charging Southern with bankruptcy fraud, lying to the bankruptcy court and committing wire fraud by filing false documents with that court. <\/p>\n
Federal authorities allege that Southern repeatedly misled the court and other government officials by saying he did not play a significant role in running the Freedom facility prior to December 2013. In his affidavit, Lafferty said Southern was actually the chief operating officer of the company starting in May 2009 and served on its board of directors from March 2010 to October 2013, before becoming president in December 2013. <\/p>\n
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Criminal charges raise questions about funds in Freedom bankruptcy<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Criminal charges filed against a former top executive of Freedom Industries have raised new questions about whether officials overseeing Freedoms bankruptcy proceeding are looking for every source of money to fund the cleanup of the companys Elk River facility and compensate victims of the Jan. 9 chemical leak. Federal prosecutors allege that former Freedom President Gary Southern lied about his role at the company to protect his personal wealth from the bankruptcy court and from legal actions pursuing damages from hundreds of thousands of Kanawha Valley residents whose drinking water was contaminated by Freedoms leak of MCHM and other chemicals Continue reading