A U.S. attorney has charged five men including an insurance company auditor with engaging in a fraudulent scheme that included bribery and the under-reporting of payroll by certain employers and cost West Virginia’s largest workers’ compensation insurer millions of dollars.
U.S. Attorney Booth Goodwin said investigators found that a BrickStreet Mutual Insurance Co. premium auditor, Arville Sargent, from January 2006 until February 2011, allegedly accepted bribes and other items including a Yamaha Rhino all-terrain vehicle.
In exchange for the cash and other items, Sargent allegedly allowed four employee leasing companies, Aracoma Contracting, Christian Contracting, Newhall Contracting and T&W Services to falsify documents that drastically understate their actual payroll. The leasing companies provided labor on a contractual basis to coal companies in southern West Virginia.
Goodwin earlier this month announced the arrests.
Sargent faces two counts of honest services mail fraud and tax evasion and could face up to 25 years in prison and a $500,000 fine.
In addition to charges of defrauding BrickStreet of workers’ compensation premiums, the owners of the four leasing company owners also face other charges.
Officials said that two executives of Aracoma, Jerome Eddie Russell and Frelin Workman, admitted paying a significant number of their employees in cash to evade paying premium taxes. Randy Workman allegedly used a similar scheme to avoid paying premium taxes, according to officials. They also also said Arthur White allegedly paid a portion of T&W Services through a shell company to avoid paying taxes.
Russell, Frelin Workman and Randy Workman face up to 25 years in prison and a $500,000 fine. White faces up to 10 years in prison and a $500,000 fine, officials said.