CHARLESTON, W.Va. -- An insurance company auditor and four mine contracting officials were charged Tuesday with orchestrating a multimillion-dollar scheme aimed at lowering workers' compensation premiums for firms that provide workers to some of the state's largest coal producers.
The auditor, Arville W. Sargent, 52, of Chapmanville, allegedly took bribes -- hundreds of thousands of dollars and an all-terrain vehicle -- to help the contractors save millions in workers' compensation premiums by falsifying payroll records, according to court filings.
Prosecutors allege that Sargent worked with four mining contract firms -- Aracoma Contracting LLC, Christian Contracting, T&W Services LLC, and Newhall Contracting -- to defraud BrickStreet Mutual Insurance Company, West Virginia's largest workers' compensation provider.
The four companies are "employee-leasing" services that supplied miners for coal companies including Alpha Natural Resources and Patriot Coal under arrangements common in the state's mining industry.
"Mine safety is unquestionably a priority of my office," said U.S. Attorney Booth Goodwin. "Today's filings underscore my commitment to approach this important issue from every angle."
Along with Sargent, also charged were the principals in three of the contracting firms: Jerome Eddie Russell, 50 of Williamson, and Frelin Workman, 58, of Belfry, Ky., both of Aracoma Contracting LLC; Randy Workman, 36, of Belfry, Ky., of Christian Contracting; and Arthur White Jr., 60, of Lenore, of T&W Services LLC.
Each of the five was charged through a document known as an "information," rather than through a grand jury indictment, a move that generally means a plea deal has been reached or is in the works.
Two officials from Newhall Contracting, Allen H. Workman and Melvin Parsley, both of Williamson, had both already pleaded guilty in federal court in Virginia as part of a scheme to withdraw $10 million in cash from financial institutions and pay kickbacks to mine supply purchasers. Allen Workman and Frelin Workman are brothers, and Randy Workman is Frelin Workman's son, officials said.
Prosecutors allege that the insurance scheme dates back to January 2006, when BrickStreet first took control of West Virginia's previously publicly operated workers' compensation system, and continued through February 2011.