CHARLESTON – Williamson-based employee leasing firm, Aracoma Contracting, LLC, was sentenced to three years of probation and ordered to pay more than $4 million in restitution and forfeit another $405,000 in connection with a structuring scheme involving more than $2 million in cash withdrawals from the company’s bank accounts once held at a Mingo County bank.
“Structuring” involves the breaking down of cash transactions into amounts of $10,000 or less for the purpose of avoiding a financial institution’s reporting requirements to the Internal Revenue Service.
Acting on behalf of Aracoma, its principals Jerome Edward Russell, 50, of Williamson, and Frelin R. Workman, 58, of Belfry, Ky., formed a longstanding relationship with Bank of Mingo and, particularly, one of its employees at the bank’s Williamson branch.
From January 2009 through April 2012, Aracoma structured at least $2.2 million out of Bank of Mingo. Russell and Workman also enlisted the assistance of a number of individuals who agreed to appear at the Williamson branch and cash cashier’s checks. The cash from the bank withdrawals was later brought back to Aracoma’s office to be used to pay cash payroll.
During the scheme, Aracoma sent advance forms to the Williamson branch prior to the structured cash withdrawals, so the bank could prepare the cash ahead of time. Bank of Mingo would then prepare cashier’s checks in the names of the identified individual or individuals and precount 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 precounted cash.
Numerous times when multiple individuals appeared at the same teller window to endorse cashier’s checks that exceeded $10,000 on Aracoma’s line of credit, Bank of Mingo routinely failed to file notifications, known as currency transaction reports, as required by law.
As part of its sentencing, Aracoma admitted that substantially all of the cash structured out of Bank of Mingo by Aracoma was used to pay the company’s payroll in cash, therefore avoiding the payment of required federal employment taxes and also to make bribe payments to a former BrickStreet field auditor, Arville Sargent.
Sargent, 52, of Chapmanville, previously pleaded guilty in March of 2013 to honest services mail fraud and tax evasion. As a field auditor, Sargent purposely allowed four “employee leasing” companies, including Aracoma, 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. At Tuesday’s sentencing, the district court held Aracoma jointly and severally liable for the $4 million owed in restitution to BrickStreet and the state of West Virginia by Sargent, Russell and Workman.
Sargent was previously sentenced last October to six years in federal prison. Russell and Workman each were sentenced to 30 months of imprisonment for their role in the bribery scheme.
The FBI, the IRS, the West Virginia State Police and the West Virginia Insurance Commission conducted the investigations. Assistant U.S. Attorney Thomas Ryan is in charge of the prosecutions.