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KIZER SEES HIMSELF AS VICTIM


Publication: THE CHARLESTON GAZETTE
Published: Sunday, April 22, 1990
Page: P1A
Byline: PAUL NYDEN

H. Paul Kizer grew up in Turkey Knob, a small Fayette County coal camp. His father, Ernest Edward Kizer, worked 43 years underground. He died from black lung disease in 1975. At 16, Paul.

moved to a boarding house in the remote Webster County town of Bergoo and became a miner himself.

Twenty-five years later, Kizer bought his first mine from.

Westmoreland Coal. Within five years, by 1988, Kizer's Beckley-based Maben Energy Corp. was the nation's 19th-largest underground coal producer.

Before he sold three Boone County mines last year, Kizer employed more than 1,000 miners and had an annual payroll of $40 million.

Business success brought political entanglements. Between 1984 and 1989, Kizer made nearly $1 million in campaign contributions and other payments to former Gov. Arch Moore and his associates, including former Workers' Compensation Commissioner John Leaberry.

Kizer was a central figure in the federal investigation of Moore that produced an April 12 indictment on five felony charges, including extortion, income tax evasion, mail fraud and obstruction of justice.

Moore agreed to plead guilty to those charges, and faces up to.

36 years in prison and $1.25 million in fines. Moore is scheduled to be arraigned Thursday.

Kizer's lawyer, Fred Fahrenz, would neither confirm nor deny .

that federal officials gave Kizer immunity from prosecution in return for his cooperation with the Moore investigation.

Kizer believes he was the victim in his relations with Moore..

He also believes that news reports have ignored his side of the story Coal cash was a key to Moore's political career. Coal operators.

and their relatives gave more than $750,000 to Moore for his 1984 and 1988 gubernatorial campaigns. Illegal coal cash was instrumental in.

bringing Arch Moore down - cash Moore extracted from Kizer, from an A. T. Massey subsidiary, from Island Creek Coal, perhaps from other coal companies as well.

Kizer, 48, touched down at Yeager Airport Saturday morning in a.

sleek, black and gold helicopter sporting a Maben Energy logo.

Kizer talked about his life. Fahrenz, a lawyer with Hunt & Wilson, revealed details of just how Moore extorted money.

Between 1984 and 1988, Kizer's payments to Moore included:KIZER hop A payment of $57721 in October 1985. The federal indictment stated the money was paid "in return for Moore's assistance in obtaining a refund of over $2 million from the West Virginia Coal Workers Pneumoconiosis Fund." A payment of $211,542 in July 1988. This went to Leaberry, who became Moore's campaign manager in 1988 and created a consulting.

firm called Left Coast Inc. on July 13. Six days later, Barrett Fuel, another of Kizer's companies, wrote a $211,542 check to Left Coast The Coal Workers Pneumoconiosis Fund issued a $2.1 million refund to Beckley Lick Run that same day. Kizer bought Beckley Lick.

Run, a former CSX subsidiary, in July 1987 and merged it into Barrett Fuel. John Kozak, executive secretary of the Workers' Compensation.

Fund, said last week that he would not have approved the Beckley Lick Run refund.

A series of payments totaling $150,000 in 1989. The federal.

indictment stated these payments were made in return for Moore's help in getting Kizer more than $60 million in tax credits over a 10-year period, under the state's super tax credit program.

At least $2100 in political contributions in 1984 and 1988 from Kizer and his associates, reported to the secretary of state.

After Moore's indictment, Gov. Gaston Caperton returned a $1,000 political contribution Kizer gave him two months ago to retire his 1988 campaign debt. Caperton did not return $14,000 in political contributions he received from Kizer and his associates in 1988 and 1989.

Kizer said that he took advantage of federal and state laws providing for black lung refunds and for tax credits. He said he followed all required procedures, qualified for the benefits and was entitled to them.

Moore wielded political power to extract payments from Kizer, Fahrenz said.

Kizer applied for his first black lung refund in 1984, when Jay Rockefeller was governor. It was the policy under the Rockefeller administration and Moore's previous administrations to return black lung premiums, less benefits paid to miners, to coal companies that qualified to become self-insured.

The McDonough Caperton Insurance Group, then headed by Gaston Caperton, handled Kizer's black lung refund applications during 1984 and 1985. David P. Cook, a McDonough Caperton vice president, wrote to Workers' Compensation Commissioner Mary Martha Merritt about Kizer's refund on March 7, 1985.

Cook cited verbal agreements he made with former Workers'.

Compensation Commissioners Gretchen O. Lewis and Timothy Huffman "to refund all premiums paid to the Coal Workers Pneumoconiosis Fund by Maben Energy and its affiliates, less claims and expenses, upon provision of proof that the U.S. Department of Labor has permitted them to self-insure." In 1985, Kizer paid McDonough Caperton about $600,000 for insurance premiums and administrative fees to cover his mining employees, Fahrenz said.

Samuel H. Davis, director of the state's black lung fund, wrote to Cook on April 12, 1985. Davis stated the fund would refund Kizer's premiums when he got federal approval for self-insurance.

Before getting final approval, the U.S. Department of Labor required Kizer to set up a $705,000 trust fund to cover future black lung liabilities, Fahrenz said. Kizer got the approval on Oct. 1, 1985 Three days later, on Oct. 4, the black lung fund sent Kizer $2.

3 million for any black lung overpayments his companies made since 197 when states began administering federal black lung funds.

Kizer sent Moore 25 percent of the refund, or $57721.

Moore had arranged to get this money 11 months earlier, after beating Democrat Clyde See in the 1984 governor's race and before he took office. Fahrenz said, "Moore made a fee agreement as a lawyer with Kizer after he was elected to get 25 percent of whatever was refunded.

"Basically, Moore was telling Kizer, "You don't sign the agreement. You don't get the refund.' 1/3" Fahrenz said.

"From our investigation, we can't find anything that Arch Moore did to facilitate this refund," Fahrenz said. "He might have expedited the issuance of refund checks. Maybe he didn't even do that." Fahrenz called Moore a rainmaker. "Rainmaking is getting your victim to think a goal is achieved because of your actions when, in fact, that goal was going to be achieved in the normal course of events.

"Moore was like the lawyer who finds out a judge is going to grant his client probation," Fahrenz said. "Then the lawyer goes to his client and says, "Give me an extra $50,000. I've got an in.

with the judge and I can get you probation.' The guy gives the lawyer $50,000 and he gets probation. That was going to happen anyway, but no one is the wiser." Events leading to Kizer's black lung refund in 1985 were replayed in 1988 and 1989, when Kizer got his super tax credits.

Fahrenz said, "Kizer opened new mines and employed new people..

He qualified for the super tax credits. Former Tax Commissioner.

Michael Caryl promised and promised that we would get this approval.

We never did. In December 1988, Caryl was leaving office." Early that month, Moore and Kizer met again.

At the time, Kizer said he was also worried about his trial for murder and conspiracy charges slated to begin in Huntington on Dec. 12. Kizer was accused of hiring two men to beat up Jimmie Lee Vickers II, a Boone County man, in March 1986, following a dispute over a girlfriend. Instead of roughing up Vickers, the hired men shot and killed him.

In November 1988, James Bonham, Kizer's personnel manager, was.

convicted of voluntary manslaughter for his role in hiring the gunmen..

Both men directly involved in killing Vickers went to jail.

Kizer was acquitted on all charges.

During his December 1988 meeting with Kizer, Moore did the same thing he did four years earlier. "It was clear to Mr. Kizer that unless he signed an agreement, he would not obtain the super tax credits," Fahrenz said.

Moore had just lost his bid for a fourth term as governor to.

Caperton, by an 18 percent margin. "The governor told Kizer he lost the election and needed clients," Fahrenz said. "Moore told Kizer he had to sign a retainer agreement and make payments of $150,000." Caryl gave Kizer preliminary approval for $60 million in tax credits over 10 years in a letter dated Dec. 8, 1988. The letter noted Kizer had invested $82 million in his mines and created or saved 744 jobs.

Another 11 months passed before Kizer got final approval.

Caperton was governor.

In July, Kizer hired S. Austin Caperton III, the governor's cousin, as a consultant, paying him $10,000 a month. Kizer gave Caperton Energy, Austin Caperton's firm, an extra $35,000 check on Nov. 10, a week after getting final approval for the super credits Last week, Tax and Revenue Secretary Charles O. Lorensen said his staff is investigating whether Kizer was entitled to those tax credits.

Lorensen's lawyer, Dale W. Steager, signed the 1989 letter granting Adventure Resources Inc., Kizer's management company, final approval for the credits. Lorensen had disqualified himself from signing the letter because his former law firm, Jackson & Kelly, had also worked to help Kizer get the credits.

Moore and Kizer met again in October 1989, this time behind the abandoned Charleston Municipal Incinerator. Moore got a list of business matters from Kizer, the indictment stated, "in order to prepare a false story about legal services Moore had supposedly performed for Kizer." Last year, the super credit program gave coal companies $54 million in tax breaks. Today, 20 percent of all coal mined in West Virginia is mined tax free. A Tax and Revenue Department study released earlier this year stated operators who got the special credits - designed by legislators to increase employment _ actually.

employed 1,300 fewer miners in 1988 than they did in 1985, before the program went into effect.

Tax Department officials refuse to reveal which companies are .

getting the credits. Industry sources revealed the companies include Island Creek Coal, Consolidation Coal, Cyprus Kanawha Corp., Ashland Coal, High Power Energy and Peabody Coal.

Kizer said Saturday, "Some of the companies that got the credits were not eligible for them. We were.

"Some large companies with an unprofitable mine employing 50.

miners would shut it down. Then they got the tax credits and hired a contractor who opened it back up with 10 employees.

"The state got screwed," Kizer said. "That's what hurt the super tax credit program. It bothers me to no end." This year, the Legislature ended the super credit for coal companies. The new law made an exemption for operators who already.

invested at least $10 million under the program by March 1990.

Kizer could qualify for future credits.

Kizer said his companies expanded from about 80 employees in 1982 to 1,022 employees in 1989. In November 1989, Kizer sold his Boone County mines to Big River Mineral Corp., a company based in St. Louis. Some tax credits went with the sale.

David Harrah, Kizer's accountant in Beckley, said the Boone.

County mines accounted for 50 percent of Kizer's 1989 production, but only 15 percent of his coal reserves.

Kizer still employs more than 750 miners who will mine between 2.

5 million and 3 million tons this year. Kizer said he has 254 million tons of recoverable reserves. Since these reserves are low- to middle-sulfur coal, passage of the federal clean air bill could help his companies.

Kizer talked about his past and his family on Saturday. He graduated from Marshall University in 1966. Before that, he spent.

three years at the University of Tennessee, where he played center on the Volunteers' football team.

Kizer talked about Ruby Kizer, his mother, who lives in the same.

house in Turkey Knob where she raised three sons and three daughters, including Henry Paul. Kizer said he offered to build her a new house several times. "She refuses to move anywhere else," he said.

After graduating from Marshall, Kizer taught school in Mount Hope for two years. After that, he sold farm machinery in Western Kentucky and auto bumpers in Huntington.

Kizer was a federal mine safety inspector for five years, beginning in 1972. He quit in 1977 to become a contract miner for Westmoreland Coal's East Gulf mines on the Raleigh-Wyoming county border.

Slab Fork Coal Co., owned by the Caperton family, took over the.

Westmoreland properties in 1982. Kizer said, "All of a sudden, Slab Fork took over at Wyco. One day, two vehicles drove up and said, "You no longer work for Westmoreland. You work for Slab Fork.' "Before they left, one had a flat tire and we had to jump-start the other," Kizer said. "I knew we were in trouble if they couldn't afford tires and batteries." Slab Fork declared bankruptcy on March 14, 198 more than $16 million in debt. "We convinced them to return the property to Westmoreland Coal. Westmoreland then gave us the property in May," Kizer said. "The state later did several million dollars of reclamation work at the Slab Fork mines." Slab Fork coal forfeited seven permits and reclamation bonds.

The Division of Energy's list of coal operators barred from opening new mines anywhere in the country has several Slab Fork officials, including W. Gaston Caperton Jr., the governor's late father; S. Austin Caperton Jr.; and Charleston businessman Angus E. Peyton.

Kizer said he has come a long way. He grew up in a poor.

family. As he talked about his mother and father, Kizer began crying "From time to time over the years, my father was laid off from.

the New River mines," Kizer said. "After the Korean War, it really got tough. Sometimes, we couldn't even make a mayonnaise sandwich

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