The office confirmed in an information filing that Williamson-based Aracoma Contracting is accused of structuring cash withdrawals from the company’s bank accounts at the Bank of Mingo.
Aracoma principals Jerome Edward Russell, 50, and Frelin Workman, 58, pled guilty in March to their roles in an honest services mail fraud scheme to defraud BrickStreet Mutual Insurance of insurance premiums and tax evasion.
In the charges filed Thursday against Aracoma Contracting, the agency alleged Aracoma generated cash to bribe BrickStreet auditor Arville Sargent, 52, and also pay employees cash wages with money generated by the Bank of Mingo structuring – breaking down transactions into amounts smaller than $10,000 to avoid Internal Revenue Service reporting requirements.
“Acting on behalf of Aracoma, Russell and Workman formed a longstanding relationship with the Bank of Mingo, and, particularly, one of its employees at the bank’s Williamson branch,” the agency said.
That relationship, between January 2009 and April 2012, resulted in the structuring of at least $2.2 million, according to the information filing.
Russell and Workman were not the only two collecting the money. The pair enlisted the help of numerous individuals who agreed to go to the bank’s Williamson branch to cash cashier’s checks, subsequently returning it to Aracoma’s office to pay out cash payroll.
“During the scheme, Aracoma sent advance forms to the Williamson branch of Bank of Mingo prior to the structured cash withdrawals, so the bank could prepare the cash ahead of time,” the agency said of the scheme.
“Bank of Mingo would then prepare cashier’s checks in the names of the identified individual or individuals and pre-count the requested cash.
When an individual or individuals from Aracoma appeared at a Bank of Mingo teller window, a bank representative presented them with the cashier’s check in the individual’s name.
The check was immediately endorsed and the individual was given the pre-counted cash.
Bank of Mingo, meanwhile, despite several incidents where multiple individuals went to the same teller window to endorse cashier’s checks exceeding $10,000 on Aracoma’s line of credit, routinely did not file required currency transaction reports.
A further investigation found the cash from the bank had been used for cash payroll, which avoided the need to pay employment taxes, and also to make bribe payments to former BrickStreet auditor Sargent.
“As a field auditor, Sargent purposely allowed four employee leasing companies, including Aracoma, to falsify documents drastically understating their actual payroll,” the USAO said.
“In exchange for saving those policyholders millions of dollars in insurance premiums rightfully owed to BrickStreet, Sargent accepted hundreds of thousands of dollars in cash bribes and other things of value, including a Yamaha Rhino all-terrain vehicle.”
Russell and Workman each face as much as 25 years in prison and a $500,000 fine. Sentencing for both has been scheduled for August 22.
Sargent, who is set to be sentenced August 28, faces the same prison time and fine.
The FBI, the IRS, the West Virginia State Police and the West Virginia Insurance Commission conducted the investigations.
This probe was also handled in coordination with the United States Attorney’s Office for the Western District of Virginia and the local Abingdon, Virginia Resident Agency office of the IRS.
Assistant United States attorney Thomas Ryan is in charge of the prosecutions.