The legal bills were filed in U.S. Bankruptcy Court in Charleston on Monday, a week after authorities charged former Freedom Industries President Gary Southern with a bankruptcy fraud scheme related to the Jan. 9 chemical leak that contaminated the drinking water supply serving hundreds of thousands of people in Charleston and surrounding communities.
Word that Freedom has approved a plea agreement comes as federal authorities moved this week to freeze some of Southerns personal assets and a request by Southern
that Goodwin be disqualified from prosecuting criminal charges that accuse Southern
of lying about his
role running Freedom in a scheme to protect his
personal wealth from bankruptcy court and civil lawsuits arising from the chemical leak.
On Monday, lawyers for Southern
filed a motion in U.S. District Court in Charleston asking that Goodwin be disqualified.
The motion also asks that all of Goodwins
staff and any federal investigators working for his
office be prohibited from working on the case.
Also Monday, Wright sought seizure warrants covering more than $7 million from at least three different accounts listed in the name of Southern
or a company he
owns called IWL Inc., according to documents filed in federal court.
U.S. Magistrate Judge Dwane L. Tinsley approved the warrants, and officials said the government was in the process of seizing Southerns assets.
In the disqualification motion, Bob Allen, lead defense lawyer for Southern, argued that federal officials in Charleston have a conflict of interest in the case because they as well as their families, friends and neighbors were victims of the chemical leak.
Allen argued that Goodwin, his staff and federal investigators currently working on the case could benefit from any money recovered from Southern
for the bankruptcy case, class-action lawsuits over the chemical leaks impacts, and any restitution ordered as a result of criminal convictions in the matter.
The impact of the chemical spill was widespread, the motion filed for Southern
Everyone at the United States Attorneys office was affected at work and many of them, including their families, were affected at home Every employee of the United States Attorneys office was in the same position as everyone else mired in the ordeal and thus, they and their families are actual victims.
Among other things, the motion also argued that an unbiased third party would question whether Southern
is being overcharged or charged too aggressively and being prosecuted for acts related to the chemical spill to vindicate personal interests or placate the victims of the water crisis many of whom are friends and relatives of members of the United States Attorneys office or to gain access to [Southerns] personal wealth for those who have suffered through the ordeal.
Last week, Southern
was charged in a federal criminal complaint with bankruptcy fraud, lying in a bankruptcy case and committing wire fraud by filing false documents in Freedoms ongoing bankruptcy proceeding.
Federal authorities allege that Southern lied about his
role in running Freedom and its Etowah Terminal along the Elk River in an effort to avoid personal liability for the conditions that led to the leak of MCHM and other chemicals.
For example, Southern testified that he was not part of the Freedom organization prior to December 2013, testifying at a Jan. 21 bankruptcy court hearing that he worked for Freedom only as a part-time financial-type consultant.
Authorities allege that Southern actually was the chief operating officer of Freedom starting in May 2009 and served on its board of directors from March 2010 to October 2013.
Working with the FBI, Goodwins office charged Southern through a federal criminal complaint, rather than a grand jury indictment, and moved quickly last week to have Southern arrested in Florida, where Southern owns a home on Marco Island.
Southern is currently free on a $100,000 unsecured bond after appearing before a federal magistrate judge in Fort Myers, Florida.
In an affidavit filed with the original criminal complaint, Lafferty had noted that Southern
had in February 2014 moved $6.5 million from an account with Wells Fargo Bank
to a Jackson National Life Insurance Co.
annuity, one of the accounts covered by the seizure warrants.
Allen complained in his motion to disqualify Goodwin that this transfer was as unbelievable as it may be the reason that federal authorities moved to charge Southern
and arrest him in Florida.
The fact that Mr. Southern
was arrested at his
home in Florida on December 8, 2014, without notice to his
attorneys, when the government knew he
was represented by counsel, and without any factual basis to believe he
was a flight risk, again shows loss of impartiality or the appearance thereof.