As they began their case last week against former Massey CEO Don Blankenship, federal prosecutors made it clear that they want jurors to hear a lot about money — Don Blankenship’s money.
Trial started off with expected testimony to explain coal mining to the jury, and with the testimony of a former Upper Big Branch miner who described rampant safety hazards in the Raleigh County mine, where 29 workers died in an April 2010 explosion. But with its opening statement and especially by playing jurors recordings of telephone calls in which Blankenship discusses his “personal wealth,” prosecutors hope to convince jurors Blankenhip’s obsession with coal production and corporate profits drove him to push Massey to ignore federal safety rules.
“The motive for all this was simple: Money,” Assistant U.S. Attorney Steve Ruby said in his opening argument on Wednesday.
Defense lawyers fought hard to keep jurors from hearing about Blankenship’s pay, stock options and personal fortune. They filed a pre-trial motion to keep such references out of the case, and argued a last-minute motion on Thursday afternoon trying again to keep jurors from hearing Blankenship’s own voice talking about his money.
Details of U.S. District Judge Irene Berger’s ruling on the pre-trial motion aren’t clear, because the judge made that ruling during a closed-door court session Tuesday night. But on Friday, the judge ruled in open court to allow most of the recordings prosecutors wanted to be admitted into evidence.
And then Assistant U.S. Attorney Greg McVey was able to time his questioning of Blankenship’s former secretary so that the last thing jurors heard before the three-day weekend was Blankenship complaining that the $12 million Massey’s board wanted to pay him wasn’t enough and that he wanted a bigger salary, not just more stock options.
“Finally, I said I can’t go to the grocery store and buy groceries with options,” Blankenship said on one of the phone calls jurors heard.
Blankenship faces three felony counts alleging that he conspired to violate mine safety standards and thwart government inspectors to cover up the resulting hazards to workers. He also is charged with making false statements to securities regulators and with securities fraud. Those charges allege that Blankenship issued false public statements touting Massey’s safety practices to try to stop company stock — and his personal fortune — from plummeting after the Upper Big Branch Mine disaster.
The false statement and securities fraud charges — which account for 25 years of the 30-year maximum sentence Blankenship faces if convicted — center on statements made to shareholders and in a press release in the days after the Upper Big Branch explosion. At the time, media coverage across the country was focused on Massey’s long-troubled safety record, highlighting previous fatal accidents and long lists of U.S. Mine Safety and Health Administration violations at the company’s mines.
Within two days, Massey’s stock price had dropped by nearly 17 percent, and Blankenship’s personal net worth had dropped by $3 million, according to the indictment against him.
Ruby told jurors in his opening statement that they would hear evidence that investors “were focused after the explosion on whether there had been any intentional wrongdoing by the company” and that after word emerged of a criminal investigation, investors “sold off so much Massey stock that the value of the company dropped by more than $300 million in a single day.”
In the public statements targeted by prosecutors in their indictment of Blankenship, Massey said “we do not condone any violation of MSHA regulations” and “we strive to be in compliance with all regulations at all times.”
Bill Taylor, Blankenship’s lead defense lawyer, told jurors that Blankenship didn’t write those statements, or sign them, or send them out to stockholders and the media.
“I don’t want to sound too much like a lawyer, but you should ask yourself whether it’s really fair to charge someone with making a false statement when somebody else made that statement,” Taylor said in his opening statement.
But in testimony to the grand jury that initially indicted Blankenship, U.S. Department of Labor investigator Jeffrey Carter said that government agents determined that Blankenship had reviewed, edited and approved the statements. Two individuals that were involved in reviewing the statements with Blankenship — former Massey chief administrative officer John Poma and then-Massey public relations agent Karen Hanretty — were on a list of potential witnesses in the case that Berger read to jurors last week.
“They wrote a statement that responded to the growing public criticism of the company’s safety violations,” Ruby told jurors during opening statements. “The defendant personally reviewed it. He personally edited it. When it was ready, he gave it to Massey’s chief administrative officer to file.”
Ruby told jurors the statements were false, because “they didn’t mention the system to cover up violations before inspectors got to the mine or to redirect fresh air to the part of the mine where an inspector was going so it would look like the law was being followed, or to fake the test of how much coal dust miners were breathing.
“They didn’t say that most of the safety violations that were cited at UBB could have been prevented,” Ruby said.
Taylor told jurors that, though “it’s no secret that Don Blankenship is a wealthy man” or that he “was paid millions of dollars” as CEO of the company, the case shouldn’t be about those things.
“Are we here because he is wealthy and because he demanded production at the coal mine and because he was the CEO of Massey, or are we here because the evidence proves beyond a reasonable doubt that he committed a crime?” Taylor said. “The trial of Don Blankenship is not about whether he was easy to get along with or whether he was rude and insulting. I’m prepared to tell you that he was.”
Taylor added, “Can you imagine what happens to coal companies when the CEO does not push mine operators to produce coal? Can you imagine what happens when it costs more to mine the coal than you can sell it for? If the CEO is not responsible for cost, who is?”
Reach Ken Ward Jr. at email@example.com, 304-348-1702 or follow @kenwardjr on Twitter.