CHARLESTON, W.Va. — Assistant U.S. Attorney Steve Ruby told U.S. District Judge Irene Berger late Monday there is a “reasonable possibility” federal prosecutors will rest their case against Don Blankenship by early Tuesday afternoon.
The prosecution has one witness left, Ruby said.
That’s expected to be an FBI Agent who has been one of the lead investigators in the case against the former Massey Energy CEO.
Blankenship, 65, allegedly conspired to break mine safety laws in order to push production at the Upper Big Branch mine in Raleigh County in the months before the April 2010 explosion there that killed 29 miners. He also allegedly committed fraud in a statement about Massey safety practices sent to shareholders and filed with the federal Securities Exchange Commission following the blast.
The prosecution’s final witness, the 27th in all, is expected to focus more on that statement, Blankenship’s compensation deal with Massey and his specified powers with the company.
Judge Berger allowed Ruby to introduce approximately two boxes full of documents after the jury was dismissed Monday evening. The documents include Massey Energy bylaws, minutes of Massey board meetings, quarterly earning statements of Massey including how the company’s profits dipped following the 2006 Aracoma mine fire in Logan County that killed two miners and proxy statements involving Blankenship.
Frank Torchio, president of Forensic Economics, Inc. and an adjunct professor of finance and economics at the University of Rochester, took the witness stand as the trial resumed Monday morning. He was the only witness of the day.
“The market is hungry for information,” Torchio, an expert on how markets react to certain events, told the jury.
Torchio showed the jury how quickly Massey’s stock price fell in the two days after the deadly 2010 blast. The market return was down by 12.53 percent on April 6, 2010 and by 6.7 percent at the market close on April 7, 2010.
Those were “highly statistically significant” market declines, according to Torchio.
Prices leveled off on April 9, 2010, a change that Torchio attributed to Massey’s 8-K filing — an update for the market — with the U.S. Securities and Exchange Commission which included the statement: “We do not condone any violations of MSHA regulations and we strive to be in compliance with all regulations at all times.”
In this trial, the U.S. government has repeatedly attempted to link Blankenship directly to that statement which was made to both the SEC and shareholders in the days after the UBB Disaster. It is the basis for two of the three charges against Blankenship dealing with alleged fraud.
Prosecutors have claimed Blankenship was trying to protect Massey’s value and his own personal wealth, much of which was tied up in Massey stock, with what they allege are false statements.
On cross examination, Eric Delinsky, one of Blankenship’s attorneys, attempted to show that safety compliance was not among the main market concerns after the 2010 explosion and pointed Torchio to the other 48 sentences Delinsky said he counted in the SEC filing.
Delinsky also introduced as evidence an analysis from Jefferies, which was issued after that SEC filing, that concluded, “The market impact on Massey shares appears excessive.”
Sparring with Delinsky at times, Torchio defended his analysis that showed the return on Massey’s stock fell by nine percent, close to $500 million, on Apr. 30, 2010 following an NPR report of an FBI investigation into alleged “criminal negligence” within Massey with regard to mine safety violations.
Another 6.2 percent decline in return, or a $382 million loss, was recorded on May 17, 2010, Torchio testified, the first market day after the U.S. Department of Justice confirmed an investigation into alleged “willful criminal activity” linked to Massey and UBB.
Such declines were “not surprising,” said Torchio, for “an event of this magnitude.”
After UBB, he said shareholders had questions about future coal production, potential liability and possible damage to the company’s reputation in addition to the allegations of intentional misconduct.
Monday was the 22nd day for testimony in the trial that began on Oct. 1 with jury selection in front of U.S. District Judge Irene Berger.
There will be no testimony Wednesday, Nov. 11 in observance of Veterans Day.