CEOS ON TRIAL: Should Executives Fear Personal Criminal Charges for Corporate Wrongs?

ARTICLE UPDATE: The following article was published in the Spring/Summer 2016 issue of USLAW Magazine. The article was released in early April, the same week in which Don Blankenship was sentenced to a year in prison, fined $250,000 and ordered to serve a 1-year term of supervised release after his prison term.  Both are the maximum allowed by statute. Blankenship has indicated that he plans to appeal his conviction and sentence to the United States Court of Appeals for the Fourth Circuit.

excerpt from USLAW Magazine aticle written by Wesley P. Page of Flaherty Sensabaugh Bonasso PLLC in West Virginia

On December 3, 2015, Don Blankenship, the former CEO of Massey Energy Company, was convicted by a federal jury sitting in Charleston, West Virginia, of a misdemeanor charge of conspiring to violate mine safety laws. Although Blankenship faces up to a year in prison, the conviction could have been far more serious, as he was ultimately acquitted of felony charges of making false statements to the United States Securities and Exchange Commission (“SEC”) and to investors – charges which, if proven, could have carried sentences of up to 30 years’ imprisonment.

Blankenship’s conviction – for which he will be sentenced in the Spring of 2016 and which he will likely appeal – is the latest turn in a saga which began with an explosion that killed 29 miners at Massey’s Upper Big Branch (“UBB”) coal mine in southern West Virginia. The subsequent investigation by the federal Mine Safety and Health Administration (“MSHA”) concluded that the explosion was caused in part by routine safety violations by Massey, for which MSHA issued 369 citations resulting in more than $10 million in regulatory  penalties.

Despite the $209 million settlement of Massey’s corporate criminal liabilities, the United States Department of Justice continued to pursue potential personal criminal charges against Massey employees and executives, including Blankenship. Those investigations resulted in the guilty plea of a former mine superintendent, Gary May, to conspiring to impede MSHA enforcement efforts, and the indictment of Blankenship in November 2014. Although many of the allegations in the indictment involved the UBB disaster, the formal charges were directed at Blankenship’s oversight and management of UBB’s safety and health practices and representations Massey  made to the SEC and to investors regardingthose practices.

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