Lawsuits Mount Against Chemical Company in West Virginia that Left 300,000 People without Drinking Water

On Jan. 9, 2014, a tank at Freedom Industries in Charleston, W.Va., leaked coal-cleaning chemicals into the Elk River about a mile and a half upstream from a water treatment plant. Tap water in the area began to smell like licorice. The water also had a blue-green color. Drinking the water was prohibited for several days. Freedom Industries filed for bankruptcy protection eight days after the spill.

The top executive of the company has been alleged to have lied about his role with the company to protect his personal wealth of nearly $8 million from lawsuits. The FBI is investigating.

Freedom Industries’ president, Gary Southern, repeatedly told investigators he had little to do with the company before it was sold a few weeks prior to the January 2014 chemical spill.

But an FBI affidavit revealed that Southern had overseen day-to-day operations at the chemical storage company, hired employees and executed contracts for several years, according to a complaint that was unsealed.

Southern was also involved in negotiating the sale of the company in December 2013, including how much money would be set aside to deal with necessary repairs at the site. Investigators discovered holes in tanks, shoddy last-resort containment walls and other structural deficiencies. Southern has denied any wrongdoing although he was arrested in Florida in early December 2014 and faces charges of bankruptcy fraud, wire fraud and lying under oath.

“All of the statements [by Mr. Southern] indicates or suggests an effort to deflect blame from Southern for the discharge of [the chemical] MCHM into the Elk River, which resulted in the denial of water to thousands of people and businesses for most uses, for several days.” As a side note, there were reports that Southern’s public appearances seemed to be unsympathetic and in fact, during an interview, he took a long drink from bottled water in front of TV cameras.

Chemstream Holdings Inc. had purchased Freedom Industries on Dec. 6, 2013, just weeks before the chemical spill. According to the affidavit, Southern had a “substantial motive” to downplay his employment with Freedom. He was trying to protect his net worth of at least $7.7 million from dozens of lawsuits already filed over the spill and any potential new ones, according to the affidavit. Many businesses sued Freedom, Southern, the regional water company and other related parties because the tap-water ban shuttered their operations for days. Creditors are looking to recover more than $176 million.

The trouble for Southern started in the bankruptcy court where he described his role as “part-time, financial type consultant to help the owners of their business get their finances and systems back on track.” Southern had said that he was involved only “superficially” in Chemstream’s purchase of Freedom. The matter is pending as are the many lawsuits and what Southern’s responsibilities to those damaged may be.

Kreisman Law Offices has been handling chemical injury cases, pharmaceutical product defect cases, wrongful death cases and catastrophic injury cases for individuals and families who have been harmed, injured or died as a result of the carelessness or negligence of another for more than 38 years in and around Chicago, Cook County and its surrounding areas, including Wood Dale, Western Springs, Clarendon Hills, Lemont, Palos Park, Palos Heights, Chicago Ridge, Chicago Heights, South Holland, Calumet City, Berwyn, Melrose Park, River Grove, Palatine, Kenilworth, Lockport and Hinsdale, Ill.

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