CHARLESTON, W.Va. -- Leads continue to develop out of an investigation into a multimillion-dollar scheme aimed at lowering workers' compensation premiums for contract firms that provided workers to some of the state's largest coal producers, an assistant U.S. Attorney said Tuesday.
U.S. District Court Judge John Copenhaver said the "scam here has been extraordinary" before sentencing Aracoma Contracting LLC to three years probation and ordering restitution be paid.
The scheme involved former BrickStreet Mutual Insurance Co. auditor, Arville Sargent, who took bribes to help contract companies save millions in workers' compensation premiums by paying workers in cash and falsifying payroll records.
It involved four mining contract firms -- Aracoma Contracting LLC, Christian Contracting, T&W Services LLC, and Newhall Contracting. The companies were controlled by Jerome Eddie Russell, Frelin Workman and his son, Randy Workman.
The four companies were "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.
Acting on behalf of Aracoma, its principals Russell, 50, of Williamson and Frelin R. Workman, 58, of Belfrey, Ky., formed a relationship with the Bank of Mingo, and one of its employees at the bank's Williamson branch.
Aracoma, Sargent and Workman must jointly pay back about $4.7 million in restitution. Aracoma must also forfeit another $405,000.
Copenhaver also ordered Aracoma to report its accounts payable every six months, so any money collected can go toward paying back BrickStreet and the state.
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."
In a one-count "information," Assistant U.S. Attorney Thomas C. Ryan charged Aracoma Contracting with "conspiracy to structure currency transactions."
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.
Structuring of this kind, according to Ryan, is "done to facilitate larger crimes."
"This was no kept secret in Williamson what Aracoma was doing," Ryan said.
Russell, Frelin Workman and Randy Workman each pleaded guilty to two criminal counts, admitting to tax evasion and aiding Sargent in the scheme.