U.S. credit card issuers, burned by a series of data breaches at major retailers such as Home Depot, have stepped up their timetable for issuing high-tech cards.
CHARLESTON, W.Va., Feb. 12 -- The U.S. Attorney for the Southern District of West Virginia issued the following news release:
U.S. Attorney Booth Goodwin today charged a workers' compensation insurance premium field auditor employed by BrickStreet Mutual Insurance Company ("BrickStreet") with orchestrating a multimillion-dollar fraud on his employer, the state's leading workers' compensation provider. Arville W. Sargent, 52, of Chapmanville, Logan County, W.Va., was charged in a two-count information with honest services mail fraud and tax evasion as part of the scheme to defraud BrickStreet.
According to a court document filed today, from its inception in January 2006 until at least February 1, 2011, Sargent engaged in 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. According to the filings today, Sargent purposely allowed four "employee leasing" companies, Aracoma Contracting, LLC ("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.
"Mine safety is unquestionably a priority of my office. Today's filings underscore my commitment to approach this important issue from every angle," U.S. Attorney Booth Goodwin said. "Employers in the coal mining industry who cheat the workers' compensation insurance system are really only cheating the hard-working miners who risk injury to perform dangerous jobs to provide for their families.
Goodwin continued, "Failing to honestly and accurately report employment information to insurance companies like BrickStreet potentially exposes those coal miners to devastating financial misfortune if they get hurt on the job. 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. This type of corruption has long plagued the coal industry in southern West Virginia and must be stopped."
In addition to defrauding BrickStreet, the principals of Aracoma, Jerome Eddie Russell, 50, of Williamson, West Virginia and Frelin Workman, 58, of Belfrey, Kentucky, 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, 36, of Belfrey, Kentucky, similarly utilized a significant cash payroll to evade payroll taxes. Likewise, Arthur White, Jr., 60, of Lenore, West Virginia paid a portion of the payroll for T&W Services, LLC 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 ten years in prison and a $500,000 fine.
The FBI and the IRS are handling the investigations. This investigation was 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.
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