West Virginia government: bank cheated on family over loan guarantee
CHARLESTON, Va. (AP) – In a new court case, West Virginia Governor Jim Justice accused a failing UK bank of fraudulently causing him to personally guarantee $ 700 million in loans taken out by his companies.
In the amended complaint filed on Friday, the Justice family and the coal companies claim that Greensill Capital UK “has carried out continuous and very profitable fraud”.
Justice told reporters on Tuesday that the loans were “a burden on our family beyond belief.” Justice’s Bluestone Resources Inc., which is involved in the mining of metallurgical coal used to make steel, sued Greensill in March in federal court in New York.
The business concerns of the Republican governor, who Forbes recently pulled from his billionaire list due to growing 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 was personally responsible for $ 368 million at Virginia-based Carter Bank & Trust.
And Justice companies face several other problems, including penalties totaling $ 3.2 million from the federal government and lawsuits over allegations of non-delivery of coal by its companies.
The latest filing in the case against Greensill in the US District Court in New York shows that the governor and his wife, Cathy Justice, and son Jay Justice have personally guaranteed payment for Bluestone’s loans. The complaint alleges that the London-based bank misled them by hiding its own financial risk.
Greensill, a London-based supply chain finance company, filed for bankruptcy in March over allegations of fraud. The Financial Conduct Authority, the UK’s financial regulator, announced a formal investigation into Greensill’s collapse after receiving allegations it said were “potentially criminal in nature.”
Greensill began lending to Bluestone in 2018. The company sought funding after a period of decline under the ownership of Russian mining and metallurgical company Mechel, according to court documents.
“When the Russians had Bluestone, what happened to Bluestone? It completely came to naught, ”Justice said at a press conference on Tuesday. The company had unpaid vendor obligations and tax debts when the Justice family took over it in 2015.
Greensill’s loan was supposed to help rebuild the business, but bank officials in November 2020 began asking for early repayment of the loan and additional fees, according to the complaint.
The Justice family say they only personally signed the loans with the understanding that repayments would start no earlier than 2023, when Bluestone would have had years to rebuild and generate cash flow. Justice and its companies are seeking damages from Greensill in their lawsuit.
At his Tuesday press conference, Justice briefly touched on his other loan from Carter Bank in Virginia, saying he still personally guarantees loans for his businesses.
“I personally guaranteed the loans,” he said. “The loans were always personally guaranteed when they moved from Carter Bank through Greensill to other banks along the way. It has been for a long, long, long time.