A $1.7 million civil lawsuit has been filed by John Manchin II against his brothers U.S. Sen. Joe Manchin III and Roch (Rock) Manchin.
The suit involves funds that John Manchin claims he gave to his brothers in the late 1980s so that their carpet business could avoid bankruptcy. John Manchin, a doctor of osteopathic medicine and the owner of two medical clinics in Marion County, claims that not only have his brothers refused to pay him the $1.7 million they owe him, but that the two dissolved their partnership without his knowledge and that Dr. Manchin was misled to believe he would receive payments from a coal gob disposal project that the Manchins didn’t even have a legal interest in.
Jonathan Kott, spokesperson for Sen. Manchin’s Office, said that no statement has been prepared by the senator at this time in regards to the lawsuit.
“All I can tell you is that it’s a family matter and we’re not going to comment on it,” Kott said.
Dr. Manchin filed the suit in Marion County Circuit Court Wednesday and is suing his brothers for what the suit claims is breach of contract, civil conspiracy, constructive fraud, a violation of a partnership and failure to repay the money Dr. Manchin says he invested to help the family business avoid bankruptcy.
Attempts to reach Dr. Manchin at his offices and through his attorney, J. Michael Benninger of Morgantown, were unsuccessful Friday. Calls to Rock Manchin’s carpet business and cell phone were also not returned.
The three brothers were partners and co-owners of real estate and other business interests. In the early 1980s, the three brothers formed Manchin Brothers, a partnership that included coal, real estate and other business ventures.
According to the suit filed by Dr. Manchin, he provided all the funds for Manchin Brothers to be formed. At the time Manchin Brothers was formed, Sen. Manchin and Rock Manchin along with other family members owned and operated Manchin Carpet Center in Marion County.
In the early 1990s, the suit says Manchin Carpet Center became financially unstable, and the senator and Rock Manchin had to reorganize the finances of the business to avoid bankruptcy.
According to the suit, Dr. Manchin says that the senator and Rock Manchin asked him for financial assistance and support. Because of that financial assistance, Dr. Manchin says he became a partner in Manchin Carpet Center.
The suit says that Dr. Manchin invested in excess of $1.7 million to help stabilize the company, all paid to the business’ primary creditor, Community Bank & Trust. The suit says that Manchin Carpet Center was reorganized in 1991 and now does business as Wholesale Carpet Outlet and is still in operation today.
The suit claims Sen. Manchin and Rock Manchin promised to repay Dr. Manchin everything that he put into the partnership. Dr. Manchin says he has repeatedly requested that the senator and Rock Manchin repay him, and every time Dr. Manchin contacted his brothers, he claims they orally and in writing renewed agreements to repay their debt.
The court documents say that Sen. Manchin and Rock Manchin told Dr. Manchin that if he withheld legal action against them, Dr. Manchin would be granted one-third interest in coal reserves and coal brokerage and other businesses.
The court documents include copies of an agreement from July 2012 that appear to be signed by the senator and Rock Manchin. Also included is a letter dated July 25, 2012, on United States Senate letterhead from Kirtan Mehta, chief counsel to Sen. Manchin, referencing a phone conversation between Dr. Manchin and Sen. Manchin the day before. In the letter, Mehta urges Dr. Manchin to contact him with any follow-up questions about a “Funds Sharing Agreement” that he was to sign in triplicate and then give to Rock Manchin for his signatures.
The agreement, which looks to have been signed by Sen. Manchin on July 24, 2012, says that the first $1 million Sen. Manchin would earn from the Wellington Development - WVDT LLC Nemacolin Power Project would go to Dr. Manchin. Anything in excess of the $1 million would be divided three ways between the three brothers as long as they were all living.
Dr. Manchin contends that the agreement was solely intended to mislead him, since the Manchins had no legal interest in Wellington Development or the project at the time the agreement was executed.
Dr. Manchin also claims that the Manchin Brothers partnership was reorganized without his knowledge and all funds and assets were transferred to Manchin Enterprises, which is owned and controlled by Sen. Manchin and his son, Joseph Manchin IV, “and it is believed that its funds, assets and property were transferred to Wholesale Carpet.”
Dr. Manchin says that he believed and was led to believe that he had a one-third stake in coal reserves and related businesses, like Transcom (now Farmington Resources) and Enersystems. However, the suit contends that Dr. Manchin is “unpaid and without any ownership interest in the coal reserves and the coal brokerage and other businesses now owned and operated by these defendants.”
According to a search of the West Virginia Secretary of State’s online business database, Enersystems was incorporated in 1988 by Rock Manchin, and Joe Manchin IV holds all executive positions in the company. Farmington Resources was incorporated in 1999 by Michael Jones, and Joe Manchin IV holds all executive positions of that company as well. Wellington Development was incorporated in 2002 by Wilfred Derby of Maryland and Anthony J. Julian of Fairmont.
According to the United States Senate Financial Disclosure filed by Sen. Manchin for the 2013 calendar year, there was no income associated with Wellington Development. Income declared by the senator mentioned within the lawsuit are: Manchin Enterprises, rental/royalty income, $15,000 to $50,000; Farmington Resources, interest income, $5,001 to $15,000; and Enersystems, operating income, $460,894.
Email Misty Poe at mpoe@timeswv.com or follow her on Twitter @MistyPoeTWV. Email Emily Gallagher at egallagher@timeswv.com or follower her on Twitter @EGallagherTWV.
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