Auditor, coal company contractors plead guilty to fraud - WVVA TV Bluefield Beckley WV News, Weather and Sports

Auditor, coal company contractors plead guilty to fraud

Posted:
  • More Local NewsMore Local NewsMore>>

  • Probable cause found in beating case

    Probable cause found in beating case

    Manuel WilliamsManuel Williams
    RALEIGH COUNTY- (WVVA) One of two man accused of attacking a man inside his own home was in court for his preliminary hearing. Manuel Williams, 39, appeared in magistrate court in Raleigh County...More >>
    RALEIGH COUNTY- (WVVA) One of two man accused of attacking a man inside his own home was in court for his preliminary hearing. Manuel Williams, 39, appeared in magistrate court in Raleigh County...More >>
  • Businesses in Bluefield West Virginia

    Businesses in Bluefield West Virginia

    BLUEFIELD (WVVA)- A couple of fast food chains in Bluefield,West Virginia are no longer on Cumberland Ave. Wendy's closed for financial reasonsand according to Mark Meachum, President of the Bluefield Chamber of Commerce, "Arby's as you're aware, the franchisee claimed bankruptcy in a number of Arbys."Not all businesses in Bluefield are having a hard time.Ahmed Anu the owner of Portobella's says, "Just right now I think to myself, business is good. We did good."His Italian restaurant has been...More >>
    BLUEFIELD (WVVA)- A couple of fast food chains in Bluefield,West Virginia are no longer on Cumberland Ave. Wendy's closed for financial reasonsand according to Mark Meachum, President of the Bluefield Chamber of Commerce, "Arby's as you're aware, the franchisee claimed bankruptcy in a number of Arbys."Not all businesses in Bluefield are having a hard time.Ahmed Anu the owner of Portobella's says, "Just right now I think to myself, business is good. We did good."His Italian restaurant has been...More >>
  • Police look for missing man

    Police look for missing man

    William "NIck" DanielWilliam "NIck" Daniel
    RALEIGH CO. (WVVA) – Police in Beckley are looking for a man who went missing last week.William “Nick” Daniel, 26, was last seen July 24...More >>
    RALEIGH CO. (WVVA) – Police in Beckley are looking for a man who went missing last week.William “Nick” Daniel, 26, was last seen July 24...More >>

CHARLESTON, W.Va. (AP) -- A workers' compensation auditor and four coal company contractors have pleaded guilty to federal charges in a multimillion-dollar fraud scheme.

Federal prosecutors said Thursday that 52-year-old Brickstreet Insurance auditor Arville Sargent pleaded guilty to mail fraud and tax evasion.

Prosecutors say Sargent admitted allowing labor contractors for southern West Virginia coal operators to underreport their payroll in exchange for hundreds of thousands of dollars in cash bribes and other items, including an all-terrain vehicle.

The companies involved in the scheme were Aracoma Contracting LLC, Christian Contracting, Newhall Contracting and T&W Services.

Four others in West Virginia and Kentucky pleaded guilty to charges stemming from paying workers in cash or through a shell company to evade payroll taxes.

Following is the full press release from the U.S. Attorney's Office:

CHARLESTON, W.Va. –A former workers' compensation insurance premium field auditor employed by BrickStreet Mutual Insurance Company ("BrickStreet") admitted to federal charges in connection with his role in orchestrating a multimillion-dollar fraud against the state's leading workers' comp provider.  Arville W. Sargent, 52, of Chapmanville, Logan County, W.Va., pleaded guilty to honest services mail fraud and tax evasion on March 27, 2013. 

Two other co-defendants involved in the scheme to defraud BrickStreet were the principals of "employee leasing" companies Aracoma Contracting, LLC ("Aracoma"), Jerome Eddie Russell, 50, of Williamson, W.Va., and Frelin Workman, 58, of Belfrey, KY.  Russell and Workman each pleaded guilty to honest services mail fraud and tax evasion.  Russell and Workman admitted to paying a significant number of their employees in cash as part of a tax evasion scheme to avoid the associated payroll taxes owed to BrickStreet.  Both defendants admitted that they paid Sargent approximately $1 million in cash bribes to falsify the audits performed for the Workers' Comp Commission and then BrickStreet.  Russell and Workman estimated that the Workers' Comp Commission and BrickStreet were defrauded approximately $4 million in lost premiums over the course of the fraud scheme. 

Additionally, Randy Workman, 36, of Belfrey, KY, pleaded guilty on March 26, 2013 to aiding and abetting honest mail fraud and tax evasion.  Workman admitted that he utilized a similar cash payroll scheme to evade payroll taxes.  Workman further admitted that from October 1, 2007 through June 30, 2009, he structured approximately $800,000 in cash out of Community Trust Bank and used the funds to pay employees in cash.  Workman also admitted that he underpaid approximately $280,000 in premiums owed to BrickStreet.   

A fifth co-defendant, Arthur J. White, Jr., 60, of Lenore, W. Va., pleaded guilty today to tax evasion and structuring in connection with a scheme to defraud BrickStreet.  White admitted that he paid a portion of the payroll for T&W Services, LLC through a shell company, thereby evading taxes. According to his plea agreement, White estimated that he skimmed approximately fifteen percent of the premium actually owed to BrickStreet over a four-year period, resulting in a loss of approximately $154,527 to BrickStreet.  

Sargent admitted that from its inception in January 2006 until at least February 1, 2011, he led a scheme to defraud BrickStreet by allowing certain policyholders operating in the coal mining industry to drastically underreport their payroll during annual field audits he conducted on behalf of BrickStreet for the intended purpose of confirming those policyholders were paying accurate workers' compensation insurance premiums.  Sargent further admitted that he purposely allowed four "employee leasing" companies, Aracoma, Christian Contracting, Newhall Contracting and T&W Services, LLC, all of whom provided labor on a contract basis to coal companies in southern West Virginia, to falsify documents drastically understating their actual payroll.  In exchange for saving those policyholders millions of dollars in insurance premiums rightfully owed to BrickStreeet, Sargent accepted hundreds of thousands of dollars in cash bribes and other things of value, including a Yamaha Rhino all-terrain vehicle. 

Sargent faces up to 25 years in prison and a $500,000 fine when he is sentenced on July 8, 2013 by United States District Judge John T. Copenhaver, Jr.   

Russell, Frelin Workman and Randy Workman each face up to 25 years in prison and a $500,000 fine when they are sentenced on July 2, 2013.   

White faces up to ten years in prison and a $500,000 fine when he is sentenced on July 11, 2013.  

The FBI, the IRS, the West Virginia State Police and the West Virginia Insurance Commission conducted the investigations.  This investigation was also handled in coordination with the United States Attorney's Office for the Western District of Virginia and the IRS's local Abingdon, Virginia Resident Agency. Assistant United States Attorney Thomas Ryan is in charge of the prosecutions. 

  • NEWSMore>>

  • Pro-coal rally held in Pittsburgh in wake of EPA hearings

    Pro-coal rally held in Pittsburgh in wake of EPA hearings

    PITTSBURGH (AP) -- More than 2,000 union workers and others organized by the coal industry in Pennsylvania, Ohio and West Virginia are rallying in Pittsburgh to oppose new proposed pollution regulations...More >>
    PITTSBURGH (AP) -- More than 2,000 union workers and others organized by the coal industry in Pennsylvania, Ohio and West Virginia are rallying in Pittsburgh to oppose new proposed pollution regulations...More >>
  • Additional Lane Closure Expected in East River Mountain Tunnel

    Additional Lane Closure Expected in East River Mountain Tunnel

    (WVVA)- Motorists traveling northbound through the East River Mountain Tunnel can expect some delays as more cleaning and repairs are made.Officials with the Virginia Department of Transportation tell us that a single northbound lane will be closed in the tunnel to allow crews to make electrical repairs and clean ventilation ducts.The closure, which will not affect southbound traffic, will take place from 8 P.M. July 30th until 7 A.M. July 31st.We're told a structural assessment will also be ...More >>
    (WVVA)- Motorists traveling northbound through the East River Mountain Tunnel can expect some delays as more cleaning and repairs are made.Officials with the Virginia Department of Transportation tell us that a single northbound lane will be closed in the tunnel to allow crews to make electrical repairs and clean ventilation ducts.The closure, which will not affect southbound traffic, will take place from 8 P.M. July 30th until 7 A.M. July 31st.We're told a structural assessment will also be ...More >>
  • Two Raleigh Co. communities to get new fire hydrants

    Two Raleigh Co. communities to get new fire hydrants

    Raleigh Co. (WVVA) –Two communities in Raleigh County are getting new fire hydrants...More >>
    Raleigh Co. (WVVA) –Two communities in Raleigh County are getting new fire hydrants...More >>
  • DHHR workers picket outside agency

    DHHR workers picket outside agency

    Fayette Co. (WVVA) -Department of Health and Human Resource workers picket outside the agency’s office in Fayette County...More >>
    Fayette Co. (WVVA) -Department of Health and Human Resource workers picket outside the agency’s office in Fayette County...More >>
  • UPDATE: Nighttime lane closure expected for repairs on tunnel

    UPDATE: Nighttime lane closure expected for repairs on tunnel

    UPDATE: The West Virginia Division of Highways says motorists can still expect periodic lane closures over the next several weeks as work continues inside East River Mountain Tunnel.More >>
    UPDATE: The West Virginia Division of Highways says motorists can still expect periodic lane closures over the next several weeks as work continues inside East River Mountain Tunnel.More >>
  • Deadline approaches for claims against Freedom Industries

    Deadline approaches for claims against Freedom Industries

    CHARLESTON, W.Va. (AP) -- Time is running out for residents and businesses affected by a January chemical spill in Charleston to file claims in federal bankruptcy court.Claims must be filed with U.S. Bankruptcy Court in Charleston by Friday. Forms can be obtained and filed on the court's website.Business losses must be accompanied by documentation, while residents don't need such documentation for personal damage.The Jan. 9 spill at Freedom Industries' plant along the Elk River caused a tap-w...More >>
    CHARLESTON, W.Va. (AP) -- Time is running out for residents and businesses affected by a January chemical spill in Charleston to file claims in federal bankruptcy court.Claims must be filed with U.S. Bankruptcy Court in Charleston by Friday. Forms can be obtained and filed on the court's website.Business losses must be accompanied by documentation, while residents don't need such documentation for personal damage.The Jan. 9 spill at Freedom Industries' plant along the Elk River caused a tap-w...More >>
  • Another tornado confirmed in West Virginia

    Another tornado confirmed in West Virginia

    JOHNSTOWN, W.Va. (AP) -- Another tornado has been confirmed in West Virginia.The National Weather Service says a twister touched down Sunday night near the southeastern Harrison County community of Johnstown...More >>
    JOHNSTOWN, W.Va. (AP) -- Another tornado has been confirmed in West Virginia.The National Weather Service says a twister touched down Sunday night near the southeastern Harrison County community of Johnstown...More >>
  • Dealership donates car to help out hospice group

    Dealership donates car to help out hospice group

    BECKELY (WVVA) One local car dealership is donating a vehicle to a nonprofit organization to help raise money.Mountaineer Automotive of Beckley is giving away a Volkswagen to the Living Water Baptist Church.Over the next couple of weeks, the car will be on display throughout the community. There will be a silent auction in which all proceeds will go to Hospice of Southern West Virginia."It takes lot of work to organize events and to raise money. But if you have other organizations willing to ...More >>
    BECKELY (WVVA) One local car dealership is donating a vehicle to a nonprofit organization to help raise money.Mountaineer Automotive of Beckley is giving away a Volkswagen to the Living Water Baptist Church.Over the next couple of weeks, the car will be on display throughout the community. There will be a silent auction in which all proceeds will go to Hospice of Southern West Virginia."It takes lot of work to organize events and to raise money. But if you have other organizations willing to ...More >>
Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and WVVA.
All Rights Reserved. For more information on this site, please read our Privacy Policy, Terms of Service and Mobile Privacy Policy & Terms of Service.

Persons with disabilities who need assistance with issues relating to the content of this station's public inspection file should contact Administrative Assistant Audrey Sluss at (304) 324-0659. Questions or concerns relating to the accessibility of the FCC's online public file system should be directed to the FCC at 888-225-5322, at 888-835-5322 (TTY) or at fccinfo@fcc.gov.