Freedom Industries President facing federal fraud charges
Gary Southern, President of Freedom Industries during the January 2014 MCHM spill into the Elk River, is facing charges of bankruptcy fraud, lying under oath and wire fraud.
According to the criminal complaint filed in federal court in Charleston, Southern lied under oath about his role at Freedom Industries prior to the spill in order to deflect blame from himself and protect himself financially.
FBI Special Agent James Lafferty II says in the criminal complaint that Southern engaged "in a pattern of deceitful behavior, which included numerous false and/or fraudulent statements about his role at Freedom, his role in the sale of Freedom to Chemstream, and his knowledge about conditions at the Etowah Facility.”
In bankruptcy court, Southern said under oath that his role with Freedom Industries prior to its sale to Chemstream, a Pennsylvania company that bought Freedom on December 6, 2013, was as a "part-time financial-type consultant," and that his role in Freedom Industries sale to Chemstream was "superficial."
Investigators found that Southern became Chief Operating Officer of Freedom Industries in May 2009 and handled day-to-day operations at both the Etowah and Poca facilities, including hiring's, presiding over staff meetings and executing contracts. It was also discovered by investigators that Southern played a key role in the sale of Freedom Industries to Chemstream, including providing information to Chemstream and assisting in negotiations.
The criminal complaint says that despite these involvements, Southern said under oath that “prior to the acquisition by Chemstream, I was not part of the Freedom organization.”
Investigators say that Southern's motive was financial. The criminal complaint says Southern had about $7.7 million in assets as of October 31, 2014 and claims against Freedom total over $176 million.
Check 59 News for updates on this developing story.
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