CHARLESTON, W.Va. -- A coal mining contractor used dozens of illegal cash withdrawals from a Mingo County bank to help finance a multimillion dollar scheme aimed at lowering workers' compensation premiums for firms that provide workers to some of West Virginia's largest coal producers, federal prosecutors alleged in a court filing this week.
Aracoma Contracting LLC generated the cash to bribe a BrickStreet Mutual Insurance auditor and pay employees cash wages by "structuring" withdrawals at the Bank of Mingo, according to a charging document filed in U.S. District Court in Charleston.
In a one-count "information," Assistant U.S. Attorney Thomas C. Ryan charged Aracoma Contracting with "conspiracy to structure currency transactions." The company faces a fine of up to $250,000 and a forfeiture of up to $405,000, officials said.
This kind of "structuring" is when cash transactions are broken down into amounts of less than $10,000 to avoid having banks report the withdrawals to the Internal Revenue Service. Typically, a defendant who is charged through an "information," rather than through a grand jury indictment, is cooperating with prosecutors and likely will reach a plea agreement.
The new allegations against Aracoma Contracting come six months after BrickStreet auditor Arville Sargent and four mining contractor officials were charged in the plot.
Court documents filed Wednesday also, for the first time, mention the role the Bank of Mingo, where House Majority Leader Harry Keith White, D-Mingo, is chairman of the board of directors and a former bank president.
"We have been aware of this [investigation] for a period of time and we are fully cooperating with the U.S. Attorney's Office with the investigation," White said Thursday afternoon.
Charges were not brought against the bank or any of its employees, but prosecutors said in a court filing that the "Bank of Mingo would and did fail to file a Currency Transaction Report in violation of its obligations under . . . [federal law], allowing defendant Aracoma's pattern of structuring activity to not be reported to the Internal Revenue Service, as required by law."
U.S. Attorney Booth Goodwin said in a statement that Aracoma Contracting "formed a longstanding relationship" with the bank, "particularly, one of its employees at the bank's Williamson branch."
The employee was not named, and a spokesman for Goodwin would say only that "it is an ongoing investigation."
White said bank officials are confident they and their employees have done nothing wrong.
"We do not feel that an individual was involved in any kind of scheme," White said. "They were doing best practices and doing what they thought was correct. I think it's probably an interpretation of the procedure."
In the case, BrickStreet's Sargent, 52, of Chapmanville, pleaded guilty in March to "honest services" mail fraud, which means he deprived BrickStreet of its intangible right to his honest services, and to tax evasion. In court filings, prosecutors said Sargent, in 2009, reported annual income of just less than $50,000 when he knew his income was "substantially in excess" of that amount because of "unreported cash bribes."