Who Runs Freedom Industries? West Virginia's Chemical Spill Mystery

Before the lawsuits and the retreat into federal bankruptcy court, before the change in ownership in a veiled roll-up by an out-of-state coal baron, before the Justice Departments environmental-crimes investigation, the presidentially declared emergency, and the National Guards arrivalnine years before all of thatthe co-founder of Freedom Industries, the company at the center of the Jan. 9 chemical spill that cut off tap water for 300,000 West Virginians, was convicted of siphoning payroll tax withholdings to splurge on sports cars, a private plane, and real estate in the Bahamas. And 18 years before that, in 1987, before he started Freedom Industries, Carl Kennedy II was convicted of conspiring to sell cocaine in a scandal that brought down the mayor of Charleston.

Little known, even locally, Freedom was born and operated in a felonious milieu populated by old friends who seemed better suited to bartending at the Charleston-area saloons they also owned. These people who were running Freedom Industries werent the sort youd put in charge of something like chemical storage that could affect the whole community, Danny Jones, Charlestons current mayor, says. Who are these guys, anyway?

Good question. Kennedy kept the books for bars and restaurants, including a rib house Mayor Jones used to own, although he hadnt gotten to know him well. He was pleasant enough, Jones says. Until the spill, the mayor had no idea his former accountant had been enmeshed with Freedom. That really seems troubling, Jones says, especially with the cocaine stuff in his history.

Kennedys main partner was a college buddy named Dennis Farrell, who had some technical background and took over Freedom after Kennedy went to prison in 2006. By Farrells own account, the company, founded in 1992, nearly ran aground on his watch. Only a rescue in 2009 funded by the federal antirecession stimulus program kept the company going.

The third member of the companys leadership triad, Gary Southern, has served as Freedoms public face since the spill. He lives in Marco Island, Fla., and says hed been advising the company for several years before becoming full-time president in 2013. Not blessed with a talent for public expression, Southern didnt mention in the first days after the leak of 10,000 gallons of coal-processing compounds that Freedom had been acquired, only 10 days earlier, by Cliff Forrest.

A different sort of character from Kennedy, Farrell, and Southern, Forrest founded and heads Rosebud Mining, the third-largest coal producer in Pennsylvania and the 21st-largest in the country. Hes a prominent figure in his industry and an opponent of what he calls the Obama administrations war on coal. Why he wanted Freedoms decrepit facilities for blending and distributing chemicals remains a mystery. Publicly, Forrest hasnt said a word. His connection to Freedom wasnt confirmed until Jan. 17, when his lawyers put the company into bankruptcy. The Chapter 11 filing in Charleston required disclosure of a financial paper trail that led to Forrests coal company headquarters near Pittsburgh via another entity called Chemstream Holdings.

So while the spill revealed once again that porous legislation and murky assumptions about industry self-policing hinder oversight of dangerous chemicals, it also highlighted a peculiar and deeply troubling element of American commerce, one where holding companies and roll-ups make it difficult to determine whos accountable. Kennedy grew up in Montgomery, W. Va., a small city on the Kanawha River. He went to college there at West Virginia University Institute of Technology. It was later, in Charleston, that he attained a measure of notoriety.

West Virginias rugged mountains and forested hollows are home to struggling coal-mining communities. Locals call the Kanawha region Chemical Valley because of the network of foul-smelling refining plants spread across it. The state ranks among the nations poorest. Charleston, with its office towers and expensive eateries, is a place apart: Home to a social and business elite of lawyers, lobbyists, and coal executives, the capital enjoys a wealth and lan alien to the states rural and industrial precincts.

In the mid-1980s, Kennedy moved easily in a narcotic-fueled night scene associated with Charlestons Republican mayor at the time, James Mad Dog Roark. Targeted by a federal investigation, Roark pleaded guilty to cocaine possession in 1987, resigned as mayor, and went to jail. The same year, Kennedy, then 30 years old, was charged with distributing the not-trivial amount of 10 ounces to 12 ounces of coke. In a plea deal, he admitted to one distribution count and was sentenced to five years probation. In all, federal prosecutors notched some 30 convictions.

A forgiving town, Charleston didnt ostracize Kennedy. Despite his criminal record, he and Farrell became prolific business partners. Farrell had earned a masters degree from West Virginia University and for a time was employed by a company called Sherex Chemical. Together they invested in commercial real estate and a saloon in Montgomery called the Bank Bar & Grill. In a laudatory 2002 article, the Charleston Gazette marveled at the pairs far-flung array of business ventures, which included a manufacturer of a synthetic fuel additive, a trucking company, and a plant in the town of Nitro, W. Va., that mixed chemicals. Kennedys portfolio also contained Freedom Industries, which he incorporated in 1992, according to filings with the West Virginia secretary of state. (Kennedy, Farrell, and lawyers who have represented them over the years all failed to respond to telephone and e-mail messages.)

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Who Runs Freedom Industries? West Virginia's Chemical Spill Mystery