Five men charged in workers compensation fraud scheme - WOWK 13 Charleston, Huntington WV News, Weather, Sports

Five men charged in workers compensation fraud scheme

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Five men, including a BrickStreet Mutual Insurance Co. employee, were charged Feb. 12 in connection with a multimillion-dollar workers' compensation scheme, U.S. Attorney Booth Goodwin recently announced.

According to a news release from Goodwin's office, Arville W. Sargent, 52, of Chapmanville, served as a workers' compensation insurance premium field auditor.

The news release states Sargent was charged in a two-count information with honest services mail fraud and tax evasion as part of a scheme to defraud his employer.

In addition to Sargent, the principals of Aracoma -- Jerome Eddie Russell, 50, of Williamson and Frelin Workman, 58, of Belfrey, Ky. -- admitted to paying a significant number of their employees in cash as part of a tax evasion scheme to avoid the associated payroll taxes, according to the news release.

Another Belfrey, Ky. resident, Randy Workman, 36, is accused of utilizing a significant cash payroll to evade payroll taxes.

And Arthur White Jr., 60, of Lenore, also is accused of tax evasion for paying a portion of the payroll for T&W Services LLC through a shell company, the news release states.

Court documents state Sargent participated the scheme from January 2006 through February 2011. In the scheme, federal prosecutors allege Sargent allowed certain policyholders operating in the coal mining industry to drastically underreport their payroll during annual field audits he conducted for BrickStreet.

The purpose, the news release continues, is to confirm the policyholders were paying accurate workers' compensation insurance premiums.

Federal prosecutors further alleged Sargent allowed four employee leasing companies — Aracoma Contracting LLC, Christian Contracting, Newhall Contracting and T&W Services LLC — to falsify documents, drastically understating their actual payroll.

The news release noted these companies provide labor on a contract basis to coal companies in southern West Virginia.

In exchange for saving those policyholders millions of dollars in insurance premiums rightfully owed to BrickStreet, federal prosecutors further allege Sargent accepted hundreds of thousands of dollars in cash bribes and other things of value, including a Yamaha Rhino all-terrain vehicle.  

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.

Greg Burton, president and CEO of BrickStreet Insurance released the following statement:

"BrickStreet has been informed that it is one of the victims of a crime committed by a former employee working with a very small number of our policyholders, nearly all of which were owned or controlled by one family in Southern West Virginia. BrickStreet has been fully cooperating with and assisting the authorities in this investigation since we were first informed of it in August 2012. No BrickStreet policyholder lost money because of this crime.

"We are thankful to U.S. Attorney Booth Goodwin and his office for the plea agreements that have been secured to date. We will continue to cooperate and support the prosecution of any individuals or companies who may be found to be involved with this incident to the fullest extent of the law. We are committed to fighting fraudulent activity that may impact our policyholders and we will take this same aggressive approach any time fraud is committed against BrickStreet."