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Freedom executive Kennedy had felonies

CHARLESTON, W.Va. -- Freedom Industries, the company responsible for contaminating the water of 300,000 Kanawha Valley residents, was founded by a two-time convicted felon, benefited from the 2009 federal stimulus and at least two of its executives have longstanding ties to the Charleston business community.

Since the chemical spill on Thursday, Freedom Industries executives have entirely avoided media requests, except for a brief news conference Friday night.

On Sunday morning, Charles Ryan Associates, a prominent Charleston public relations firm hired by Freedom, abruptly dropped the chemical distributor as a client.

"I made the decision not to represent them," said Susan Lavenski, who was handling Freedom for Charles Ryan. She would not give any details as to why she would no longer represent the company.

Freedom Industries was founded in 1992 by Carl Lemley Kennedy II, according to filings with the West Virginia secretary of state. The company's website, however, says it was founded in 1986.

"Our friends and our neighbors, this incident is extremely unfortunate, unanticipated and we are very, very sorry for the disruption to everybody's daily life that this incident has caused," Gary Southern, the company's president, said at the news conference Friday night. "It has been an extremely long day, I'm having trouble talking at the moment. I would appreciate it if we could wrap this thing up."

He has not spoken publicly since.

Kennedy is still listed as "incorporator" with the secretary of state, but a woman who answered the phone at Freedom Industries on Friday said he left the company "years ago."

As recently as 2005, Kennedy owned 5 percent of Freedom Industries, according to a bankruptcy filing. That stake was valued at $675,000, according to Kennedy's filing, meaning that in 2005 Freedom Industries was valued at $13.5 million.

That valuation has almost certainly increased over the past eight years. In 2008, the company employed 45 people, sold 10 million gallons of material and earned $26 million, according to newspaper records.

Within the last two weeks, on Dec. 31, 2013, Freedom merged with three other companies, Etowah River Terminal, Poca Blending and Crete Technologies.

The companies were already interrelated. Freedom markets and distributes chemicals that are mixed by Poca Blending in Nitro. Etowah River Terminal is the storage facility on the Elk which leaked the chemical. It has about a dozen tanks, each of which can hold tens of thousands of gallons of chemicals. It was formerly a Pennzoil facility.

Kennedy told the court in 2006 that he also owned portions of Poca Blending, Etowah River Terminal, New River Chemical Co., New River Leasing, New River Air, The Sands Land Co., Dogtech Land Co., Protech Land Co., and all of Southway Inc.

Kennedy filed for bankruptcy in 2005 after he was charged with tax evasion and willful failure to pay employees' withholdings to the government. He pleaded guilty to both charges in U.S. District Court in the Southern District of West Virginia.

He admitted that between 2000 and 2003, while he was the accountant for Freedom Industries, Poca Blending and New River Chemical Co., he withheld more than $1 million from employee paychecks that he never passed on to the federal government, according to court filings. He also owed more than $200,000 in state taxes.

"Carl L. Kennedy II took steps to conceal a large portion of his income from the Internal Revenue Service by, among other things, using his position as an accountant to ensure a W2 form was not filed in his name," the court document reads, "using corporate funds for his personal benefit and writing corporate checks to cash for his personal enrichment."

He was sentenced to more than three years in prison, but had his sentence cut almost in half after he cooperated with authorities by making controlled cocaine buys and wearing a wire in conversations with a former business associate.

It was not Kennedy's first brush with the law.

In 1987 Kennedy pleaded guilty to selling between 10 and 12 ounces of cocaine in connection with a scandal that toppled then-Charleston Mayor Mike Roark.

Kennedy has, in the past, owned extensive property in downtown Charleston, including the building currently housing Bar 101 on Capitol Street and the building at 8 Capitol St.

Charleston Mayor Danny Jones said he has known Kennedy since the '80s and called him an "edgy guy."

"He was just kind of a character and he's gotten in trouble," Jones said. "I liked him, but if he got in trouble twice on felony charges then he's a slow learner."

Kennedy has been a longtime business associate of Dennis P. Farrell.

Farrell is listed as the president of Freedom Industries on the company's website, but was called only an "executive" by a woman who answered the phone at the company.

The two met in college, at West Virginia Institute of Technology in Montgomery, and went on to own at least two restaurants together.

They co-owned The Bank Bar and Grill, in Montgomery, and Tomahawks, in Jefferson.

In 2009 Freedom Industries was at risk of either going out of business or leaving its location on the Elk River, Farrell told the Charleston Daily Mail.

Sand, silt and mud had built up in the river, making it difficult for barges to travel the 2.5 miles from the company's river terminal to the Elk's confluence with the Kanawha.

But the river was dredged in 2009 by the U.S. Army Corps of Engineers, thanks to $400,000 from the federal stimulus.

"It could've put us out of business," Farrell told the Daily Mail about the undredged river. "At some point we wouldn't have been economically fit to run the facility. That's our claim to fame: the barges."

In 2008, Freedom Industries secured a contract to distribute a line of products called Talon that are used as a binder in coal processing, according to a news release issued at the time. Freedom distributed Talon to eight states, including West Virginia.

"We are excited to offer our customers inventive products like Talon that push past the status quo in coal recovery to bring profit and productivity benefits to mining preparation plants," Joshua Herzing, a Freedom executive, said in the press release.

Talon is made by Georgia-Pacific Chemicals LLC. Georgia-Pacific is owned by the billionaire industrialists Charles and David Koch.

The Koch brothers have, through a conservative group called Americans for Prosperity, spent millions of dollars campaigning against a wide array of environmental regulations.

On Saturday, Americans for Prosperity set up a water distribution site at Columbia Gas in Charleston.

Since Friday night's news conference, the only public statement from anyone connected with Freedom came from Kathy Stover-Kennedy, Farrell's fiancé.

On her personal Facebook page, Stover-Kennedy asked for empathy for Freedom executives, and said that she had showered and brushed her teeth with the contaminated water and she was "just fine."

Stover-Kennedy is Carl Kennedy's ex-wife, according to Gazette archives and a business associate of Kennedy's who asked not to be named.

Also associated with Freedom Industries, is J. Clifford Forrest, who is listed as "manager" of Etowah River Terminal and Poca Blending on the merger document submitted to the secretary of state.

Forrest is the president of Rosebud Mining, a Pennsylvania-based coal company.

In late 2010, Rosebud was sued by the federal Mine Safety and Health Administration because they were allegedly providing advanced notice to miners of coming inspections, violating the Mine Safety and Health Act of 1977.

Forrest also owns The Lodge at Glendorn, a luxury resort in northern Pennsylvania.

Southern, Kennedy, Farrell and Forrest did not return requests for comment.

Reach David Gutman at david.gutman@wvgazette.com or 304-348-5119.

 


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