GILLETTE — For nearly 600 Powder River Basin coal mine workers, July 1, 2019, is as infamous a date as Sept. 11, 2001, Nov. 22, 1963, or perhaps even Jan. 6, 2021.
That’s the day Blackjewel LLC suddenly imploded, abruptly closing its flagship Eagle Butte and Belle Ayr mines in Campbell County.
The move put hundreds of workers out of jobs — many of them mid-shift — and began a months-long spiral that financially destroyed hundreds of families across the company’s 32 operations in four states.
It’s also the day that began an unprecedented — and ongoing — bankruptcy fraught with financial intrigue and alleged mismanagement and shady shenanigans by former CEO Jeff Hoops Sr.
Bankruptcy court filings reveal Hoops loaned and paid himself back tens of millions of dollars outside the view of Blackjewel’s board of directors. He also employed an untenable and precarious financial model of juggling money to pay the most pressing bills at various locations while selling coal from the Wyoming mines at a loss to generate cash.
Overall, about 1,700 people were put out of work and 1,100 of those at the Eastern operations had their final paychecks bounce.
Along the way, the company under Hoops’ leadership didn’t properly handle about $1.2 million in payroll deductions for employee contributions to their own retirement accounts and was $900,000 behind on its obligation to match employee contributions.
Blackjewel also owed nearly $150 million in back federal, state and county taxes and royalties.
In Wyoming, the Eagle Butte and Belle Ayr mines reopened in October 2019 under the ownership of Eagle Specialty Materials. By all accounts, ESM has so far been operating above board and workers — mostly former Blackjewel employees — have nothing but good things to say about their new employer.
Now 19 months removed from when Blackjewel first filed its botched Chapter 11 effort, many Campbell County coal mining families are back to work, but haven’t recovered.
Over that time, Western Services owner Doug Cox has seen his staff shrink from 17 to 11 while trying to weather the fallout of Blackjewel leaving his business out more than $126,000.
The same thought has rolled over and over in Cox’s head.
“If this isn’t illegal, it should be,” Cox said.
Turns out, Cox isn’t alone in wondering how Hoops can get away with allegedly playing loose with the books to the extent of driving Blackjewel into bankruptcy and forcing dozens of families into foreclosure and worse.
Since his appointment as Campbell County attorney in November, Mitch Damsky has begun a new investigation into how the Blackjewel fiasco unfolded and Hoops’ role in it. He wants to know if there’s evidence the former CEO broke the law and if so, make sure the proper authorities act.
While Damsky said he doesn’t know if there was anything illegal, he feels Campbell County residents deserve to explore the question to be sure.
“No question about that,” he said about his office undertaking the probe. “I think the citizens of Campbell County should know that they’re not forgotten and that we at least want to show them that we care.
“I think the citizens would expect us to do our due diligence and see what the deal is.”
An investigator from the Campbell County Sheriff’s Office has been assigned to look into the potential case, Damsky said, adding he couldn’t comment further because of the ongoing investigation.
If it were up to Cox, charges “would’ve been filed yesterday,” he said.
Western Services is a family legacy company in Campbell County opened by his parents in 1971, Cox said. While he wasn’t directly a Blackjewel employee, his company did quite a bit of work at both the Eagle Butte and Belle Ayr mines and were left owed more than $126,000 at the time bankruptcy was filed.
“I realize $126,000 may not seem like much, but to my business it’s a lot,” Cox said, adding he still hasn’t recovered.
Because of the unpaid tab, Western Services has gone from 17 employees to 11 and still isn’t out of the woods.
“That $126,000 to my business means a lot and it may end us yet,” Cox said. “We’re still trying to dig out of the hole. If I didn’t have a good bank and vendors, we’d have shut the doors the next week.”
Worse than leaving an outstanding tab, Cox said he believes Hoops and Blackjewel intentionally lied to him and nearly scuttled his business.
In an attempt to appease Cox’s efforts to collect, a company official brought him a paper check from Blackjewel for about $61,000 three days before the company filed for bankruptcy. Cox deposited the check and let it sit for nearly a week days until his bank said the money was available.
So, Cox wrote checks to pay his bills. Three days later, the bank called him.
“Then the next week, my bank calls and says the check’s no good,” Cox said. “It was showing in my account that the money was available. I mailed the checks (to his vendors) and the next day my bank called and said the check’s no good.”
Because the company filed bankruptcy just a few days after bringing him the $61,000 check, Cox is convinced the intent was to “float that sucker” knowing it would bounce.
In the meantime, not only was Western Services still out the full amount owed, it was in dire straights with its creditors for writing bad checks of its own.
“They wrote those checks knowing they were filing for bankruptcy,” he said. “When they filed, I thought, ‘OK, I can survive a loss of $60,000. At least we got the majority (of what was owed).’”
The call from the bank was “like a kick in the gut” that still hurts, Cox said.
Knowing how his company and Blackjewel’s local employees were impacted when the company’s financial house of cards blew over, Cox said he supports Damsky’s investigation and that he’ll help if he can.
Campbell County won’t soon forget that Hoops was leading the sinking ship, and is still attempting to recoup $11 million he claims he loaned the company, Cox said.
“I still can’t believe that the guy can just walk away from all of this and nothing happens to him,” he said. “What (upsets) me the most about Jeff Hoops is he says, ‘I’m sorry. I did my best.’ It was a ramrod job from the beginning. They were going to run it into the ground, take all the money, all the profit, and just file for bankruptcy.
“If it were me and I came into Gillette and wracked up a lot of debt to vendors and didn’t pay checks and all of that, I would be in prison.”
While Cox’s business has so far hung on in the aftermath of the bankruptcy, Tana Golay’s wasn’t as fortunate.
Along with her husband David, the Golays began working for Carefree Cleaning in 1983 and bought the company in 1991. One of their largest accounts was cleaning at the Eagle Butte and Belle Ayr mines. They performed services at the mines through numerous owners, but it was Blackjewel that closed the longtime local business and cost the Golays their home.
“We’re a small company and we’re out there (at the mine) for $20,000 a month, and to get two to three months behind on that just sunk us,” Golay said. “I was in the company for 38 years. I was out at those two mines, Eagle Butte and Belle Ayr, for 14 years through about five different owners.”
Hoops was the only one who wouldn’t pay his bills, she said. “They all did except him.”
While Golay said it’s easy to see Hoops as a scapegoat for everything that went wrong with Blackjewel, it’s also fair because he captained the ship.
“I think he needs to be investigated,” she said. “There’s got to be something illegal. You can bet that if I don’t pay my taxes, I go to jail. … If the prosecuting attorney needs to talk, have him give us a call.”
The questionable business operations weren’t limited to the bankruptcy and its ongoing fallout. That’s how Blackjewel always did business, said Brandy Elder, now Campbell County’s human resource manager.
Before she signed on with the county, she was the human resources manager for Blackjewel’s Wyoming mines. Throughout her time working for the company, Elder said she witnessed some questionable business practices and was ignored when she voiced her concerns.
Elder said she stayed on after the bankruptcy filing because she wanted to help the employees any way she could.
“That is why I stayed after July 1,” she said. “The team here was doing everything in their power to keep things together.”
While nearly 600 local workers were putting in long, hard hours for the company, Elder saw the corporate office change her payroll filings to not include employee retirement contributions, among other irregularities.
“That’s the most frustrating part of Blackjewel — being the one doing the payroll and doing the paperwork for those deductions,” she said. “Then to email those to Blackjewel headquarters, then I’m standing in a room full of people on payday saying to me, ‘Hey, what happened to this?’ And I had no idea.”
Not having an integrated payroll system connected to the company headquarters also seemed hinky to Elder, who said that in retrospect, it seems a deliberate attempt to keep her from knowing what they were doing with her payroll data.
“They knew what they were doing and the cruelty of doing that to so many people,” Elder said, adding Hoops was involved at all levels of Blackjewel’s financial decisions. “I honestly think sometimes I have PTSD from dealing with it.”
Elder said she would voice her concerns directly with Hoops, who disregarded them and instead instructed her to do things she was uncomfortable with.
“It got to the point there I would ignore his calls,” she said. “It was definitely one of the biggest quick trainings I’ve ever had in HR in walking the lines between what the company’s telling you to do and what you think is right.”
At this point, Elder said it doesn’t matter much that Hoops be prosecuted. That Damsky is willing to look under all the rocks is enough for many people left emotionally battered by Blackjewel.
“At the end of the day, it will be good for the people of Gillette to see that Campbell County isn’t going to lay down,” she said. “The emotional toll was so much more than anything monetary.”
Damsky isn’t the only one looking deeper into the Blackjewel bankruptcy and what led up to it. The Blackjewel estate itself wants answers and is suing Hoops and a host of his family members and associated companies collectively called the “Hoops Parties.”
Just days after Hoops filed for bankruptcy and $20 million in funding was pulled at the last minute to keep the company running through the Chapter 11 process, Hoops was ousted as CEO as part of a condition to secure a $5 million emergency loan to allow the bankruptcy to proceed.
Along the way through initial bankruptcy filings and subsequent motions in the case, a tapestry of financial finagling was revealed, along with indications the company’s regular mode of operation seemed to be avoiding paying anything it owed anybody. That included millions owed to vendors and tens of millions in unpaid federal royalties, and federal, state and local production taxes.
Hoops, who remains an owner of the company without any power within it, continues to pressure the bankruptcy court to pay him $11 million. He says that’s what’s left of about $52 million he loaned the company in the months leading up to July 1, 2019.
In January 2020, lawyers for the company filed a 48-page motion attempting to compel Hoops to submit to an extensive discovery process and questioning.
“The level of insolvency and inevitable bankruptcy filings were the result of a yearslong effort by Mr. Hoops to transfer tens of millions of dollars of (Blackjewel’s) assets for his benefit and the benefit of his family and other Hoops-related entities,” according to the motion.
The motion also claims Hoops recouped more than $41 million in distributions from the company without any paperwork or knowledge of the board of directors, a claim Hoops says in his response is “patently false.”
Mr. Hoops did not respond to a request for an interview for this story, but in court filings acknowledges there isn’t any documentation for the loans and the millions he took back as repayment, but said it was aboveboard and legal.
He not only has maintained his innocence throughout the bankruptcy and its fallout, he paints himself as a would-be savior who went to extraordinary personal financial lengths in an attempt to avoid bankruptcy and a shutdown.
In an open letter to Blackjewel workers after he resigned as CEO, Hoops wrote that “no one is hurting more than me” over the messy way things unfolded. He said he wanted “to set a little of the record straight as it is clear each of you have no idea what has transpired.”
He also rebuked claims he did anything improper by taking reimbursements from the company.
“There has not been one cent taken out of the mining company,” he wrote. “The exact opposite. I have loaned more money to try to get this company through these difficult times.”
Christopher Pilsher is one of those hundreds of coal miners put out by Blackjewel and hired back by Eagle Specialty Materials, which bought the mines in a bankruptcy sale.
The difference between working for the two companies “is like night and day,” he said.
“It’s way better than it was before,” he said. “It’s all different. It’s the same mine, just a different attitude, different morale. I know I’m a lot happier. I know a lot of people came back, and that was their choice.”
Feeding that boost in morale is an overall sense of stability and professionalism, Pilsher said. And so far, no ESM paychecks have bounced, something that happened more than a few times with Blackjewel.
Pilsher’s journey took him 360 degrees from working at Eagle Butte back to working at Eagle Butte. In between, he had to leave the state and farm potatoes to make ends meet.
He also saw some of his coworkers and good friends devastated much worse than he was. They lost their homes and in some cases had to move to find work.
“It didn’t affect me as bad as it did a lot of other people,” he said. “Unfortunately, some people had to up and move with basically nothing.”
He also said he has his fingers crossed that Damsky may find something Hoops can be prosecuted for.
“I hope they find something on him and I hope they prosecute him,” Pilsher said, adding that the past 19 months hasn’t done much to quell the disdain for Hoops in Campbell County. “I still have the same feelings as I did then (July 1, 2019). I’d rather not say in words out loud how I feel about that guy.”
Wyoming and Campbell County is built on a solid base of blue-collar, hard-working people who provide a fair day’s effort.
“It just drives me insane when people think they can just come and take like that,” he said. “I trade my time for money, and it’s time I spend away from my family. It drives me nuts to think people can steal my time and be OK with it.”
Like Elder and Cox, Pilsher is of the opinion there has to be something criminal about the Blackjewel bankruptcy.
“There’s something that guy has done that’s criminal,” he said. “He’s just really good at hiding it is all.”
At this point, however, seeing Hoops in jail wouldn’t do much for those hurt by the company, Pilsher said.
Watching Hoops be prosecuted “wouldn’t ease my mind at all, but I’d feel better that another person has looked into it.”
Elder explained how Hoops would make quarterly visits to Wyoming. He’d go to Belle Ayr and Eagle Butte and shake hands with employees and reassure them of a great future.
Pilsher said he recalls shaking hands with Hoops and that he “didn’t trust him from Day One.”
He said the former CEO would make bold promises about Blackjewel’s success and that they’d all be part of that.
“He basically said, ‘I’ll make your dreams come true overnight. It’ll be all sunshine and rainbows,’” Pilsher said. “It was all bull——.”