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.

Before the system went private, the issue of workers' compensation payments for coal contractors was highly controversial, with major producers allegedly creating a web of contract firms to avoid insurance premiums. A decade ago, a series of state lawsuits, backed by organized labor, forced the industry to pay back millions in workers' comp debts.

In the new case, Assistant U.S. Attorney Thomas C. Ryan alleged that Sargent allowed the four contract firms, all BrickStreet policyholders, to underreport their payroll during annual field audits conducted to confirm those policyholders were paying accurate insurance premiums.

"These charges are even more disturbing because these crooked operators were able to compromise the one person entrusted to make sure the employees are properly accounted for: the insurance company's auditor," Goodwin said in a statement. "This type of corruption has long plagued the coal industry in southern West Virginia and must be stopped."

Sargent was charged with "honest services" mail fraud, which alleges he deprived BrickStreet of its intangible right to his honest services, and with tax evasion.

In court filings, prosecutors said Sargent in 2009 reported annual income of just less than $50,000, when in fact he knew that his income was "substantially in excess" of that amount because of "unreported cash bribes."

Prosecutors are seeking to seize $415,000 they say is traceable to Sargent's crimes, including $226,000 in cash from a safe deposit box. The government also is seeking to seize from Sargent a Dodge Ram truck, a Harley-Davidson motorcycle and a Yamaha ATV, court records show.

Goodwin's office said that Russell and Frelin Workman admitted paying "a significant number of their employees" in cash as part of a tax evasion scheme to avoid the associated payroll taxes. Randy Workman similarly used a significant cash payroll to evade payroll taxes, Goodwin's office said. White paid a portion of the payroll for T&W Services through a shell company, thereby evading taxes.

Sargent, Russell, Frelin Workman and Randy Workman each face up to 25 years in prison and a $500,000 fine. White faces up to 10 years in prison and a $500,000 fine.

Through Susan Lavenski, a media spokeswoman at Charles Ryan Associates, BrickStreet officials refused to answer questions about the case. But the company issued a prepared statement saying it "has been informed that it is one of the victims of a crime committed by a former employee working with a very small number of our policyholders, nearly all of which were owned or controlled by one family in Southern West Virginia.

Reach Ken Ward Jr. at kw...@wvgazette.com or 304-348-1702.