The FBI has filed criminal fraud charges against Gary Southern, former president of Freedom Industries, the company responsible for contaminating the drinking water of 300,000 West Virginians with 10,000 gallons of a toxic coal-cleaning chemical called Crude MCHM that leaked into the Elk River.
The charges stem from Southern’s actions in the aftermath of the chemical spill, when the embattled company executive, who drew fierce criticism for drinking from a water bottle during a press conference in which he was attempting to apologize to West Virginians for contaminating their water supply, allegedly lied about his involvement with Freedom Industries in an attempt to shield himself from lawsuits and thus protect his personal fortune.
In a sworn affidavit included in the criminal complaint, FBI Special Agent James Lafferty says “Southern engaged in a pattern of deceitful behavior” centered around his role at Freedom before it was purchased in December 2013 by a company called Chemstream and his knowledge of conditions at Freedom’s Etowah Facility, the chemical storage site responsible for the chemical leak.
The affidavit includes this example of false testimony made by Southern at a January 21 hearing for Freedom’s bankruptcy case:
Q: You didn’t work for Freedom before the purchase by Chemstream, correct?
A [SOUTHERN]: I did not work for Freedom, no.
* * * * *
Q: Well, did you have any capacity prior to December 31, 2013 with any of the companies?
Q: You did?
A: Prior to that — that’s a great question. Prior to then, I worked as a part-time, financial type consultant to help the owners of that business get their finances and systems kind of back on track. Which is why I have a relatively detailed knowledge of the business.
Q: The owners of what?
A: The previous owners of Freedom — the previous owners of Freedom Industries.
In fact, Southern had served as Freedom’s Chief Operating Officer prior to the sale to Chemstream, not as a “financial type consultant,” as he claimed in sworn testimony. As COO, he managed Freedom’s day-to-day business, including operations at the Etowah Facility.
Lafferty says in the affidavit that “Southern’s goal in making the false and/or deceptive statements is to protect his assets from legal judgments that may result from the lawsuits” arising from the chemical leak.
Southern was arrested at his home in Florida and released on a $100,000 bond after appearing in a federal court today, according to the Charleston Gazette.
U.S. Attorney Booth Goodwin, who was also involved in indicting former Massey Energy CEO Don Blankenship last month, told the Gazette that he anticipates “further results very soon” when asked if more charges related to the chemical leak might be forthcoming.
Image Credit: Screengrab of video by WCHS & WVAH TV