Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 1 of 41 PageID 2270

 

UNITED STATES DISTRICT COURT FOR THE 

SOUTHERN DISTRICT OF WEST VIRGINIA

CHARLESTON GRAND JURY 2014
MARCH 10, 2015 SESSION

 

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UNITED STATES OF AMERICA ?213 

Sntithern  

    

 

 

 

v. CRIMINAL NO. 
30 use. 820(d)
18 use. 3.71
18 use. 1001
is use. 2
15 use. 78ff
r7 C.F.R. 240.10h-5

 

DONALD L. BLANKENSHIP

SUPERSEDING

1. Beginning no tater than January I, 2008 and continuing through April 9, 2010 (the
?Indictment Period?)? defendant DONALD L. BLANKENSHIP the Chief
Executive Of?cer and Chairman of the Board of Directors O't?coal producer Massey
Energy Company (?Massey?), conspired to commit and. cause routine Vioiations ofmandatcry
federal mine safety standards at M'asgey?s Upper Big i3raneh~$euth mine 'I?hmughetit
the Indictment Period, managed 88, the coal from which was
criticei to Masseye ?nancial performance. BLANKENSHIP knew that BB was committing:
hundreds of satietydaw Vielations every year and that he had the ability to prevent meet of the

Vieiatiens that UBB was committing. Yet he fostered and participated in an understanding that

 

Aiiegatinns herein are made with reference. to the indictment Period unless etherwise noted.

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perpetuated practice of routine safety Violations, in. order to produce more coal, avoid the
costs of following safety laws, and make more money.

2. Throughout the Indictment Period, BLANKENSHIP also conspired to defraud the United
States by impeding the federal Mine Safety and Health Administration in carrying
out its duties at U88.

3. Following a major, fatal explosion at UBB on April 5, 2010, BLANKENSHIP made, and
caused to he made, materially false and misleading statements and representations, and omitted
and caused to be omitted statements of material facts, regarding his and Massey?s practice of
willful violations of safety laws at that mine. These included materially false statements and
representations made to the United States Securities and Exchange Commission and
materially false statements and. representations, and. materially misleading omissions, made in
connection with the purchase and sale of Massey stock.

Background

4. At all relevant times, Massey was a corporation engaged in the business ofmining and
selling coal, including at numerous mines in the Southern District of West Virginia, where
Massey maintained a regional headquarters. UBB was a coal mine that Massey, through various
subsidiaries, wholly owned and controlled, and was located in and around Montcoal, Raleigh
County, West Virginia, within the Southern District of West Virginia. UBB and all Massey?s
other mines and mining?related facilities produced products that entered commerce and had
operations and products that affected commerce, rendering them subject to Title 30, United
States Code, Chapter 22, concerning mine safety and health, and to rules and regulations
promulgated thereunder, including mandatory federal mine. safety and health standards codified

in Title 30, Code of Federal Regulations, Chapter l. UBB was subject to regular federal mine

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safety inspections conducted by an agency of the United States Department of Labor
(IDOL), which was part of the executive branch of the government of the United States. BB was
also subject to monetary penalties imposed by MS HA for Violations ofmandatory federal mine
safety and health standards that federal mine. safety inspectors discovered during inspections of
U88.

5. At all relevant times. Massey?s Class A Common Stock was registered with the SEC and
was publicly traded on the New York Stock Exchange. At all relevant times. in order to sell
securities to members of the public and maintain public trading of its securities in the United
States: Massey was required to comply with. provisions of the federal securities laws, including
the Securities Exchange Act of 1934. and rules and. regulations promulgated thereunder.

6. At all relevant times? the SEC was an agency of the executive branch of the government
ofthe United States.

7. At all relevant times. as CEO ofMassey and. Chairman of Massey?s
Board <.>fDirectors, was principally and ultimately responsible for the management of Massey?s
business. At all relevant times, the Restated Bylaws of Massey Energy Company provided that
BLANKENSIWHP, as CEO, had general supervisioni direction, and control ofthe officers,
employees, business, and affairs ofMassey, including the UBB mine.

8. During the Indictment Period, UBB was cited approximately 835 times for Violations of
mandatory federal mine safety and health. standards. This was one of the highest levels of safety
law Violations of any Massey mine. Approximately 319 of these violations were in an especially
serious category of Violations: those that: could significantly and substantially contribute to the
cause and. effect ofa safety or health hazard. Approximately 283 of safety?law violations

during the lndictment Period were Violations of the laws on mine ventilatiom which operate to

DJ

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prevent explosions and tires in coal mines and to minimize deaths and serious injuries in the
event an explosion or the does occur. Approximately 59 of safety?law Violations during
the Indictment Period resulted in shutdown orders closing all or part of the mine until the
Violation was abated, pursuant to Title 30? United States Code, Section 814(d). Violations
resulting in such shutdown orders were among the most serious category ot?violations that can
occur in a coal mine. UBB ranked among the worst mines in the United States in such shutdown
orders during the Indictment Period.

9. During the Indictment Period. UBB was important to Massey?s financial performance.
UBB produced a type of coal called metallurgical coal, which was used for manufacturing steel.
During the Indictment Period, metallurgical coal sold for substantially more per ton than
Massey?s other major product, which was steam coal used to generate electricity. Metallurgical
coal from UBB was particularly important to Massey?s sales of metallurgical coal, because it
was an essential ingredient in a blend of metallurgical coal that also included coal from a group
of other Massey mines near UBB. In 2009, this BIS?centered group of mines generated
revenues of approximately $331 million, which represented approximately 14% of Massey?s
approximately $2.3 billion in revenue more than any ol?Massey?s numerous other mining
groups. For 2010. Massey projected UBB~group revenue of approximately $432 million,
approximately 16% ot?Massey?s projected revenue oi?approxiinately $2.7 billion and more than
the projected revenue for any other Massey mining group.

10. Beginning in 2009 and continuing through the rest ot?the indictment Period, one
operating section of BB employed. a mining technique known as longwall mining. (A coal
mining ?section? was an area ot?a mine where coal was being produced. A single mine may have

had multiple mining sections. While the longwall section was operating at UBB, UBB had at

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various times, four or ?ve total active mining sections, with the other sections using a mining>
technique different from the longwall method.) Longwali mining was the most. productive
method of underground coal mining; it uses equipment and a mining con?guration that permit
the extraction of large swaths ofcoal in a short period oftiine. When operating. at full
productivity, the UBB longwall mining section could produce more than $600,000 worth of coal
every day, more than any of Massey?s dozens of other underground mining sections. The
equipment needed to run a longwall mining section was expensive, typically costing many tens
of iniilio-ns of dollars.

Upper Big Branch. Safety-Law Violations

Mine Ventilation Laws

1 i. Routine violations of mine-safety laws at UBB included. violations of the laws on mine
ventilation. Proper ventilation in a coal mine was essential to preventing explosions. The coal
mining process inherently generates airborne coai dust. which was highly explosive. And in
many coal mines, including UBB, the mining; process also inherently releases methane gas into
the mine air. Methane gas was explosive if it reaches certain atmospheric concentrations. A.
constant supply of clean air was necessary to dilute those airborne explosive substances and
carry then: away? preventing them from reaching dangerous 

12. Minimum air?ow requirements and mine ventilation plans. At all reievant timesi airflow
in certain key areas ofa coal mine was required, by mandatory federal mine safety standards, to
be. adequate to dilute, render harmless, and carry away explosive substances. At all relevant
times the. operator of any coal mine was required to deveiop and follow a ventiiation plan
approved by federal mine?safety officials, also pursuant to a mandatory federal mine safety

standard. This ventilation plan i- as required to be designed to control methane and coal dust, and

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to mandate. in certain key locations, speci?c quantities of air?ow that were adequate to dilute,
render harmless, and carry away explosive substances. A violation ofa mine?s approved
ventilation plan was a violation ofa mandatory federal mine safety standard.

l3. Construction rcquiredfor proper mine ventilation. At all relevant times, coal mines were
required to construct structures called ventilation controls and devices to manage the ?ow of air
in a mine, pursuant to mandatory mine safety standards. These ventilation structures included
permanent block walls and temporary walls made of heavy cloth. or plastic to route mine air to
locations where it was needed to carry away explosive substances. Maintaining this mandatory
system of ventilation structures required continual construction, because as the mines workings
advanced deeper and deeper. new ventilation structures had to be built to route air through the
most recently opened parts of the mine.

4. Mine safety examinations. At alt relevant times, coal mines were required to conduct
regular safety examinations to check for ventilationrelated hazards, including, the presence of
potentially explosive methane gas in the mine air, illegally low levels of air?ow, and air ?owing
in. the wrong direction. In these safety examinations, mines were also required to check for the
existence of any other hazardous conditions, including accumulations of explosive coal d?ost.
Safety examinations in certain areas ofa mine were required to be conducted. within three hours
before any wtiirking shift and at least once during each. working> shift. Wider ranging safety
examinations were required to be conducted weekly. These requirements were established in
mandatory mine safety and health standards.

ES. The abovedescribed mandatory federal mine safety standards concerning ventilation.

were basic, wellaknown principles ofcoai mining.

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UBB is; Routine Violations of'Mine? Ventilation LCIWS

16. During the Indictment Period, and Massey routinely violated the above?
described and other mandatory safety standards on ventilation at UBB.

7. Violations ofiaiij?ow requirements and mine ventilation plat-2. Examples of these
violations included the following: On or around June 4t 2009. a federal mine safety inspector
discovered airflow of 147 cubic feet per minute in an area of the mine where 9,000 cubic feet per
minute was required. This legal minimum air quantity of 9,000 cubic feet per minute was
established to ensure that airflow was sufficient to dilute and carry away explosive substances in
the mine atmosphere. The inadequate air quantity violated a mandatory mine safety standard
requiring the mine to follow its approved ventilation plan.

l8. On or around lane 3, 2009, a federal mine safety inspector discovered that section
#1 was operating with less than halfthe minimum legal air quantity, which again. violated the
mandatory mine safety standard requiring the mine to follow its approved ventilation plan.

'19. On or around October 21, 2009, a federal mine safety inspector discovered that 
section #2 was operating with less than the minimum legal air quantity. As a result ofthe
illegally low air quantity, the federal minewsa?fety inspector observed visible airborne coal dust
surrounding miners who were working; on section This illegally low air quantity again
violated. the mandatory federal. mine safety standard requiring the mine to follow its approved
ventilation plan.

20. On or around March 2., 2010, a federal mine safety inspector discovered that #1
section was operating with less than half the legal minimum air quantity, again violating the
mandatory federal mine safety standard. requiring the mine to follow its approved ventilation

plan.

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21. Veniz?lottomplan violations regarding water sprays. UBB also was cited repeatedly for
violating another important component of its ventilation plan: its requirements for water sprays
on equipment that cut. coal from the coal seam. These water sprays suppressed coal dust and
cooled the area where cutting occurred, the latter to diminish the possibility that frictional heat.
from cutting would ignite explosive substances in the mine air. On or around July 15, 2009.
federal mine safety inspectors discovered that a continuous mining machine in section #2
was missing water sprays required by the mines ventilation plan. On or around October 27.
2009. federal mine safety inspectors discovered that a continuous mining machine at U813 was
running with less than the minimum level of water pressure for its sprays as required by the
mines ventilation plan. On or around March 23. 2010, federal mine safety inspectors discovered
that a continuous mining machine at UBB was running with nearly half its required number of
sprays in inoperable condition and with a water fitting for its spray system broken. Each of these
discoveries represented a violation of the mandatory mine safety standard requiring compliance
with the mines approved ventilation plan, and each resulted in the issuance ofa federal citation.

22. After the April 5. 20M) explosion at UBB, a federal investigation determined that at the
time ofthe explosion. the lo-ngwall shearer in the mines longwall section was operating with
approximately seven of its required water sprays missing and with other sprays clogged. The
missing sprays reduced the water pressure at the remaining sprays significantly below the
minimum level. required by the mines approved ventilation plan and. prevented the remaining
sprays from counteracting frictional heat in the area where coal was being cut. Operating the
longwall shearer with missing and clogged sprays and insufficient water pressure violated. the
mandatory federal mine safety standard. requiring compliance with the mines approved

ventiiation plan.

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23. in total, UBB was cited approximately 61 times for violations ol?its approved ventilation
plan during the indictment Period. The cited violations occurred throughout the Indictment
Period and ranged from in or around March 2008 through on or around April. 5, 20} O.

24. routine violation of its ventilation plan was the result of several causes, including
the following: providing the mine with an inadequate number of coal miners focused on jobs
important to safety-law compliance, including the maintenance of ventilation structures in
airways away from the mines active operating sections; imposition and
aggressive enforcement of coalmproduction quotas that deprived coal miners of the time
they needed to construct and maintain ventilation control structures, and that forced them to
operate even where air quantities were below legal minimums; direction,
addressed below, not to construct certain ventilation controls that would produce more reliable
airflow because constructing them diverted time from coal production; and 
denial! also addressed below ol?a request to construct an airshatt at UBB that would have
increased air?ow to areas of the mine where it was often below the legal minimum.

25. Violations." Constructing and maintaining ventilation structures. UBB also was routinely
cited during the Indictment Period for violating mandatory federal. mine safety standards on
ventilation control structures and devices. For example, on or about November 19: 2009, and on
or about December 1, 2009, federal mine safety inspectors discovered that. legally mandated
ventilation controls were missing- in airways that were essential to airflow in at least two ot?the
tnine?s operating sections, including the longwall mining section. Because of poor engineering,
the roof and walls of the area of the mine in which these structures were located were collapsing,
causing the structures to be crushed almost as quickly as they could be built. The president of

mining group, whose identity is known to the Grand Jury (the ?Known UBB Executive)

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along with other UBB officials known and unknown to the grand jury, knew that the ventilation
control structures in this area of the mine were routinely being; destroyed by the collapse of the
area?s roof and walls. They nonetheless caused the affected passageways to rernain in use as part
of the mines ventilation system? thus willfully violating mandatory federal mine safety
standards.

26. in total, UBB was cited for approximately 59 violations during the Indictment Period of
mandatory federal mine safety standards regarding ventilation control structures and. devices.
The cited violations occurred throughout the lndictment Period and ranged from in or around
January 2008 through in or around March 2m 0. Among the causes of these violations were an
insuf?cient number of coal miners in jobs focused on the construction and maintenance of
ventilation control structures and devices, and the imposition and aggressive enforcement of
coal?production quotas that did not allow time to properly maintain ventilation control structures
and devices.

27. Wolmions.? il/line?safety examinations. BB also was routinely cited during the
lndictment Period for violating mandatory federal mine safety standards requiring regular safety
examinations. or example, on or around March 9. 2009, federal mine safety? inspectors
discovered that, according to own records, one ofthe rnine?s aircourses that was required
to he examined weekly had not been examined for more than a year. In. total. BB was cited for
approximately 62 violations during the Indictment Period of mandatory federal mine safety
standards requiring regular safety examinations, which were among the standards for ensuring
proper mine ventilation. The cited violations occurred throughout the Indictment Period and
ranged from in or around January 2008 through on or around Aprii 5, Among the causes of

these violations were the employment ofan inadequate of coal miners, and the

(l

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imposition and enfincement of coal?production quotas that did not allow time, to conduct
required safety examinations in a mine the size 

28w Violations: Support of?ie mine 1-?oofand walls. During the Indictment Period, UBB also
routinely violate-d mandatory federai mine safety standards concerning support of the mines roof
and ribs (walls). Because underground coal mining extracts a layer of coal that previously
supported layers of earth and rock overheadt substitute support must be constructed to prevent
the mines roof and walls from coliapsing into the resulting void. These supports included long
bolts (as long; as sixteen feet) that were installed in the mine roof and af?xed to large plates that
hold the. stratum of rock above the mine in piace, as well as timbers that helped bear the weight
of overlying rock and earth. Just as with the mines ventilation systemr this construction process
was a continual. one: as mining advanced deeper and deeper, supports were required to be
constructed in the mine?s newly opened areas. The requirement to provide suf?cient support to
protect persons from falls ofthe mine?s roof and walls was a basic, well-known principle of coal
mining.

29. On or around September 23, 2009, for example? a federal mine safety examiner at UBB
discovered that most o?fthe mine roof had fallen out in an area ofthe mine more than 100 feet
long and approximately twenty feet wide, leaving the remaining roof unstable in an. area Where
miners were required to work and travel on a regular basis. own records of past safety
examinations showed that mine officials had. been aware of this danger for almost a month but
failed to correct it. This knowing failure violated a mandatory federal. mine safety standard that
required the roof and walls of areas Where persons work or travel to be supported or otherwise

controlled to protect persons from hazards related to falls of the roofand waiis.

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30. In total, UBB was cited approximately 91 times for violations during the Indictment
Period of mandatory federal mine safety standards regarding support of the mines roof and
walls. The cited Violations occurred throughout the Indictment Period, ranging from in or around
January 2008 through on or around. April 5. 20-10. Among the causes of these violations were the
employment of an inadequate number of coal miners to perform work necessary to comply with
the safety laws on support for the mines roof and walls, as well as the imposition. and aggressive
enforcement ofcoal?produetion quotas that did not allow enough time to perfonn such work.

3 l. Violations: Explosive coal dust and combustible loose cool and other materials. During
the Indictment Period, UBB also routinely violated mandatory mine safety standards concerning
accumulations ofcoal dust. loose coal, and other combustible materials. As explained. above,
coal mining inherently produced large quantities of airborne coal dust. This coal dust eventually
settled out ofthe mine air and. collected on surfaces throughout the mine. After settling, however,
coal dust still posed a risk of explosion. If an explosion ignited in one part ofa mine, the blast of
air from that explosion could. force settled. float coal dust. back. into the mine air. Once the
previously settled dust. became airborne again, heat and ?ame from the initial ignition could
cause it to explode. In this way, previously settled coal dust could enlarge a relatively small.
initial explosion and cause it to propagate throughout a mine. Consequently, a mandatory federal
mine safety standard required that float coal dust be cleaned up and not permitted to accumulate.
Mandatory federal mine safety standards also required that loose coal, which was flammable,
and other combustible materials be cleaned up and not permitted to accumulate; tires were a
serious danger in underground coal mines in part because such mines featured tight spaces and
limited air supply? and because miners in such mines often worked far away from the safety of

the surface. The mandatory federal mine safety standard requiring that explosive coal dust?

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combust?bie loose coal, and other combustible materials be cleaned up and not permitted to
accumulate was a basic, welt-known principle of coal mining.

32. Examples of violations of these standards include the foilowing: On or around
January 28, 2010, a federal rnine safety inspector discovered ?oat coal dust accumulated along
the entire length of the conveyor belt that carried coal from section This accumulation
violated the mandatory federal mine safety standard requiring that explosive float cost dust be
cleaned up and not permitted to accumulate.

33. On or around. March i5, 2010, a federal mine safety inspector discovered fine, black coal
dust deposited along substantially the entire length of the conveyor belt that carried coal. from
Iongwail section. This accumulation violated the mandatory federal mine safety standard
requiring that coal dust be cleaned up and not permitted to accuinuiate.

34. In totalt UBB was cited approximately St times 'for violations during the Indictment
Period of the mandatory federal rni-ne safety standard requiring that coal dust, loose coai, and
combustible materials be cleaned up and not permitted to accumulate. These violations occurred
throughout Indictment Period, from in or around January 2008 through on or around April 
2010.

35. own records ofmine safety examinations also revealed near?constant vioiations of
mandatory federal mine safety standards concerning accumulations ofcoai dust and other
combustible materials, as weIl as the application of rock dust, an incombustible substance that
was required, pursuant to mandatory federai mine safety standard that were a basic, well?known
principie of coal mining to be spread throughout a coal mine to stop the spread of any explosion
or fire that might occur in the mine. In a span oflittle more than a month. from March I, 20? 0,

through April 5. 2010. records ofon?shift examinations reflected approximately 937

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hazardous conditions arising from accumulations of coal dust and coal. and from inadequate
application of rock dust. The same records reflected that the majority of these hazardous
conditions were not properly corrected. These records were reviewed daily by UBB officials.

36. Among the causes of routine violations of the laws on explosive and combustible
materials and rock dusting were the employment ofan inadequate number ofcoal miners to
perform work necessary to compiy with these laws, as well as the imposition and aggressive
enforcement of coal-production quotas that did not allow sufficient time to perform such work.

Advance Warning of Federal Mine Inspection Activities

37. During the indictment Period, a scheme existed at UBB to routinely warn underground
workers when federal. mine safety inspectors were on their way to inspect underground areas of
the mine. At the entrance to the BB mine property was a guardhouse. When federal mine safety
inspectors passed this guardhouse on their way to the mine, it was standard practice for a guard.
to radio the U88 mine of?ce. which sat just outside the entrance to the mines underground
areas, to warn employees in the mine office that the inspectors were on. their way. It was standard
practice for an. employee in. the mine office. then to call underground. (a telephone system
connected the mine of?ce to various areas of the mines underground workings) to pass along
this warning to underground personnel. Underground supervisors then would direct miners to
quickly cover up violations ofmandatory federal mine safety standards that. the mine routinely
committed. including missing ventilation control structures and devices, accumulations of float
coal dust and loose coal, missing roof support. and faiiures to properly rock dust the mine. The
purpose ofthis advance?warning scheme was to prevent federal mine safety inspectors from
discovering and citing many of the violations of mandatory federal mine safety and health

standards that were routinely committed at BB. Because of the distance from the U88

i4

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gnardhouse to the mine office and the size of the mines underground workings, the sections of
the mine farthest from the mine entrance could be given as much- as two hours? advance warning
before federal mine safety inspectors arrived.

38. In order to avoid alerting federal mine safety inspectors that these warnings were. being
given, UBB employees frequently used. code words and phrases when discussing imminent
safety inspections on the mine telephone system.

39. UBB of?cials. including the Known UBB Executive and. others known and unknown to
the. Grand Jury, frequently instructed and encouraged rnine employees to provide advance.
warning whenever federal mine safety inspectors were on their way to inspect the mines
underground areas.

BLANKENSHIP was fully aware of practice of routinely Violating mandatory
federal mine safety standards.

40. ELAN was fuliy aware of practice of routinely violating mandatory
federal rnine safety standards. As early as in or around January 2008, ELAN KENSHIP learned
that federal mine safety regulators had designated UBB as a mine with a potential pattern of
violations, a status that applied only to the worst mines in the country as measured by serious
safety-law Violations and other indicators of safety. In or around early 2009, 
began to request and receive reports detailing the cost of fines that. Massey was being assessed
for federal safety?law violations. And in or around April 2009, BLANKENSHIP requested and
began to receive a report every workday detailing Massey?s Violations of mandatory federal mine
safety standards, inciuding an estimate ofthe fines that Massey wouid owe for these Violations.

41. Each of these daily safety?vioiation reports showed a count of Massey?s
safety?law violations for the year to date, along with year?to?date violation totals for each of

Massey?s mining groups. Each daiiy safety-vioiation report also showed BLANKENSHIP more

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detailed information on the company?s violations of the mine safety laws: how often each of the
company?s mining groups had violated those laws year?to-date, the speci?c mandatory federal
mine safety standard that each group of mines violated most often: and the areas of mandatory
federal mine safety standards that the company?s mines violated most as a whole.

42. For example, on or around July l, 2009? BLANKENSHIP received a safety~yiolatioiri
report for the year through on or around Jane 30; 2009. This report showed BIVJANKENSHIP that
in the first six months of2009, the U88 group of mines was cited for approximately 5.96

violations ofmandatory federal mine safety and health standards resulting in an estimated

$918,401 in fines

 

more than any other Massey mining group. The report also showed
BLANKENSHIP that the mandatory federal mine safety standard violated most often. at the UBB
group of mines was the standard requiring that accumulations of explosive float coal dust,
combustible loose coal, and other combustible materials be cleaned up and not permitted to
accumulate. The report further showed that the area of mandatory federal mine
safety standards violated most often at Massey?s mines as a whole were the standards concerning
mine ventilation, which were intended? among other things, to prevent: mine explosions and ?res
and to minimize the risk to miners of death or serious injury if an explosion or fire occurs. The
report showed that Massey?s mines violated mandatory federal mine safety
standards on ventilation approximately 1002 times in the first half of 2009.

43. On or around August 6, 2009, the daily satiety?law violation reports sent to
BLANKENSHIP began to include a page showing BLANKENSHIP the number of safetywlaw
violations at individuai Massey minesi as distinct from mining groups. On or around August 6..
2009, received a daily safety?violation report that showed him that in the year

to date.) UBB had been cited for approximately 292 Violations of federal mine safety laws, fourth

l6

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most of any Massey mine in the year to date. That report also showed BLANKENSHIP that the
mandatory federal mine safety standard violated most often by mines in the BB group
continued to be the standard requiring that. accumulations of explosive coal dust, combustible
loose coal, and other combustible materials be cleaned up and not permitted to accumulate in the
mine. The same report showed BLANKENSH that the area of mandatory federal mine safety
standards violated most often at .Masseyis mine-s continued to be the standards on mine
ventilation.

44. From approximately April 3, 200% through April 5, 20107 received
approximately 249 of these daily safety-violation reports. It was practice to
review each of these reports when he received it. Substantially every one of" these 249 reports
showed BLANKISNSIWHP that the UBB mining group was committing hundreds of safety?law
violations every year.

45. Beginning on or around June 2, 2009. the daily safetywlaw violation reports that
received showed him which of Massey?s mining groups were committing the
most safety?law violations.) which mandatory federal mine safety standard each minin 3 group
was violating most often, and which area ot?the mine satiety laws Massey as a whole was
violating most. From on or around June 2, 2009, through on or around April 5, 2010,
received approximately 21(1) of these daily reports ot?safety-law violations.
Nearly all of those reports showed him that mining group was one ot?Massey?s worst
mining groups for safety?law violations and that the worst area ot?saietywlaw violations for
Massey mines as a whole was mine ventilation. Approximately l93 of these reports showed

that the mandatory federal mine safety standard that the UBB group violated

l7

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most often was the standard requiring explosive coal dust, combustible loose coal accumulations.
and other combustible materials to be cleaned up and not permitted to accumulate.

46. From approximately August 6. 2009, through April 5, 20m, received
approximately 163 daily safety-violation. reports that showed him year?to-date safety?violation
totals for the UBB mine itsel? as distinct from its associated. group ot?niines. Nearly ail of these
reports showed that UBB was committing hundreds of safety~law violations
each year and. was among Massey?s worst mines for safety?iaw Violations.

47. On or around October 7. 2009, received a Masseywinternal ?Report
Card? detailing mine safety violations for each ofMassey?s mines in the third quarter (.lniy
through September) of 2009. This internal Report Card showed BLANKENSHIP that UBB
violated mandatory federal mine safety standards 168 times in that three?month perioda
compared to a target of ?fty-nine safety-?law Violations that Massey had set for UBB in the third
quarter of 2009. The Report Card, which was created internally by Massey personnel who
tracked safety-law Violations at the company?s mines, showed BLANKENSHIP that. Massey
itself had assigned UBB a grade of ?Failed? for its number ofsafety?law violations in the third
quarter of 2009.

48. During the Indictment Period, BLANKENSHIP personally monitored the details of
operations closely. After the longwall section began operation at UBB, 
insisted on personally receiving a report every thirty minutes detailing the longwall section?s
coal production and the reasons for any production delays. BLANKENSHIP insisted on
receiving this report via fax at his home on evenings and weekends. For the other mining
sections at UBB, insisted on personally receiving a report every two hours

detailing each sections coal production and the reasons for any production deiays.

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 19 of 41 PageID 2288

practice was to regularly review these production reports from 
longwall and other sections. Throughout the Indictment Period, BLANKENSHIP insisted on
personally reviewing and approving or denying every proposed hire at UBB, every proposal to
give a UBB employee a raise, every capital expenditure at U88, and every hiring ot?a contractor
to perform work at UBB. Throughout much of the Indictment Period? BLANKENSHIP
demanded daily phone calls with UBB management: in addition to the dozens of written
production reports he received every days so that he could further supervise activity at UBB.
During the Indictment Period, CEO and Chairman ot?a publicly traded
corporation with more than $2 billion in annual revenue~routinely, personally reviewed details
such as one ol?UBB?s operating sections starting three hours late because of necessary
maintenance a request to give a small number ol?truck drivers working for the U88 mining
group a raise from approximately $1 1.59 an hour to approximately fill 3.50 an hour, and a request
to spend $750 to hire a contractor to check the freeze-proo?ng systems at a UBB-group mine
before cold weather arrived.

BLANKENSHIP could have drastically reduced violations of mandatory federal mine
safety standards at UBB by taking reasonable steps to follow the law.

49. Blankenship could have drastically reduced violations of mandatory federal mine safety
standards at UBB by taking reasonable steps to lbllow the law. A large majority ot?UBB?s
safetydaw violations were preventable. For example, daily safety?law violation reports routinely
showed that the mandatory federal mine safety standard that the U88 mining;
group violated most often was the standard requiring that explosive coal dust, combustible. loose
coal and other combustible materials be cleaned up and not permitted to accumulate in the mine.
Following this safety law was a matter oi" basic housekeeping. could have

prevented the majority of these safety?law violations by hiring enough miners at UB8, and

l9

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giving them enough non?coal?production time, to clean up the expiosive and combustible
substances that coilected in the mine. Similarly, most mine?ventilation 
knew were the most common category of saf?etynlaw violations at Massey?s
mines-wand roof?control violations at UB8 could have been prevented by providing the mine
with enough miners, and giving them enough non?coalproduction time, to follow the safety
laws. Yet throughout the Indictment Period UBB regularly was staffed with too few miners and
had too iittle non?coal?production time to reasonably be able to compiy with mandatory federal
mine safety and heaith standards on ventiiation, combustible materials and rock dusting, and root"
support? among other areas.

50. Throughout the Indictment Period, possessed the authority to provide
with. the. resources necessary to prevent the majority of violations of mandatory
federal mine safety standards. BLANKENSHIP was the highesbranking of?cial in the group of
of?cials who approved each Massey mine?s annual budget and production plant, which detailed
how many miners each mine could hire in specific areas, including areas focused on safety?law
compiiancet and also set the amount of coal and pro?t. that each mine was required to generate.
BLANKENSHIP also exercised personal decisionwmaking authority over every decision at 88
regarding hiring and the use ot?non?employee contractors, as well as capital expenditures for
safety?compliance purposes. BLANKENSHIP possessed full authority to respond to 
hundreds of annuah preventabie safety?law violations hy providing the mine with more miners,
particularly in areas focused on safety?law compliance? and to reduce the mines requirements
for coal. production and profit so that miners would have more time to work on following the

safety iaws. Throughout the indictment Period, BLANKENSHIP also possessed 't?uli authority to

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discipline UBB executives for the mine?s routine violations of mandatory mine safety and health
standards, and to determine those managers? compensation.

51. Throughout the Indictment Period, Massey possessed, and BLANKENSHIP controlled,
ample ?nancial resources to provide UBB with the resources and reasonable production
requirements that it. needed to comply with mandatory federal mine safety standards. During the
Indictment Period, Massey possessed cash and cash equivalents ranging from approximately
$391 million to approximately Sill billion.

52. Throughout the indictment Period, closely managed the UBB mine and
group of mines, routinely directing and making decisions on detailed matters of the mines?
everyday operations. This elaborate level of involvement further enabled him to take action to
reduce safety?law violations at UBB had be chosen to do so. During much of the indictment
Period, received dozens of U138 coal?production reports every day, and had
telephone conversations daily or even more. frequently with the Known UBB lfixecutiveg in which
BLANKENSHIP gave direction on operation. also regularly managed
BB through handwritten messages to the Known BB Executive, often written on reports
regarding coal production or cost management with which BLAN KENSHIP 
dissatis?ed. Examples of this practice include the following: on or around April 1 1, 20081
sent. the Known UBB Executive a handwritten note, written on a coal-
production report from one shill in one operating section of the BB miner pressuring the
Known UBB Executive to change the section?s engineering plan to leave in place smaller coal
pillars. Coal. pillars were large blocks of coal left in place as a mine advances in order to help

support the mine roof; smaller pillars generally provide less support but produce more coal and

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thus more profit. The Known UBB Executive responded that the operating section that was the
subject of the report would soon begin using smaller coai pillars.

53. Also on or around April 1 1, 20085 BLANKENSHIP sentthe Known 813 Executive a
handwritten note, written on a coal?production report from one shift in one operating section of
one of the mines criticizing the placement ofa speci?c piece of equipment in that
section as it was depicted in a routine diagram on that report. demanding to know the details of
the section?s air?ow con?guration. and the speci?c sequence in which the section cut coal front
each ofits passageways, and concluding, ?It?s easy to see why your mines don?t run.?

54. On or around May 15, 2008, the Known UBB Executive sent BLANKENSHIP a memo
requesting to raise hourly pay for truckers at the UBB mining group from approximately $1 1.59
an hour to approximately $13.50 because the group could. not find truckers wiiling to work for
the rate o?fapproxintately $1 1 .59 an hour. On or around that same day. BLANKENSH 11?
responded with a series ofdetailed, handwritten questions about the proposed raise to which he
required answers before approving or denying the proposed raise.

55. On or around January 6? 2009, received a regular report called a Lost
Footage Report from one ot'UBB?s operating sections. On or around that date, 
dissatisfied with. the information shown on the report, sent the Known UBB Executive a
handwritten note on a copy of the report itself". The note reach ?ls this the Head or TailGate??
Describe Root?Conditions?? Why a late Belt move? I. didn?t see a report. Why? Did you call me.
yet [illegible]. What do coreholes in mains say rider will do ahead of you??

56. On or around March- 19, 2009, BLANKENSHIP sent the Known UBB Executive a
memorandum chastising hint for not prodocing coal as quickin as demanded at

UBB. in this memorandum, BLANKENSHEP said that BLANKENSHW wouid need to cail

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directly a subordinate. of the Known UBB Executive so that himself could
figure out what to do to increase coal production at. U138.

57. On or around October 2009., sent the Known UBB Executive several
handwritten notes written on a request from the Known UBB Executive to spend approximately
$750 to have a contractor check and. test the freeze-proofing systems at. one of the UBngroup
mines. Two ofthese handwritten notes read, ?Nonsense Giving Money Away" and ?What does
this mean? it?s yet. another example of something i never recall having done by a contractor
when was a Group Pres.?

Blankenship chose to routinely violate and cause routine violations of mandatory federal
mine safety standards at U133.

58-. Despite having the ready ability to drastically reduce violations of mandatory federal
mine safety standards at UBB, and even though he knew that practice of routinely
violating such standards was unlawfuL purposely elected to continue that
practice throughout the Indictment Period. Specifically, he chose to maximize pro?ts by
depriving UBB of the coal miners and non?coal?production time that it needed to comply with
mandatory federal mine safety standards, concluding that it was less expensive to routinely pay
fines for violating such standards than to allocate the necessary funds to following them.

59. During the Indictment Periods, BIAANKENSHIP instructed and encouraged UBB
managers to violate mandatory mine safety standards. For example, on or around February 1 1,
20085 BLANKENSHIP sent the Known UBB Executive a memorandum that addressed work
being; done to permit UBB to follow mandatory federal mine safety standards on ventilation.
This memorandum gave the tollowing instructions: ?You. need to get low on UBB [sections] #1
and #2 and run some coal. We?ll worry about ventilation or other issues at an appropriate time.

Now is not the time.? Throughout the Indictment Period, however, UBB was required to comply

k)


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with mandatory federal mine safety standards regarding ventilation. which were intended
primarily to prevent mine explosions and tires and to prevent death and serious injury to miners
if an explosion or ?re occurs. Throughout the Indictment. Periods UBB routinely violated those
standards.

60. On or around April 29. 2008, ELAN KENSHIP sent the Known UBB Executive a
handwritten message chastising him because certain sections at mines, including
UBB itself. were not producing coal as quickly as wanted. In this message.
BLANKENSHIP instructed the Known BB Executive to tell coal miners under his supervision
to ?run this sections [sic] like coal mines not like constructionjobs.? Continual construction,
including construction ot?ventilation control structures and supports for a mine?s roof and walls,
was required to comply with mandatory federal mine safety standards.

61. On or around February 2008., BLANKENSHIP sent the Known UBR Executive a
handwritten message chastising him because certain sections at [EBB?group mines. including
UBB itself. were not producing coal as quickly as wanted. in this message,
BLANKENSHIP told the Known UBB Executive, referring to two mining sections at UBIL
?Acting like construction sections. Get as low as possible and run 

62. On or around April 29. 2008. sent the Known Executive another
handwritten message chastising him for not producing coal as quickly as 
wanted at one of the mines in the U88 mining group. This message instructed the Known UBB
Executive. ?Run coal. Don?t belt for the year 2525.? This message was an instruction to increase
coal production by devoting less time to the installation ot?roof bolts. which were a term ofrooi?
support. At all. relevant times. mandatory federal mine safety standards and approved root??

support plans at all the [,iBB-group mines determined the number of roof bolts that each of those

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 25 of 41 PageID 2294

mines were required to install, as well as the manner in which they did so, in order to help
prevent falls of the mine roof and walls. At all relevant times, any Violation of a mine?s approved
roof support plan was a Violation ot?a mandatory rnine safety standard.

63. On or around March 7, 2008, BLANKENSHIP sent the Known UBB Executive a
handwritten message pressuring the Known UBB Executive to produce coal more quickly. The
message contained the "following instruction: ?Do not cut any overcasts." An overcast was a
ventilation control structure that helps ensure the reliable flow of air through a coal mine. such as
UBB. As a result instruction in this handwritten message and similar
instructions that gave to BB management at other times during the
Indictment Period, overcasts were not constructed during the Indictment Period in. numerous
locations at UBB where they were needed to ensure reliable airflow. This practice contributed to
numerous violations of mandatory mine safety and health standards concerning ventilation
during. the Indictment Period.

64. In or around August 2009, coal miners at BB were perforating work in preparation for
the startnp ol?the mine?s longwall section, which was projected to be highly profitable. One of
the last tasks remaining before the longwall section could begin producing coal was to cut a
drainage path in certain passageways around the longwall section. Massey of?cials expected that
water would enter the area near longwall mining section after it began producing coalr
and the purpose of the planned drainage path was to drain this water from the mine in order to
prevent flooding. With the drainage project approximately one to two weeks from completion a
Massey Energy Company executive known to the Grand Jury (the ?Known Massey Executive?)
ordered. that it be abandoned so that the longwall section could start. producing coal. sooner. his

decision was made in substantial part as a result of pressure from to begin

25

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operating the longwall section as soon as possible. In or around November 2009, when the
expected in?ow of water entered the area of the longwall section, there was no system in place to
drain it. and airways that were necessary to ventilate the mine ?ooded, at least two of ?lling with
water from floor to roof. On or around December 14, 2009, a federal mine safety inspector
issued. a shutdown order upon discovering that coal miners at UBB were being required to work
and travel in dark. and murky water measuring tip to four feet in depth with invisible slipping and
tripping hazards on the floor of the ?ooded are-aeconditions that the inspector found could result
in drowning. This condition, which made it impossible to examine several ofUBB?s aircourses
in their entirety, violated a mandatory federal mine safety standard requiring that all air-courses
be examined in their entirety at least weekly. It was caused by the decision to abandon the
project to drain the area around the longwall section.

65. In or around December 2009. section #l was still idled because one of its return
aircourses (an airconrse that carries away air potentially contaminated by explosive substances
and removes it from the mine) was flooded and could not safely he traveled to conduct required
safety examinations and had not been examined in several weeks. While this return aircourse
was still ?ooded and not. capable of being examined for safety, directed the
Known UBB Executive to start producing coal again in 83?s section in violation ofthe
mandatory mine safety standard requiring that all aircourses he examined at least weekly. When
the Known UBB Executive resistedt chastised him for ?letting MSHA run his
mines.?

66. In or around the summer o-f2009. during a period when certain sections at UBB routinely

were operating with inadequate airflow, counseled the Known UBB Executive

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 27 of 41 PageID 2296

to ensure that underground operations were warned. ahead. of time when federal mine
safety inspectors were coming to inspect those operations.

67. During the Indictment Period, UBB management repeatedly requested, in the course of
the annual mine budgeting process that BLANKENSHP oversaw, to hire more. coal miners to
work in jobs critical to safetywlaw compliance. BLANKENSHIP and other Massey officials
carrying out instructions and policies, whose identities are known and
unknown to the Grand Jory, denied these requests, knowing that these denials would cause
routine, preventable Violations of mandatory federal mine safety standards to continue at U813.

68. During the Indictment Period, together with other Massey officials
carrying out instructions and policies. whose identities are known. and
unknown to the Grand Jury, imposed coal-production requirements on UBB that they knew
would, in combination with the inadequate staffing and. other resources provided to BB, cause
routine, preventable Violations of mandatory federal mine safety and health standards to continue
at UBB.

69. During the Indictment Period, BLANKENSHIP consistently pressured 8.8 management
to cut the number of coal miners in jobs critical to safety?law compliance, including conducting
satiety examinations and cleaning and rock dusting the mines conveyor belts. (In part, because
conveyor belts carried large quantities oi?coal at hi gh speeds, they inevitably develop-ed
accumuiations of explosive ?oat coal dust and combustible loose coal that had to be 
cleaned up to comply with mandatory federal rnine safety standards.) or example, on or around
March l0, 2008, ELAN KENSHIP sent the Known UBB Executive a. handwritten note chastising

him for employing too many coal miners in jobs that focused on safety examinations, cleanup of

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 28 of 41 PageID 2297

explosive and combustible substances on conveyor belts, and other safety?conipiiance work,
calling the USE group?s employment of such miners ?ridiculous? and ?lil?literally crazy.?

70. On. or around April 18', 2008, sent the Known UBB Executive another
handwritten note chastising him for employing too many coal miners in jobs involving safety
examinations and cleanup of explosive and combustible substances along conveyor belts. In this
handwritten note. demanded to be sent the name and job description ot?every
coal miner assigned to clean and maintain conveyor belts at the UBB group so that he could
personally review them.

7l . On or around February 25, 2009, directed U88 and all other Massey
mines to reduce their labor cost from $18 per ton of coal ruined to $14 per ton ot?coal mined.
knew that the only way to carry out this directive at BB was to further cut the
number ofcoal rniners employed in jobs that. focused on safety?law compliance rather than the
direct production ofcoal, including coal miners who conducted safety examinations? cleaned up
and maintained conveyor belts, and maintained compliance with safety laws in the mines
aircourses. BLANKENSHIP further knew that this reduction in the number of BB coal miners
who were focused on these and other safety?law compliance tasks, as distinct from direct
production ofcoal, would cause continued routine violations of mandatory federal rnine satiety
standards at ll BB.

72. Throughout the indictment Periodw BLANKENSHI aggressively pressured UBB
management to produce more coal and reduce costs while rarely if ever mentioning the mines
routine safety~law violations unless they threatened to affect. eoal production. UBB managers
knew that BLANKENSHIP was aware of the mine?s routine satiety~law violations. so his near~

exclusive emphasis on coal production and cost~cutting, compared with his near silence on

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hundreds of safety-743w violations, further clarified to them. that he expected and accepted
routine safety-law violations as long as they did not compromise coal production.

73. For exampie. on or around March 19., 2009, sent the Known UBB
Executive a memorandum chastising him for not producing as much coal at as
BLANKENSHIP wanted. The memorandum said, miner sections are a mitigated [sic]
disaster." and threatened. to shut down UBB it" it did not begin producing more coal. in this
memorandum. BLANKENSHEP stated that BLANKENSHEP himself would need to personally
intervene with the Known UBB Executive?s subordinates at BB to determine, in detail, how to
increase coal production at the mine.

74. On. or around March 10. 2009. BLANKENSHIP sent the Known UBB Executive a
handwritten note chastising him for using two different forms for reports to BLANKEN SHIP on
an area nicest?cutting; at UBB. In this note. BLANKENSHIP threatened the Known UBB
Executive?s job for what BLANKENSIMP regarded as insufficient. attention to cost?cutting.
writing. ?You have a kid to feed. Do yourjob."

75. On or around March 13, 2009, sent the Known UBB Executive a
handwritten note chastising the Known UBB Executive for not producing as much. coal as
wanted at a UBB?group mine. This note said. "Pitit?ut. You need to get focused.
As I said at UBB. Marsh [Marsh Fork, another UBB~group mine], etc could Krushchev [sic]
you. Do you understand??

76. On or around August 5. 2008. BLANKENSH 1P sent a memorandum to several Massey
mining-group presidents. including the Known UBB Executive. with the subject 
COST The memorandum said. in part. ?It seems to me that. none of you are too concerned

about your costs. Please let me know whether you are concerned. It you are and you happen to

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be responsible for {nines like . . . UBB  please advise how you can run the kind of cost that
you run.? The memorandum went on to say, ?In my opinion, children could run these mines
better than you all do. Look at your cost and figure out what you are going to do to get it down
because if we don?t have a better August and September than we had July, you can be assured
that the stock options are not going to look very attractive." This memorandum made no
reference to compiiance with federal mine safety laws.

77. On or around February 9, 200% BLANKENSHIP sent a memorandum. to Massey mining;
group presidents,. including the Known UBB Executives which said: ?Please be reminded that
your core job is to make money. To do this? you have to run coal at a low cost? ship your orders
and. control your quality.? The memorandum went onto say, ?My suggestion is that you begin
looking at your daily [profit and loss statements] everyday because I?m iooking to make
an example out of somebody and i don?t mean embarrassment." This memorandum made no
reference to compliance with federal mine safety laws.

78. Meanwhile, during the indictment Period? in hundreds of calls with the Known BB
Executive in which BLANKENSHIP managed and supervised operations at UBB,
BLANKENSIVHP rarely if ever mentioned practice of routine safety?law violations, of
which practice was well aware.

79. During the Indictment Periodi and others known and unknown to the
Grand Jury used compensation decisions to communicate an expectation and acceptance that
UBB would routinely violate mandatory federal mine safety and health standards. During the
Indictment Period, BLANKENSHIP personally made decisions on compensation for the
presidents ofMassey?s minino groups. in 2009, for example, UBB was cited for approximately

5 7 Violations of mandatory federal mine safety standards. For 200-9, however? 

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 31 of 41 PageID 2300

made the Known UBB Executive. the president of mining group, among the highest-paid
mining group presidents at Massey, with total compensation of approximately $450,000. Also
for 2009, a year in which Massey mines were cited, according to Massey?s own count. in the
daily safety?law violation reports that received, for approximately 8.900
Violations of mandatory mine safety and health standards, persons known and unknown to the
Grand Jury voted to award BLANKENSHIP bonuses and other compensation that brought his
total compensation for the year to approximately $17.8 million.

False and. Misleading Statements and Omissions Following an Explosion at UBB

80. On April 5. 2010, an explosion occurred at BB. The explosion resulted in a substantial
number of fatalities and, as a result, attracted national and international media attention. Some
media outlets reported that Massey had engaged in a practice of routinely violating mandatory
safety standards. By April 7. 201.0, Massey?s Class A Common Stock price dropped
approximately $915 per share. or i6.8%, from its Closing pricing on April 5, 2.010. This
decrease reduced net. worth by approximately $3 million.

81. On or around April 7. 20l0. BLANKENSHIP directed Massey officials known to the
Grand Jury to draft a statement to Massey shareholders (the Shareholder Statement?). On
or around April 7. 2010, Massey of?cials known to the Grand Jury prepared a draft ofthe UBB
Shareholder Statement and provided it to BLANKENSHIP for his review and approval. Among
other things, the draft BB Shareholder Statement specifically responded to public reports that
Massey had engaged in a practice of routinely Violating mandatory mine safety and health
standards.

82. On or around April 8, 2.010. BLANKENSHIP reviewed and approved the UBB



Shareholder Statement. and approved. its release to the public and its filing with the SM

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 32 of 41 PageID 2301

BLAN KENSl-ill? did these acts in or around. .lulian, Boone County, West Virginia, within the
Southern District of West Virginia. he UBB Shareholder Statement that BLANKENSHIP
approved included the following statements: ?Media reports suggesting that the U88 tragedy
was the result of a willful disregard for safety regulations are completely unfounded,? and, ?We
do not condone any violation of MSHA regulations, and we strive to be in compliance with all
regulations at all. times.? On or around April 8, O, as a result of approval,
Massey released the U88 Shareholder Statement to the public and ?led it with the SEC, using
means and. instrumentalities of interstate commerce.

83. On or around April. 9, 20M), a public relations consultant retained by Massey and known
to the Grand Jury sent a draft press release with a. message asking him to
review the draft release and advising that the consultant wanted to issue the release that day. The
release consisted primarily ofa list oftive claims marked with bullet points. The second of these
items was this claim: ?We do not condone any violation oil?s/line Safety and Health
Administration. regulations, and we strive to he in compliance with all regulations at all
times." On or around April 9, 2010, in or around Julian, Boone County, West Virginia, in the
Southern District of West Virginia, BLANKENSHEP responded in writing, approving the
issuance of the release. On or around. April 9, 20] 0, the public relations consultant issued the
release on Massey?s behalf through means and instrumentalities of interstate commerce,
including commercial services intended to disseminate press releases to the. financial and
investing communities.

84. At the time BLANKENSHIP approved the release and filing of the U88 Shareholder
Statement, he knew that the statements that ?[wle [Massey] do not condone any violation of

MSHA regulations" and ?we [Massey] strive to he in. compliance with all reguiations at all

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 33 of 41 PageID 2302

times" were materially false? fraudulent, fictitious, and misleading; that the UBB Shareholder
Statement contained untrue statements of material fact and omitted to state material facts
necessary in order to make the statements made in light of the circumstances under which they
were made, not misleading; that it employed devices? schemes, and artifices to defraud; and that
it would operate as a fraud and deceit upon purchasers and sellers of Massey Class A Common
Stock.

85. At the time the BLANKENSHEP approved the issuance o'fthe press release described in
Paragraph 837 he knew that the statements that [Massey] do not condone any violation of
Mine Safety and Health Administration (MSHA) regulations? and ?we strive to be in compliance
with all regulations at all times? were materially false, fraudulent, fictitious, and misleading; that
the press release contained untrue statements of material fact and omitted to state material facts
necessary in order to make the statements made, in light of the circumstances under which they
were made, not misleading; that it employed devices, schemes, and artifices to defraud; and that
it would operate as a fraud and. deceit upon purchasers and sellers of Massey Class A Common.

Stock.

Lu)
Kg.)

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 34 of 41 PageID 2303

Count One
(Conspiracy)

86. The Grand Jury re-alleges Paragraphs 1 {hrough 85 as if fully incorporated herein.

87. 'l?hroughout the Indictment Period, BLANKENSHIP, together with others known and
unknown to the Grand Jury, unlawfully, willfully, and knowingly combined, conspired,
conf?ederated, and agreed together with each other:

a. for BLANKENSHIP and Massey, as operators of UBB, to willfully violate
mandatory federal mine safety and health standards at UBB, in Violation of'l?itle 30, United
States Code, Section 820(d), and Title 18, United States Code, Section 371; and

b. to defraud the United States and an agency thereof, to wit, 1) to hamper, hinder,
impair, impede, and obstruct, by trickery, deceit, and dishonest means, the lawful and legitimate
"functions and its agency, 8151A, in the administration and enforcement of mine safety
and health laws at U88, and 2) to defraud and deprive, by trickery, deceit. and dishonest means.
the United States of money that it otherwise would have received.

88. The purposes of this conspiracy included, among other purposes, unlawfully increasing
Massey?s profits and unlawfuliy enriching BLANKENSHIP.

()hjec'fl's affirm (?..?on.spirocy

89. Among the objects of the conspiracy were to:

a. routinely Violate mandatory federal mine safety and health standards;

b. hamper, hinder, impair, impede, and. obstruct, by trickery. deceit, and dishonest
means, the lawful and legitimate functions and its agency, MSHA, in the administration
and enforcement ofniine safety and health laws at and

c. defraud and deprive, by trickery, deceit, and dishonest means, the United States of

money that it. otherwise would have received.

LA
at?

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Manner and Means

90. The manner and means of the conspiracy included, but were not. limited to, the following:

91. it was a part of the conspiracy that together with others known and
unknown to the Grand Jury, would and did instruct and counsel their subordinates to commit
Violations ofrnandatory federal mine safety and health standards, and to take actions that they
knew would and did cause Violations of those standards, and to engage in omissions to act that.
they knew would and did cause violations of those standards.

92. It. was further a part. of the conspiracy that BLANKENSHER together with others known
and unknown to the Grand Jury, would and did refuse to provide UBB with. enough. coal. miners,
time to devote to safety-law compliance and other resources to he reasonahiy able to comply
with mandatory federal inine safety and health standards, knowing that this refusal would and
did cause routine violations of federal mine safety and health standards at UBB.

93. It was further a part of the conspiracy that together with others known
and unknown to the Grand Jury, would and did routinely pressure BB management to increase
coal production and cut costs, and specifically to cut the number of coal miners that UBB
employed in jobs focused on safety?law compliance, knowing that these steps would cause UBB
to continue routinely Vit)l?tii?g mandatory federai mine safety standards.

94. It was further apart of the conspiracy that BLANKENSHIP, together with others known
and unknown to the Grand Jury. would and did routinely disregard practice of safety-law
violations in communicating with UBB management which served to inform UBB management
that BLANKENSHIP and Massey expected and accepted routine violations of mandatory federal

inine safety standards at BB.

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 36 of 41 PageID 2305

95. It was further a part of the conspiracy that BLANKENSHIP, together with others known
and unknown to the Grand Jury, would and did reward with high levels of compensation, and
declined to punish or discipline, of?cials who committed and caused routine violations of
mandatory federal mine safety and health standards at UBB. These of?cials included
and the Known UBB Executive.

96. it was further a part of the conspiracy that persons known and unknown to the Grand. Jury
would and did routinely commit willful, readily preventable violations ofrnandatory federal.
mine safety and health standards at UBB.

97. It was a part of the conspiracy that together with others known and
unknown, would and did cause and counsel to be given to persons at UBB advance warning of
federal mine safety inspection activities, knowing and intending that the persons receiving this
advance warning would conceal and cover up and. cause to be concealed and covered up
violations ofmandatory federal mine safety and health. standards that otherwise would result in
citations and shutdown orders issued by federal rnine safety inspectors, and in monetary penalties
due to the United States.

98. It was :l?urther a part of the conspiracy that members ofthe conspiracy known and
unknown, upon receiving advance warning of federal mine safety inspection activities at BB,
would and did conceal and cover up and cause to be concealed and covered up violations of
mandatory federal mine safety standards that would otherwise result in citations and shutdown
orders issued by federal mine safety inspectors, and in. monetary penalties due to the United
States.

99. It was further a part of the conspiracy that members of the conspiracy known and

unknown falsified and caused to be falsified samples ot?respirahle dust that were collected at,

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 37 of 41 PageID 2306

UBB pursuant to mandaiory federal mine health standards, by falsely representing, and causing
to be falseiy represented: the locations at which dust sampling devices were placed for the
coliection of such samples.
Overt A CH
100. . Overt acts committed in furtherance of the conspiracy and to effect the iilegal
objects thereof included, but were not limited to, the following:

a. The imposition of staffing levels and proddetion requirements, by
and others known and unknown to the Grand (Fury, that BLANKENSHIP and
these others known and unknown to the Grand Jury knew would resuit in continued routine
violations ofmandatory federal mine safety and health standards at UBB, as alleged in
Paragraphs 67 and 68;

h. the instructions and counsel to perform acts, and to commit omissions, that would
violate and cause violations of mandatory federal mine safety and health standards, alleged in
Paragraphs 59 through 65;

c. the counsel to provide advance warning of federal mine safety inspection
activities in underground works, alleged in Paragraph 66;

d. providing and causing to be provided advance warning of federal mine safety
inspection activities in underground works, as alleged in Paragraphs 37 through 39;

e. concealing and covering up and causing to be concealed and covered up, routine
violations of mandaiory federal mine safety and health standards at UBB in response to warnings
of federal mine safety inspection. activities in underground works as alleged in Paragraph

37;

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 38 of 41 PageID 2307

falsifying and causing to be falsified, during the Indictment Periods samples of
respirable dust collected at BB pursuant to mandatory federal mine health standards, by falsely
representing and causing to be falsely represented the locations at which dust sampling devices
were placed for the collection of such samples;

g. regularly pressuring UBB management to increase coai production and reduce
production costs while knowing that UBB was routinely failing to meet. mandatory federal mine
safety and health standards and that those steps would cause continued and. increased violations
of those standards at UBB, as. alleged in Paragraphs 69 through 77;

h. awarding high levels ot?compensation to, and declining to discipline or punish,
of?cials who committed and caused routine and ongoing violations ofmandatory federal mine
safety and heaith standards at UBB, as alleged in Paragraph 79;

1. making and causing to be made false and misleading statements and omissions
intended to conceal the existence of, and. thereby perpetuate, the conspiracy, as alleged in
Paragraphs 80 through 85; and

j. committing routine Violations of mandatory federal mine safety and health
standards at BB, as alleged in Paragraphs 16 through 36.

In Violation of Title 30, United States Code, Section 820(d)i and Title 38, United States

Code, Section 37 .

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 39 of 41 PageID 2308

Count Two
101. The Grand Jury re?alleges Paragraphs 1 through 100 as if fully incorporated
herein.
102, On or around. April 8, 20l 0, in the Southern District of West Virginia,

BLANKENSHIP, aided and abetted by others known. and unknown, knowingly and willfully
made and caused to be made materially false, ?ctitious, and fraudulent statements and
representations; and knowingly and willfully made and used, and caused to be made and used, a
false writing, and document knowing the same to contain materially false, ?ctitious, and
fraudulent statements and entries, in a matter within the jurisdiction of the executive branch of
the Government ofthe United States, to wit, by ?ling and causing; to be ?led with. the SEC a
document containing statements, entries, and representations including, the following: ?[wle
[Massey] do not condone any violation of MSHA regulations" and ?we [Massey] strive to be in
compliance with all regulations at all times," which statements then and there
well knew were false, ?ctitious and ?l?raudulent.

ln Violation ofTitl.e 18, United States Code, Section. and and Section 2.

Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 40 of 41 PageID 2309

Cennt Three
103. The Grand Jury re-alleges Paragraphs 1 through 102 as if fully incorporated.
herein.
104. From on or around April 7, 2010, through on or around April 9, 2010,

BLANKENSHIP, aided and abetted by others known and unknown to the Grand Jury, did
directly and indirectly, by means and instrumentalities of interstate commerce, and by means of
the mails and. of the facilities of national securities exchanges, did make and cause to be made
untrue statements of material tact, and did omit to state, and cause to be omitted to state, material
facts necessary in order to make the statements made, in the light oi?the circumstances under
which they were made, not misleading, did engage in acts and practices and courses of business
which operated and would operate as frauds and deceits upon persons, all in connection with the.
sale and purchase of securities, to wit, Massey Class A Common Stock, in that BLANKEN SHIP,
aided and abetted by others known and unknown to the Grand Jury, did directly and. indirectly,
make and cause to be made. the statements, [Massey] do not condone any Violation of
MSHA regulations,? and [Massey] do not condone any Violation of Mine Safety and
Health Administration (MSHA) regulations,? and ?we [Massey] strive to be in compliance. with
all regulations at. all times,? in a filing made with the SEC by means of interstate wire
transmission, and in a press release distributed by means of interstate wire transmissions and
companies engaged in the business ofdistributing press releases by means ot?interstate wire
transmissions.

In Violation ot?Title 15, United States Code, Section 78ft; Title 17, Code of Federal

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Case 5:14-cr-00244 Document 169 Filed 03/10/15 Page 41 of 41 PageID 2310

Regulations, Section 240.1005; and Title 18 United States Code, Section 2.

  

 

SEE .RUBY
Assistant United States Attorney

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