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 Post subject: Blue Coal's Checkered Past Revealed in Bankruptcy
PostPosted: Mon Jan 28, 2013 10:13 am 
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Blue Coal's checkered past revealed in bankruptcy
By Paul Golias (Correspondent)
Published: January 28, 2013

Nuggets of history continue to emerge from the Blue Coal bankruptcy, some full of intrigue amid questions that may never be answered.

Was Jimmy Hoffa killed due to his linkage to anthracite land deals? How did financial giant IIT get bamboozled in what the federal courts later found to be a fraudulent coal company sale? Who were the other people interested in the 17,000 acres of land that eventually came under control of Earth Conservancy?

All of these questions and much more information were in the open when the Huber Breaker Preservation Society hosted a program on the historic bankruptcy case that ran from 1976 to 2000. Speakers were attorney John Doran, who served as counsel to the trustee in the Blue Coal case through 1994, and attorney F. Charles Petrillo, local historian.

Ironically, the preservation society meets in the Earth Conservancy building on South Main Street, Ashley, where Blue Coal and its predecessor, Glen Alden Coal Co., had their office. Doran took depositions in the same building in the 1970s as the Blue Coal case expanded into one with a depth and breadth that made U.S. bankruptcy history.

Petrillo gave an overview of how Blue Coal evolved. An antitrust breakup of the Delaware, Lackawanna and Western Railroad led to creation of Glen Alden Coal Co. in 1921. It became Glen Alden Corp. in 1955. List Industries became major shareholder in 1958 and List spun off coal lands in Lackawanna and Luzerne counties to Blue Coal Corp. in 1966. Blue Coal came under control of the Raymond Group, the Cleveland and Gillen families, and then sold to Great American Coal Co. in 1974.

Great American's owners eventually were identified as James J. Durkin, Dallas; Jimmy Hoffa, former international president of the Teamsters Union, and Hyman Green, a New York businessman. They secured an $8.5 million mortgage from Institutional Investors Trust, New York City.

In the same period, Lucky Strike Coal Co., owned by Louis Beltrami, bought the Huber Breaker and land around the breaker. In this chain of events, Lucky Strike went bankrupt in 1991 and No. 1 Contracting Co., owned by Al Roman, formerly of Pagnotti Enterprises, bought the breaker and land. No. 1 itself went into bankruptcy in 2010 and the fate of the breaker depends on what happens in Bankruptcy Court. It appears the breaker will be sold for its salvage value.

Pagnotti Enterprises ended up holding the mortgage on some 30,000 acres of coal lands in the two counties, but the downturn in the anthracite business led to the eventual scheduling of the lands at tax sales. These sales were set for Dec. 17, 1976.

Doran then took up the narrative, noting that a fellow attorney called his attention to the tax sales and the impact it would have on the Anthracite Health and Welfare Fund which was owed $7 million by Pagnotti, then the mortgage holder.

Within a few days, Doran rounded up five creditors as plaintiffs and filed an involuntary bankruptcy action on Dec. 16. In his naïveté, Doran said, he even called a Pagnotti subsidiary that was owed money and he asked if that firm wanted to join in the action.

Doran said attorney Bernard Hendrzak, then director of the Luzerne County Tax Claim Bureau, resisted pressure from men "in dark overcoats and hats, not from around here," to go through with the sale despite the bankruptcy filing. Hendrzak held fast and a 26-year bankruptcy case was under way.

Doran said he had no idea of the scope or the players at that time.

"I wasn't even sure of where I was going to go (with the case)," he said.

Because Pagnotti needed coal to sell, Beltrami was allowed to mine coal on land in bankruptcy with the agreement that Pagnotti would pay $7,500 per month into the bankruptcy case account.

"That helped us create a war chest to continue the case," Doran said.

The case came down to a pivotal 120-day trial held before Judge Malcolm Muir in U.S. District Court, Williamsport. With the federal government as lead counsel, and Doran and his partner Bob Nowallis on the team, the case went in favor of the government and the trustee on their allegation that the IIT mortgage was invalid. The court found that the mortgage proceeds were used by the Clevelands and Gillens to buy stock and little went toward the coal company's $20 million in debt.

The winners were the Anthracite Health and Welfare Fund and the county, state and federal tax authorities owed money by Pagnotti.

Doran left as counsel to the trustee after 17 years in a dispute over the sum to be paid for the 17,000 acres of former coal lands in Luzerne County. Then Congressman Paul Kanjorski secured the land for $14.5 million and created Earth Conservancy to manage and reclaim the land, or to donate parcels for such uses as state forest land, game lands or youth recreation.

Doran said two local people, whom he would not identify, offered $21 million for the acreage. On upside would have been payment of taxes on the land. As a nonprofit, Earth Conservancy does not pay taxes.

IIT's role in providing the mortgage to Great American brings in the Durkin-Hoffa-Green connections. In the summer of 1975, Durkin wanted out of Great American and Green wanted to stay in. Hoffa, then a secret owner of half of the GA shares, had an attorney in St. Louis, Eugene Zaff, who received a $500,000 check from Durkin. Doran said when he later deposed Durkin and showed him the check, asking what it was for, Durkin responded, "I can't recall."

Green, the likely link to IIT, ended up as listed owner of all of the stock and Zaff, who disliked Green, tried to get Hoffa to reassert his ownership share. Hoffa disappeared on July 25, 1975, and Petrillo and Doran said there is speculation that the disappearance was linked to the coal lands dealings.

In his book, "I Heard You Paint Houses," author Charles Brandt writes that former Teamsters Union official Frank Sheeran, of Philadelphia, confessed to killing Hoffa on orders of then Northeastern Pennsylvania crime boss Russell Bufalino, of Kingston. The motive: Hoffa would not back down from his attempts to retake the Teamsters Union presidency at a time when the mob was working with his successor.

The Blue Coal bankruptcy was messy and fraught with people in shadows. Doran told this reporter that for a time, he feared for his life and for his children and he took precautions. Doran said he was offered a bribe to end the case. He would not identify the person or people who offered the bribe.

Doran's success in guiding the Blue Coal bankruptcy case was noted by the federal court.

"But for the efforts of Attorney John Doran in placing the Blue Coal Corporation into involuntary bankruptcy, it would have been extremely unlikely that the pre-petition creditors of that company would ever have seen a dime of payment," Bankruptcy Judge John J. Thomas wrote in an opinion and order on Jan. 15, 1997. "Now, the secured and priority creditors are being paid in full, and the non-priority creditors will receive approximately sixty cents on the dollar …"

Those comments and others lauding Doran came in an order approving a modest bonus to the Doran & Nowallis law firm for its work. Attorney Nowallis died recently. John Doran continues to practice law with his daughter, attorney Lisa Doran.

Meanwhile, Earth Conservancy continues its unique task of conserving and improving a vital asset, the land that was the focus of the bankruptcy case.

Earth Conservancy is based in the former Blue Coal Co. headquarters in Ashley. The historic Huber Breaker sits behind that building, a deteriorating reminder of the economic clout of the anthracite era. EC works to reclaim scarred land, eliminate mine pits and culm banks, create open space and woodland preserves, foster economic development and improve the quality of life locally.

About 10,000 acres will be committed to game lands, green space, parks, trails and other recreational uses. A soccer field complex in the Preston section of Hanover Township is an example of turning wasteland into a recreation area. Thus far, EC has spent $27.2 million to reclaim 1,453 acres. Work has begun to reclaim another 1,102 acres.

EC pays a part of its own way through sale of resources and the land itself. State and federal grants are sought too but the tough economic climate works against the nonprofit, director Mike Dziak has noted.

The organization has donated 205 acres worth $1.9 million to 20 local entities. It also operates a yard waste compost facility in Newport Township, serving people in 11 member towns, which make contributions to meet its $150,000 annual cost.

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 Post subject: Re: Blue Coal's Checkered Past Revealed in Bankruptcy
PostPosted: Mon Jan 28, 2013 11:42 am 
From 1976-2000?! In the words of George Takei: "Oh my!" That is a VERY long case!!!


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 Post subject: Re: Blue Coal's Checkered Past Revealed in Bankruptcy
PostPosted: Mon Jan 28, 2013 6:05 pm 
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Joined: Fri Jul 15, 2005 2:34 pm
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Location: Within 60 Miles of the Northern Anthracite Field
so hoffa isnt at the bottom of the no.9 shaft after all........

thats quite the story!

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 Post subject: Re: Blue Coal's Checkered Past Revealed in Bankruptcy
PostPosted: Mon Jan 28, 2013 6:10 pm 
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Joined: Thu Apr 02, 2009 7:16 pm
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Location: Anthracite Region of PA
Chris,
He might be at the end of the boat trip. :D :D :D :D :D :D :D

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 Post subject: Re: Blue Coal's Checkered Past Revealed in Bankruptcy
PostPosted: Mon Jan 28, 2013 7:51 pm 
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Joined: Fri Jul 15, 2005 2:34 pm
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Location: Within 60 Miles of the Northern Anthracite Field
what boat trip :?: :wink:

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