From The Charleston Gazette

Clay Publisher Owns Much, Owes Many

Sunday May 26, 2002

By Scott Finn

CLAY - Clinton Nichols has been in financial trouble before. On the streets of Clay and in the courthouse, people are asking if he can escape this time.

Nichols is a school bus driver, former state delegate, and coal and timber operator. He owns large chunks of downtown Clay. He and his family have owned and operated the Clay County Free Press since 1974.

Two weeks ago, the Clay County Bank sued Nichols, his wife and his business. According to the lawsuit, Nichols borrowed nearly $500,000 in short-term loans last fall and failed to pay the bank back.

Also, the bank has foreclosed on more than 20 properties that Nichols owns. Nichols used the real estate to secure five loans between 1992 and 1999. Bank officials want to auction them on the courthouse steps on July 2.

Adding to his woes, his family and his businesses owe Clay County more than $9,000 in delinquent taxes. And the Free Press is in default with the state Workers' Compensation system for not paying its premiums on time.

Nichols did not respond to several requests for an interview last week.

This isn't the first time Nichols has faced financial trouble. He was sued in 1996 for $80,000 in unpaid loans. The IRS still has liens against his property for unpaid taxes. His brother sued him for unpaid bills in the early 1990s.

When his most recent financial troubles began, Nichols gave the paper's reins over to his son. But his hand is still evident in two front-page stories about his financial troubles in the May 15 issue.

One story's headline says, "Restructuring Loan Needed Quickly For Nichols." The article (see Page 7B) is highly critical of Scott Legg, the Clay County Bank's new interim president, for foreclosing on his property.

The story starts out talking about Nichols in the third person, then switches to first person.

"Faced with the new president, Nichols said he wasn't able to convince bank officials on Tuesday that he had sufficient collateral and income from those properties to continue paying them off with a restructuring of his obligations...

"We've had some slow times before and always and I believe we'll be able to keep most everything moving this time...I think we'll all be better off settling this at the table, rather than fighting it out in public."

'I am visible'

Nichols mixes politics and business on his front page as well as in his personal life. During his 28 years with the newspaper, he has served as a county commissioner, town council member and state delegate.

In 1986, while he served on the Clay County Commission, he bragged that he could persuade the Division of Highways to repair roads to certain people's homes.

"The bottom line is that it's election 1986. I have been able to get some people's roads fixed because I am visible," he said.

According to Gazette articles from the time, one of those roads led to his brother's driveway and to his niece's house. DOH spent $10,000 to gravel the road, even though it wasn't on the priority list for roads that needed repair.

In 1993, then-Gov. Gaston Caperton appointed him to the House of Delegates to replace Randy Schoonover, who had been appointed to the state Senate.

Anti-abortion groups, manufacturers and business groups all supported Nichols. As a delegate, he voted for a Workers' Compensation reform package that unions hated and the state Chamber of Commerce supported. He also voted to kill the Women's Commission because some commissioners supported abortion rights.

He lost re-election in 1996. Some said it was because he owed the federal government more than $30,000 in unpaid taxes. Others thought he upset senior citizens when he bought the building they used as a nutrition center.

Also in 1996, Clay County resident Walter Schoonover (no relation to Randy Schoonover) sued Nichols for $80,000 in unpaid debts. Nichols eventually settled the case for $50,000.

After his defeat, Nichols remained active in political issues through his newspaper.

During a Christmas pageant in 1997, two Clay County elementary principals were accused of leading prayers and asking children to be saved during Christmas pageants.

Andy Waddell, who now publishes a rival newspaper, wrote a letter to the Free Press complaining about the altar calls, saying they violated the U.S. Constitution's separation of church and state.

Nichols received the letter and published it under the headline, "Doing the Devil's Work."

In 1999, the paper announced that state Sen. Randy Schoonover had resigned. It praised his "hard work for the district" and "his ability to win close races."

The article didn't mention that Schoonover resigned because he faced bribery charges. He later pleaded guilty to accepting almost $2,725 to steer West Virginia Turnpike business to a LeRose family towing service.

Nichols had printed materials for Schoonover's campaign before. For example, Schoonover paid him more than $1,000 for 1994 campaign materials.

Nine lives

Nichols' most recent troubles began when his longtime friend J.D. Morris retired from the Clay County Bank last month. Morris' replacement, Legg, began to call in years of loans that Nichols owes the bank.

In the Free Press, Nichols said the foreclosure was timed to embarrass his family and Morris.

Nichols also blames his misfortune on lower timber prices and the collapse of Filcon, a filter-maker that rented the former Rite Aid building from him. He says Filcon owes him $22,000 in back rent.

If the foreclosures take place, many landmarks of downtown Clay would be sold to the highest bidder, including the Tales of the Elk River Inn, a skating rink and the old Free Press building.

But Nichols may still emerge from his financial difficulty. He recently reached an agreement with state officials to move the county Department of Health and Human Resources office to the former Rite Aid building.

That upsets Alma Jarrett, the owner of DHHR's current office space between Clay and Ivydale. She says she never even knew that DHHR was looking for a new building, and had no chance to put in her own bid.

DHHR officials told Jarrett they wanted more floor space. She questioned why they are making a move that will cost state taxpayers thousands of dollars.

"It's all politics," she said. "The state should be run like a business."

Waddell, the publisher of a rival newspaper, said he saw Nichols walking out of the Clay branch of the Bank of Gassaway last week. He thinks Nichols will find a way out of this latest mess.

"He certainly would be the cat with nine lives," he said. "He has good rebound."

Not All Involved With Filcon Hurt In Its Collapse

Sunday May 26, 2002

By Scott Finn

CLAY - Just about everyone involved with defunct filter-maker Filcon has gotten burned with the exception of two powerful families - those of former Clay County Bank President J.D. Morris and Clay lawyer Wayne King.

Filcon's owner, Manfred Kuentzer, came to Clay two years ago promising to create 300 jobs, but now he's out of business.

Last week, the sheriff had his equipment hauled away, and the Clay County Bank wants to auction a half-completed industrial building and nine acres he owns outside town.

King's parents and son used to own part of that land.

They sold it to the Clay County Business Development Authority for $65,000, which then gave it to Kuentzer in February 2001 on the condition he create 15 jobs.

Two weeks later, King's wife, Sandra, sold 12 acres above the Filcon property to J.D. and Reba Morris for $25,000. Morris and his wife are building their dream home there.

But the Morrises and one other family apparently didn't have very good access to their property.

On April 17, Filcon traded one acre it owned for 1.7 acres that Sandra King held. That same day, Sandra King sold a 20-foot right of way to J.D. and Reba Morris and Thomas and Kendra Blanton for $10.

Wayne King was the lawyer listed for all these deeds, as well as the BDA deed to Filcon. He is also the lawyer foreclosing on the property for the Clay County Bank.

King said he did not try to influence the BDA to buy his family's property.

"That was between my mom, dad, my son and the county," he said.

"I'm glad they bought it from my parents."

Another property owner, Miriam Sizemore, sold three acres to the BDA for $25,000, property records show.

J.D. Morris retired late last month after 50 years with the bank. He has not returned several phone calls asking for comment.

The Clay County Bank lost $264,000 in the last quarter of 2001, according to the FDIC, the fifth-largest loss for a West Virginia bank. Interim President Scott Legg said the losses had nothing to do with Morris' retirement.

Bank officials may not be able to recoup its bad loan from Filcon. They foreclosed on the nine-acre Filcon site, but a clause in Filcon's deed with the Business Development Authority deed says Kuentzer never had permission to use the land as collateral for a loan.

Between 1996 and 1999, Kuentzer, a German national, pleaded guilty to writing bad checks, wracked up $700,000 in judgments against him and his businesses, and was extradited to Germany to face fraud and misappropriation charges.

Between 2000 and today, Kuentzer was able to convince West Virginia politicians, development officials and bankers to invest nearly $600,000 in his newest venture, a factory to make filters for heavy machinery in Clay County.

Kuentzer received more than $300,000 in taxpayer assistance, including:

$121,000 loan from the Central Appalachian Empowerment Zone.

$90,000 from the Clay County Business Development Authority, in the form of the nine-acre parcel.

$78,000 in training money from the federal government, which Kuentzer says he never used.

$50,000 from the Legislature, from the Budget Digest, to prepare the site for the building.

Hur Herald from Sunny Cal
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