Council eyes port due diligence

WEIRTON – City Council is considering a resolution calling for the West Virginia Public Port Authority to undertake an immediate “due diligence, detailed investigation” of the local port authority and its subsidiaries.

The resolution, to be introduced at tonight’s City Council meeting, also asks that, if an investigation is done and cause is found, the state “take any and all corrective actions necessary” and suggests WVPPA has a “moral and ethical obligation” to the people of Weirton to address questions surrounding the port’s organizational structure, “including facts about their subsidiaries, financial information, cash management and transparency, background history of the principals involved, … allegations of non-payment or delinquent payment to vendors, allegations of non-payment of employees, clarification of employee classifications, reports of alleged threats of Eminent Domain as a means to acquire property, statements of unfounded authority to other parties and authorities, and other items of concern.”

It states that to this point the city’s “questions and concerns have not been satisfactorily answered … to a level that meets the city’s responsibility to its taxpayers and citizens.”

Notice of the proposed resolution was referenced on the list of agenda items for tonight’s meeting, prompting The Weirton Daily Times to request a copy of that resolution in advance of the meeting.

Sponsoring the measure are Ward 6 Councilman David Dalrymple, Ward 3 Councilman Fred Marsh and City Manager Valerie Means.

The resolution to be introduced today comes nearly three months after the city joined with the Brooke and Hancock County commissioners in asking Senate President Jeff Kessler to initiate a post-legislative audit of the port’s operation to address a number of areas of concern, including WAPA’s organizational structure which they described as “complicated, unclear” with limited governmental oversight and lack of transparency as to the advisory role being played by Karl Keffer, who was previously associated with a port project in the Eastern Panhandle and was named in a pair of lawsuits alleging his company had failed to pay two vendors for hundreds of thousands of dollars in work they’d done for him on that project. Default judgments in those breach-of-contract suits against Keffer totaling more than $500,000 are on the books in Berkley County and Fairfax County, Va., where the suits were filed.

That February audit request stalled, however, after questions arose as to whether it would actually fall under Auditor Glen Gainer’s purview rather than the post-legislative audit division.

Similarly, WVPPA Director Doug York has said local leaders asked him a year ago to do an audit, but in an April interview said it was “not within my statutory authority.” He’d said he couldn’t intervene “as long as they are completing the mission they were empowered to do legislatively, though he did say the Legislature could order an investigation or the West Virginia State Police fraud unit could investigate, as could federal authorities.

York also pointed out that while local port districts in theory lay claim to power of eminent domain – that’s claiming private property for public use – the WVPPA board would have to sign off on it. State officials, including York, have made it clear they would be loathe to use eminent domain in West Virginia.

At its most recent meeting, several Weirton Area Port Authority board members had said it was incumbent on those involved in the port’s operation to address the concerns that led to the audit being requested, including reports that workers and contractors were not being paid.

But after that same meeting, at least one worker who’d been under contract could be heard demanding payment of overdue wages.

Several vendors locally also have complained of non-payment, including Frank Hoagland, an ex-Navy Seal and founder of S.T.A.R.T. (Special Tactics & Rescue Training) in Mingo Junction, who insists he is owed more than $200,000 for security work his team had done at the port. Port officials dispute Hoagland’s claim, with Acting WAPA Chairman B.J. DeFelice saying anyone who didn’t get paid “didn’t complete the work that was required or didn’t complete the contract documents.”

A memorandum of understanding was signed more than 13 months ago by Hoagland and DeFelice in which port officials outlined plans to seek grant funds for various security programs and initiatives, while S.T.A.R.T.’s Hoagland pledged to “cooperate and support” the application to implement security, domain awareness, communications, administrative, logistics and program management requirements. No grant money was awarded, however.

When payment wasn’t made, Hoagland said he made various port officials aware of his concerns, including members of the board of WAPA’s for-profit sister agency, Weirton Area Port Authority Inc., and the business side of the operation, Tri State Port Management, as well as WVPPA’s York.

“An NDA (non-disclosure agreement) is necessary to even start discussions,” a board member wrote in a Sept. 19 e-mail to DeFelice, which is included in Hoagland’s records. “I take it he does not have a contract or he would have taken legal action. From my understanding, these working groups were on a voluntary basis and therefore, we should completely disregard his requests.

“If he is interested in dealing with the port, please have him submit an official proposal that the board can review. Then if we decide to enter into a contract, we can then pay him for services rendered after contract date. If you want to set up a teleconference with him so we can listen to his plea and then reject, I am free.”

At one point, Hoagland alleges a Tri State Port Management executive “expected me to take the monies owed to my team and use it as a part of an investment toward the port.” Tri State Port Management is the port’s private investment arm.

Hoagland’s documentation also includes a July 26 text message, purportedly from another TSPM investor, saying he was “honoring our verbal agreement as I gave my word. As soon as I get enough free cash flow, S.T.A.R.T. will get every penny that I said.”

Keffer, meanwhile, has been described by DeFelice as a key adviser to the port initiative.

Prior to his involvement with the Weirton port project Keffer had been “closely associated” with efforts to develop an inland port in the Eastern Panhandle, though it wasn’t until the spring of 2010 when the breach of contract suits were filed against him and his company, Tantara West Virginia, for non-payment that his involvement became public knowledge. Hoagland has said he met with Keffer frequently in March and April 2012 to discuss port security and that Keffer gave him specific instructions as to invoicing WAPA/WAPA, Inc/TSPM.

(Harris can be contacted at