Federal Government Was Investigating Blackjewel Prior To Bankruptcy

Prior to bankruptcy, the federal government was investigating Blackjewel, LLC for possible fraud. The U.S Attorney's Office was concerned the coal company may use a reorganization to get out of debts owed to the government. In other words, that it was violating the False Claims Act. Court filings show Blackjewel owes several federal agencies upwards of $50 million.

A filing from Michael B. Stuart, the U.S. Attorney for the Southern District of West Virginia, wrote the United States had issued a subpoena to Blackjewel related to the False Claims Act prior to reorganization on July 1.

Josh Macey, visiting law professor at Cornell University, said the government is unlikely to be able to recover the debt. That's because Blackjewel sold its assets to Eagle Specialty Materials, LLC (ESM) free and clear of any debt obligations.

Filing 1189, though, gives the United States some leeway. It gives them time and flexibility to prosecute the possible False Claims Act violations in the case that Blackjewel does end up mining in some small way down the line. There is still a chance the government could go after ESM, as well, but Macey said that's unlikely to work.

Read more: https://www.wyomingpublicmedia.org/post/federal-government-was-investigating-blackjewel-prior-bankruptcy