Blackjewel Coal Alleges 'Intentional, Willful' Self-Dealing By Former CEO
Allegations of financial misconduct by Blackjewel’s former CEO have surrounded the company’s bankruptcy case since it began last July. But a December 10 court filing lays out specific allegations against ousted CEO Jeff Hoops: webs of shell companies and secret royalty schemes that allegedly enriched Hoops at the expense of coal miners, the environment, and his companies.
The filing, by Blackjewel and related companies, instigates a civil lawsuit against Hoops, a major escalation in a protracted case with wide-ranging implications for the once-mighty coal industry overall.
The bankruptcy sparked a protest by out-of-work miners, who since the beginning blamed Hoops for their misfortune. A graphic often seen at miners’ months-long coal-train blockade featured a feisty Calvin, of the Bill Watterson comic “Calvin and Hobbes,” urinating on their former boss.
The December 10 filing lays out in the clearest detail yet the manner in which Hoops allegedly defrauded his fossil fuel empire. It alleges that Hoops arranged for a Blackjewel-affiliated company to grant royalties to companies owned by him and members of his family. Hoops also arranged for grazing rights associated with Wyoming coal mines to benefit him, rather than Blackjewel, according to the filing. Triple H, the Hoops-affiliated company that received the grazing rights, allegedly expected to earn $251,000 from those permits in 2019 alone.
The total amount of money Hoops earned from these alleged misdeeds is unknown, but is likely to be in the tens of millions. Funds recovered from Hoops through the litigation would be used to repay creditors in the Blackjewel bankruptcy.
Hoops did not respond to a request for comment.
“This is a pretty big deal,” said S&P Global Market Intelligence senior mining and energy reporter Taylor Kuykendall. “It’s not something that we’ll end up seeing having a big change in the outcome of how the bankruptcy will go, it isn’t going to make Blackjewel magically come back or change a lot about how that affects operations or reclamations. But it is a big deal for Hoops, obviously.”
Hoops began his mining career with Consol Energy at just 17, according to a 2016 profile by Marshall University when it named Hoops a member of its Business Hall of Fame.
Hoops worked his way up in the industry, eventually becoming vice president of operations of Arch Coal in 1992. From there, he founded an array of companies, including Blackjewel, Triple H Real Estate, Lexington Coal, Construction and Reclamation Services, and Active Medical. The Hoops Family Foundation’s charitable funding includes a Christian orphanage in India and student dorm at Appalachian Bible College in Beckley, West Virginia.
Hoops also recently went into the resort hotel business. Despite the ongoing allegations of wrongdoing in the Blackjewel bankruptcy, construction is ongoing at the Grand Patrician resort in West Virginia, named for Hoops’ wife, Patricia.
Hoops’ alleged self-dealing, which the plaintiffs in the civil suit call “intentional, willful, and wanton,” belies the posture of beleaguered apologia the former executive has held since the beginning. In an August, 2019 phone call with the ReSource, Hoops said he was “really sorry that it’s reached this point,” and told his laid-off workers, many struggling to keep the lights on, “No one is hurting more than me.”
Bankruptcies like Blackjewel’s are “becoming a little more common in the Appalachian industry, because the really big, well-capitalized players aren't in the space anymore in Appalachia,” said S&P’s Kuykendall. “With these smaller companies [like Blackjewel], there's a question about whether they have the financial wherewithal to handle these operations anyway.”
Hoops recently petitioned the court to change the bankruptcy from a Chapter 11 restructuring into a Chapter 7 liquidation, spawning a flurry of objections from federal agencies including the Department of Labor and the Internal Revenue Service, and advocates like Whitesburg, Kentucky’s Appalachian Citizens’ Law Center.
Of Blackjewel’s pre-bankruptcy holdings, 45 mining permits have not been sold and 187 have not been transferred to their new owners, leaving their eventual reclamation, which the Kentucky Energy and Environment Cabinet expects to exceed the available pot of money by tens of millions of dollars, in doubt.