Judge says Justice business executives will be fined until they provide more information about the financial web

Two employees of Gov. Jim Justice’s large family business have been found in civil contempt by a federal judge who found they withheld financial information in a long-running case.

Jay Justice, the governor’s son, and Stephen Ball, general counsel for several businesses owned by the Justice family, were ordered to pay sanctions of $250 a day until the court finds them fully compliant and provides financial details. U.S. District Judge Gregory Van Tatenhove entered his order Friday in Kentucky, saying the officers “must be held accountable. There will be no more chasing after the wind.”

Judge Van Tatenhove’s order reserved the right to impose even greater sanctions if officers failed to comply.

Governor Justice, who has a 60 percent controlling stake in his family’s sprawling Bluestone Resources, according to the company’s organizational chart, was not named in the order. Disclosures filed with the state Ethics Commission by Governor Justice show financial interests in dozens of companies, including the one at the center of this case, Kentucky Fuel. The court order references the governor’s past position as a director of the combined group that oversees Kentucky Fuel.

Justice, a Republican candidate for U.S. Senate, has repeatedly objected to media questions about financial conflicts. “If it gets to the point where things are totally absurd, totally ridiculous, fake news, and it goes on and …

The federal sanctions order marked the 744th filing in a dispute involving Justice-owned Kentucky Fuel, which has been battling Fivemile Energy and its associate New London Tobacco Market over a mineral rights lease dispute since 2012. Fivemile was awarded $18 million in federal court in Kentucky, but the claim has been held up by years of delays.

Judge Van Tatenhove addressed this history from the beginning of his order.

“Since the beginning of this long-running case, Defendants have engaged in a campaign of delay. Their perpetual reluctance to cooperate has resulted in ever-increasing warnings, penalties, and tax liabilities in the form of attorneys’ fees and expenses,” he wrote.

Jay Justice is listed as Kentucky Fuel’s chairman and Ball as vice chairman in the corporate lawsuit with the West Virginia Secretary of State’s Office. The governor’s daughter, Jill Justice, is listed as a director, but the court has so far found that she has minimal involvement or knowledge in Kentucky Fuel’s management.

Fivemile’s attorneys alleged that Justice family agents “fraudulently transferred assets to ensure that the Defendant Entities would ultimately be judgment-proof.” New London and Fivemile sought post-trial discovery focused on collections, potential fraudulent transfers, and evidence that corporate entities such as Kentucky Fuel are the Justice family’s alter egos.

Lawyers for the Justice companies objected to the discovery requests on several grounds. They were trying to restrict the amount of discovery they would have to produce about the Justice companies. And they argued that Justice’s extensive holdings created an undue burden of discovery production — and that many of the Justice companies are not relevant to the case.

U.S. Magistrate Judge Hanly Ingram of Kentucky disagreed and ruled against the Judges. In a show cause order two years ago, Ingram concluded that “Stephen Ball and Jay Justice have failed to meet their burden of proving failure to comply with the Discovery Order.”

“Defendants have not categorically addressed in detail why they may have been unable to comply with the various components of the Discovery Order. Furthermore, they have not pointed to any factor beyond their control that prevented compliance. In other words, their failure to comply was self-induced.”

Judge Van Tatenhove, in his most recent case, was reviewing Ingram’s findings.

“In this particular case, defendants have continually evaded and hindered the post-trial discovery process. In May 2021, Judge Ingram ordered them to answer interrogatories and turn over relevant documents. They have refused,” Van Tatenhove wrote.

The judge continued, “The purpose of post-trial discovery was to uncover facts that would support an alter ego discovery. Defendants then engaged in abusive practices for the sole purpose of frustrating plaintiffs’ ability to extract discovery.”

Van Tatenhove concluded that the daily penalty imposed on Jay Justice and Stephen Ball is appropriate until they fully comply with the discovery order as ordered by Magistrate Judge Ingram.

“The Court reserves jurisdiction to consider any other additional relief that may be appropriate in the event that the Defendants fail to comply with Judge Ingram’s discovery order, or in the event that Messrs. Justice and Ball fail to comply with this Court’s order.”