FAIRMONT, W.Va. — U.S. Sen. Joe Manchin’s brother has sued the senator and another brother over more than $1.7 million that allegedly was loaned to keep a family business afloat decades ago.
The lawsuit was filed Wednesday by Dr. John Manchin against his brothers, Joe and Roch Manchin, in Marion County Circuit Court.
According to the lawsuit, Joe and Roch Manchin requested the money in the 1980s from their brother “in response to Manchin Carpet Center’s distressed financial condition.”
John Manchin loaned them more than $1.7 million, all of which was provided to the business’ primary creditor, Community Bank and Trust, according to the lawsuit.
Joe and Roch Manchin promised to repay their brother on repeated occasions, most recently in July 2012, according to the lawsuit.
The loan does not appear on Sen. Manchin’s financial disclosure forms, filed with the U.S. Senate. The Senate Ethics Committee requires disclosure of any debt valued at more than $10,000, but there is an exemption for a “personal liability” owed to a close family member, including a brother.
The July 2012 “funds sharing agreement” attached to the lawsuit describes how money from a proposed power plant in Greene County, Pennsylvania, would be split among the three Manchin brothers. The Nemacolin plant was being developed by Wellington Development, a Fairmont-based company.
Under the 2012 agreement, Sen. Manchin would deduct what he put into the project, and then John Manchin would get the first $1 million of profit. Any subsequent profit would be divided among all three brothers for as long as they survive.
The agreement was signed by Joe and Roch Manchin, and sent by Kirtan Mehta, chief counsel to the senator. It was dated July 25, 2012, with a U.S. Senate letterhead.
Jonathan Kott, a spokesman in Manchin’s Senate office, said Friday afternoon that Mehta did the personal work for Manchin at home, after hours. It was a mistake that the agreement was printed on Senate letterhead, Kott said.
“The senator feels it was a mistake, and we’ve notified the Ethics Committee to see if there’s anything we need to do,” Kott said. “They haven’t responded, but we already self-reported it.”
Morgantown lawyer Michael Benninger, who filed the lawsuit on John Manchin’s behalf, did not return multiple phone calls Thursday or Friday. Reached at his clinic in Fairmont on Thursday, John Manchin referred questions about the lawsuit to his attorney,
Since at least the early 2000s, Wellington had been working on a proposal to build a 525-megawatt power plant along the Monongahela River at Nemacolin. According to court records, the facility was being designed to burn a mixture of newly mined coal and coal wastes that would have been recovered from “gob” piles from the former Nemacolin Coal/Buckeye Coal facility. Promoters touted their belief that the project would clean up nearly 3,000 acres of degraded former mining property. Court records say the plant, if built, would have been “the largest waste-coal-fired facility” of this type in the country. A challenge from the Sierra Club and other groups was thrown out and, as recently as December 2012, the company was trying to obtain required Clean Water Act authorization from the U.S. Army Corps of Engineers.
In early February of this year, though, Wellington wrote to the Pennsylvania Department of Environmental Protection to withdraw its state permit. Wellington official Stanley Sears wrote that “present conditions, as witnessed throughout the U.S., make it virtually impossible to finance and construct this kind of facility.” The letter complained about environmental groups that opposed the project and thanked “all of the many citizens, groups and local government agencies that supported this project over the years.”
In his lawsuit, John Manchin also claims that:
| According to the July 2012 agreement, if there was a delay in paying him back, he was entitled to one-third interest in coal reserves and brokerage businesses and other incorporated businesses owned by Joe and Roch Manchin.
| Manchin Brothers, a company formed by the three brothers, was terminated without John Manchin’s knowledge or consent. According to the lawsuit, John Manchin believes its funds, assets and property were transferred to Wholesale Carpet Inc., which Manchin Carpet Center was reorganized into in the early 1990s. John Manchin claims that assets from Manchin Brothers were transferred to Manchin Enterprises — controlled by Joe Manchin and his son, Joseph Manchin IV — and others.
| On numerous occasions, John Manchin’s brothers falsely represented to him that he was one-third owner of Transcom Inc., which was incorporated in 1988. Transcom is now Farmington Resources.
Sen. Manchin owns stock and accounts in Farmington Resources worth between $200,000 and $500,000, according to financial disclosure forms filed in May with the Senate.
Sen. Manchin’s net worth is between $3.8 million and $11.5 million, according to his most recent financial disclosure forms. The wide range is because the forms require only a broad estimate of the value of each asset owned by the senator, not an exact amount.
The lawsuit asks that John Manchin be compensated for what he’s lost and awarded one-third ownership interest in all coal reserves and businesses incorporated, formed and owned by his brothers during the time Manchin Brothers’ and Manchin Carpet Center’s funds, property and assets were being used.
Mary Manchin, mother of the brothers, died in May at age 91. The family is from Marion County.
A Gazette reporter obtained a copy of the lawsuit from the Marion County Courthouse on Friday. The previous day, employees in Marion County Circuit Clerk Rhonda Starn’s office had refused to provide a copy of the lawsuit. Starn told her employees “to transfer all incoming calls regarding this case directly to her,” a clerk in Starn’s office said Thursday morning.
Starn did not return a phone message and did not answer several phone calls throughout Thursday.
Starn’s office has a policy that lawsuits remain private until a defendant is served, according to the clerk. Another clerk in Starn’s office had said Thursday that the lawsuit might not be public for 20 to 30 days.
The Gazette notified officials with the West Virginia Supreme Court about the county’s policy. Officials with the Supreme Court, which oversees all circuit courts in West Virginia, contacted Starn’s office.
At about 4:45 p.m., Robin Tucker, Starn’s deputy clerk, called the Gazette and said the clerk’s office had closed at 4:30 p.m. and that a reporter could obtain a copy of the lawsuit at 8:30 a.m. Friday for $1 a page. The amount must be paid by cash or money order before a copy is provided, Tucker said. Circuit clerk offices throughout the state usually provide information and, if they charge anything, send a bill.
“Honey, we don’t bill. We have no way to bill,” Tucker said. “All of the information is in our system. You’re welcome to look at it in the morning.”
Staff writers David Gutman and Ken Ward Jr. contributed to this report.
Reach Kate White at kate.white@wvgazette.com, 304-348-1723 or follow @KateLWhite on Twitter.
