Former Blackjewel CEO says he's not a crook

POSTED: July 8, 2019

GILLETTE — Partially prompted by threats from locked-out Blackjewel LLC coal miners and others, former company President and CEO Jeffrey Hoops Sr. maintains he’s not a crook, did not steal from company accounts and took extraordinary efforts to make sure miners were paid.

In a Fourth of July statement addressed to “All Blackjewel Employees,” Hoops said that he realizes there are 1,700 employees not working and wondering if they have a future at any of the 32 Blackjewel properties that are in limbo after the company filed for Chapter 11 bankruptcy reorganization Monday, then shut down mines when emergency financing fell through. That includes 580 people employed at the company’s largest operations, the Belle Ayr and Eagle Butte mines in Campbell County.

He said that “no one is hurting more than me” over the messy way the bankruptcy has unfolded, including the denial of operating financing, numerous emergency hearings and a stern rebuke from the bankruptcy judge about reports of workers not being paid.

Hoops said in the statement that “it is time to set a little of the record straight as it is clear each of you have no idea what has transpired.”

That misinformation “is leading to threats being made against me, my family and anyone and anything associated with me,” he wrote.

In a follow-up text to the News Record, Hoops confirmed he wrote the statement and that many of those threats have been coming from Wyoming, adding that it’s “disappointing people in Wyoming are acting the way they are as I paid a private plane at a cost of $16,000 out of my pocket to deliver cashiers checks to employees on Saturday.”

What’s disappointing to the nearly 600 Blackjewel employees in Campbell County is the defensive tone of Hoops’ statement, said one worker who asked not to be identified out of concern for being singled out in case employees are called back to the mines.

“I’d like to know how being a multimillionaire is hard on him?” he said. “I would think a good CEO and president would just do that and not complain about it if that’s what needed to be done. He has the hardest time? Walk in my shoes, where we’re wondering how we’re going to feed our kids. We’re here because he drove us here.”

While he had criticism for Hoops and Blackjewel’s senior leadership, the worker said he agrees that making threats is not good form and should stop.

“I don’t believe violence is ever the answer,” he said. “I understand being frustrated. I’m frustrated. Everybody is. But I don’t think making threats is worth it at all. Hoops is a really good talker, but all it is is smoke and mirrors.”

Checking into paychecks

The statement was released shortly before the bankruptcy judge held a short Fourth of July hearing out of concern that company employees were having problems with their final paychecks, which were due last Friday.

Judge Frank W. Volk of the U.S. Bankruptcy Court for the Southern District of West Virginia said he wanted to make it clear that getting employees the money they’re owed is a top priority.

“I know this may be interfering with the holiday plans for some of you, but I’m sure you’d agree it’s minimal (compared) to what these employees are dealing with,” Volk said.

He said he convened the hearing when he learned that some Blackjewel LLC employees have been presenting paychecks to their banks that either were not accepted, having holds placed on them or being dishonored.

It soon became clear there are two main issues with the 1,700 company employees who have been locked out of Blackjewel’s 32 coal mining operations. Those include hundreds of employees at the Eagle Butte and Belle Ayr mines in Campbell County, where workers didn’t have their pay electronically deposited into their accounts as usual Friday. Instead, cashier’s checks were flown in and distributed Sunday.

While some local banks accepted the cashier’s checks right away, others were skeptical to suddenly see so many out-of-state checks hitting at once and flagged them as suspicious, explained a Blackjewel attorney. He said the problem now is only with two banks.

The company’s eastern employees are normally paid by check, including Friday. But when Blackjewel LLC filed for Chapter 11 bankruptcy reorganization Monday morning, then unexpectedly had $20 million in emergency financing pulled, it meant there wasn’t money to cover those checks and the paychecks of those workers “can’t be satisfied yet,” the attorney said.

For the Wyoming operations, the cashier’s checks were drawn on United Bank of West Virginia and Volk ordered Blackjewel to clear up any issues left with having those checks honored.

“The urgency of this matter for the court is equal to, at a minimum, I consider this matter to be of the highest priority,” Volk said.

Along with issues of having their most recent paychecks honored, Blackjewel employees also have questioned where their recent 401(k) and health savings account contributions have gone.

Employees have reported, and court documents confirm, the company has not deposited several weeks’ worth of employee contributions to those accounts that were deducted from their pay. That comes to about $1.2 million.

Hoops denied in his statement accusations he or the company fraudulently managed that money.

“There has not been one cent taken out of the mining company,” he wrote. “The exact opposite. I have loaned more money to try to get this company through these difficult times.”

Along with the bankruptcy and uncertainty whether Blackjewel can manage a Chapter 11 reorganization are larger questions about how the Wyoming Department of Environmental Quality can make sure nearly $250 million in reclamation obligations are met without the state picking up the tab, said Powder River Basin Resource Council Chairwoman Joyce Evans in an open letter to Gov. Mark Gordon.

“The devastating impact to coal miners and the community of Gillette with the abandonment and hollowing out of the Belle Ayr and Eagle Butte coal mines by an unscrupulous operator must be addressed,” she wrote.

The Powder River Basin Resource Council, a Sheridan-based advocacy group, has been a vocal and legal opponent of Blackjewel since it took over the Wyoming mines from Contura Coal West, itself a spinoff from the 2015 bankruptcy of Alpha Natural Resources.

A recent decision to transfer Contura’s coal permits to Blackjewel was postponed because of a Resource Council complaint. The basis of the complaint was that Blackjewel’s shaky record operating in other states made the company an unfit partner for Wyoming.

“The state of Wyoming knew that Blackjewel’s CEO, Jeff Hoops, has one of the worst safety and environmental records among coal mine operators,” Evans wrote. “Unfortunately, instead of rejecting Blackjewel’s license to mine, DEQ granted the license to mine and then proposed transferring the coal permits from Contura to Blackjewel.

“Is this the kind of company Wyoming should issue permits to, to do business in our communities? Blackjewel owes taxes at both the local, state and federal levels and has probably not paid their Black Lung or Abandoned Mine Land payments.”

Monday’s bankruptcy filing came three days after Blackjewel was to make another $1 million payment on delinquent ad valorem taxes owed to Campbell County. The company had already made $5 million in weekly installments through May to pay down the $17 million it owed for 2017 coal production. It was to continue with $2 million monthly payments through March with a balloon payment in April on a plan that would have brought Blackjewel current with its 2017 and 2018 taxes. Including estimated taxes for production so far in 2019, the company could leave as much as $37 million unpaid.

Still pursuing bankruptcy

In the meantime, Blackjewel secured $5 million in emergency financing Wednesday to bring back a few employees to provide security and maintenance at its closed mines. A condition of the funding was the resignation Hoops and his family members.

A new chief restructuring officer has been named, Dave Beckman, and the company at present continues to work to find financing to reopen its mines and operate through a Chapter 11 reorganization.

For now, employees have no choice but to begin searching for new jobs or careers while waiting to see if they’ll be called back to the mines. For the Campbell County worker and his family, that includes he and his wife putting on a brave face for their young children.

“All they know is mommy and daddy are upset and they don’t know why,” he said.