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Martinsville’s Carter Bank & Trust says a Feb. 12 federal lawsuit filed against it by GLAS Trust Co. contains “false and misleading” allegations as part of a complex financial dispute over debt repayments from loans to West Virginia Gov. Jim Justice, his family and their businesses.
GLAS filed suit in the U.S. District Court for the Western District of Virginia seeking to recoup $226.2 million lent to the Justice family-owned Bluestone Resources, a coal-mining conglomerate. Justice is seeking the Republican nomination to run for the U.S. Senate seat being vacated by U.S. Sen. Joe Manchin, D-West Virginia.
The Justices and Carter Bank had a longstanding business relationship that soured after Worth Harris Carter Jr., the bank’s founder, died in 2017, according to court documents. A May 2021 federal court complaint, which the two sides later agreed to dismiss, acknowledged that the “Justice Entities” had $368 million in outstanding loans with Carter Bank.
In its February suit, GLAS said it represents investors who backed financing that Greensill UK, which filed for insolvency protection in 2021, extended to Bluestone. The lawsuit alleges that Carter Bank pressured Justice and his family to repay debts to the bank, and Bluestone paid “to satisfy the debts of the Justice Family and their other lines of business to Carter Bank.” The lawsuit also claims that “Carter Bank knew that each of these transfers were made by entities that were not obligated for the loans they were repaying.”
Carter Bank refutes these claims, stating it received repayments in good faith and was not party to the financing arrangement between the Justices and Greensill.
Additionally, the bank’s holding company, Carter Bankshares, stated in a U.S. Securities and Exchange Commission filing that it has an indemnity agreement with the Justices, supported by substantial collateral, to protect itself from such claims. “The Company and Carter Bank intend to pursue vigorously all remedies afforded to Carter Bank under the Justice Indemnity Agreement,” the bank wrote in the February filing.
Jay Justice, president and CEO of the Justice companies, said that in 2023, Carter Bank blocked the Justices’ plan to settle their debts in an “apparent attempt to continue extracting interest payments from the Justices.”
An April 2023 news release from the Justices claimed that “the Justice plan includes the sale or refinancing of assets that would completely retire the remaining Carter Bank loans within four months.”