West Virginia gov: Bank deceived family for loan guarantee
CHARLESTON, W.Va. (AP) — In a new court filing, West Virginia Gov. Jim Justice blamed a bankrupt U.K. bank for fraudulently inducing him into personally guaranteeing $700 million in loans that were taken out by his companies.
In the amended complaint filed Friday, Justice’s family and coal companies claim that Greensill Capital U.K. “perpetrated a continuous and highly profitable fraud.”
Justice told reporters Tuesday that the loans are “a burden on our family beyond belief.” Justice’s Bluestone Resources Inc., which is involved in the business of mining metallurgical coal used for steel making, sued Greensill in March in federal court in New York.
The business troubles of the Republican governor, who Forbes recently took off its list of billionaires because of mounting debt, have been publicly aired over the past week. In addition to the $700 million owed to Greensill, Justice revealed in a separate lawsuit that he is personally on the hook for $368 million to Virginia-based Carter Bank & Trust.
The latest filing in the case against Greensill in U.S. District Court in New York shows that the governor and his wife, Cathy Justice, and son Jay Justice personally guaranteed payment on the loans for Bluestone. The complaint alleges that the London-based bank deceived them into signing on by hiding its own financial risk.
Greensill, a supply chain finance firm based in London, went under in March over allegations of fraud. The Financial Conduct Authority, Britain’s financial regulatory body, has announced a formal investigation into Greensill’s collapse after receiving allegations that it said were “potentially criminal in nature.”
Greensill began lending to Bluestone in 2018. The company sought financing after a period of decline under the ownership of Russian mining and metal company Mechel, according to court documents.
“When the Russians had Bluestone, what happened to Bluestone? It absolutely just melted down to nothing,” Justice said at a news conference Tuesday. The company had outstanding obligations to vendors and tax liabilities when the Justice family took it back over in 2015.
The lending from Greensill was supposed to help rebuild the company, but bank officials by November 2020 began seeking early repayment of the loan and additional fees, according to the complaint.
The Justice family says it only personally signed onto the loans with the understanding that repayments would begin at the earliest in 2023, at which point Bluestone would have had years to rebuild and generate cash flow. Justice and his companies are seeking damages from Greensill in their suit.
At his Tuesday news conference, Justice briefly addressed his other loan from Carter Bank in Virginia by saying he always personally guaranteed the loans for his companies.
“I did personally guarantee the loans,” he said. “The loans have always been personally guaranteed when they flowed from Carter Bank through Greensill to other banks along the way. That’s been the case for a very, very, very long time.”