Charges filed against 10 in multi-million dollar kickback scheme - Beckley, Bluefield & Lewisburg News, Weather, Sports

Charges filed against 10 in multi-million dollar kickback scheme at Sharples mine

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Federal authorities allege a handful of supervisors at Mountain Laurel Mining Complex in Logan County schemed to rig bids and extort kickbacks from vendors, pocketing millions of dollars in bribes from companies desperate to keep their business.

So far, 10 people have been charged in connection with the investigation, triggered at least in part by "rumors swirling" about illegal activities at Mountain Laurel, an Arch Coal subsidiary, U.S. Attorney Booth Goodwin said.

Goodwin characterized the fraud as "substantial" and said Arch Coal is cooperating with the investigation.

"There's a lot of money involved," he said, adding that "Arch is definitely a victim here."

(CLICK HERE FOR THE FULL FILING)

Because the investigation is ongoing, Goodwin declined to say exactly who provided information to state and federal investigators. Information filed with the U.S. District Court in Charleston, however, identify four individuals involved in the scheme identified numerically as "known persons" 2, 3, 4 and 5.

Goodwin said those four "known persons" aren't necessarily confidential informants and could, in fact, face charges themselves.

At the center of the investigation: Former Mount Laurel General Manager, 45, of Delbarton, charged with extortion. Goodwin said Runyon controlled purchasing and selected vendors for the company.

Runyon and three other Arch Coal employees — Gary K. Griffith, 62, of Oceana, Wyoming County, at one time Mount Laurel's maintenance manager; Stephen B. Herndon, 37, of Holden, Logan County, who had been warehouse manager; and Chadwick C. Lusk, 32, of Davin, Logan County, a former purchasing agent -- allegedly accepted kickbacks "approaching $2 million" over a five-year span beginning sometime in 2007.

Griffith is charged with lying to investigators, while Lusk is charged with honest services mail fraud. Herndon, now a partner in Tri-State Mine Services, is charged with "structuring" cash withdrawals in increments of $10,000 or less in order to avoid reporting requirements.

Herndon and his business partner, Scott Ellis, 44, of Holden, allegedly paid nearly $425,000 in kickbacks to ensure they didn't lose a rebuild contract with Mount Laurel.

Ellis also has been charged with structuring.
Also charged:
  • Alvis R. Porter, 61, of Holden, owner and operator of Quality Oil Inc., which, doing business as Southern Construction of Logan, allegedly paid roughly $400,000 in kickbacks directly to Runyon to keep a contract for construction services. Porter has been charged with failing to collect employee payroll taxes.
  • David N. Herndon, 63, of Chauncey, Logan County, owner of MAC Mine Service, a contract labor company. Herndon, charged with engaging in an unlawful monetary transaction of criminally derived property valued at more than $10,000, allegedly paid roughly $340,000 in kickbacks so he wouldn't lose his contract with Mount Laurel, investigators say.
  • Ronald  Barnette, 53 of Holden, owner and operator of Mining Repair Specialist. Charged with making a materially false statement to investigators, Goodwin said Barnette ultimately admitted to making roughly $300,000 in kickbacks to Runyon over the course of the scheme.
  • Gary L. Roeher, 52, of Holden, owner of CM Supply. Roeher is charged with filing a false tax return. Investigators say Roeher deducted about $43,000 as a business expense for his company, but used the money to install an in-ground pool at his home.
  • James H. Evans II, 39, of Verdunville, Logan County, owner of Baisden Recycling. Evans, charged with conspiracy to commit honest services fraud, gave Arch's $30,000 commission on the scrap cable he recycled for Mount Laurel to Runyon, using Stephen Herndon as a conduit.
Goodwin said it's difficult to quantify exactly how much damage was done to other businesses and employees.

"Anytime you have corruption, especially on this scale, there are a lot of losers," he said. "There's the other vendors who played by the rules; Arch Coal, with the amount of money that was involved just in the kick-backs alone, which approached $2 million, and the number of individuals they could have employed.
"I don't know if we'll ever be able to quantify the true monetary impact, but suffice it to say it is substantial."

He said bid-rigging and kickbacks can be the "difference between operations opening and closing, especially when you're talking about a scheme of this magnitude."

"There will be further developments in this investigation," he added. "It is very much ongoing."

Click here to read Arch Coals' statement on the allegations.