CHARLESTON, W.Va. -- A former BrickStreet Insurance auditor initially told coal contractors that higher-ups at the company were involved in a bribery and workers' compensation fraud scheme, but has since recanted those statements in a plea agreement with federal prosecutors, records and court testimony show.
Arville Sargent repeatedly told officials from Aracoma Contracting and other companies that "others in Charleston" -- including BrickStreet's upper management -- were part of his scheme to take bribes from the contractors in exchange for helping them defraud BrickStreet out of millions in workers' compensation premiums.
But in a March deal with U.S. Attorney Booth Goodwin, Sargent said that those earlier statements were false, and made only to try to convince contract company officials to continue paying him bribes.
No one else from BrickStreet has been charged in the ongoing investigation, and officials from the company said they're confident Sargent acted alone.
On Friday, U.S. District Judge John T. Copenhaver Jr. sentenced Sargent to 6 years in prison after he reached a deal with prosecutors and admitted to tax evasion and mail fraud, in a scheme in which he accepted an estimated $1 million in bribes in exchange for helping Aracoma Contracting officials avoid higher workers' compensation premiums from BrickStreet. Four officials from Aracoma Contracting and related firms have also been sentenced to prison terms ranging from 15 months to 30 months.
The investigation, led by Assistant U.S. Attorney Thomas Ryan, has led prosecutors to additional information about public corruption in the region, to a potentially large gambling ring, and to more cases where coal companies were defrauding their workers' compensation insurers.
In Sargent's case, prosecutors alleged -- and Sargent admitted -- that Sargent worked with various officials from Aracoma Contracting and three related companies to defraud BrickStreet, West Virginia's largest workers' compensation provider.
The four companies were "employee leasing" services that supplied miners for coal companies, including Massey Energy, Alpha Natural Resources, and Patriot Coal, under agreements common to West Virginia's coal industry.
Officials from the four contracting firms paid their employees in cash, using withdrawals from the Bank of Mingo, allowing them to avoid employment taxes and to hide their true payroll, a move that greatly reduced their workers' compensation premiums, according to court records.
During a sentencing hearing in federal court on Friday, the issue of what Sargent had said about other BrickStreet officials came up when Aracoma Contracting official Jerome Edward Russell took the stand to testify about his dealings with Sargent.
Russell described how, after BrickStreet declined to renew Aracoma Contracting's insurance policy in 2010, Sargent still demanded more money from the contract firm's officials, saying they still owed him $500,000 for helping reduce their previous premiums.