Booth said 41-year-old Edward Ellis Mullins, 36-year-old Joey Phalin and 29-year-old Nicholas Coleman – former local sourcing agents for legacy Massey mines – orchestrated a scheme with companies that supplied equipment, supplies and services to Alpha.
The group worked for the mines of Boone and Raleigh counties along rural Route 3.
Major Alpha supply company M&S Hydraulics owner Donald Bryan Steele, 43, was also charged.
All four have agreed to plead guilty and cooperate with the US Attorneys Office probe and all have been charged with wire fraud and aiding and abetting.
“An investigation revealed that several mine sourcing agents, generally responsible for ordering goods and services for mining operations from Alpha suppliers, participated in an illegal scheme to obtain goods for their own personal benefit,” Goodwin said.
“The investigation further revealed that the sourcing agents, working in conjunction with the suppliers, hid numerous illegal transactions by creating false invoices.
“The false invoices, prepared by the supplier, were intended to look like legitimate purchases but were really used to provide cash, gifts and other things of value to the sourcing agents and other Alpha employees.”
The scheme is thought to have begun in November 2011, when Mullins was employed as the sourcing agent for the Elk Run Coal Shonk Powellton no 1 mine.
Mullins approached a tire, wheel and vehicle-related item supplier that had worked with Massey and now Alpha, with regards to supplying him, as well as other Alpha employees, with tires and wheels for their personal vehicles.
In exchange, Mullins said he would allow the tire seller to submit false invoices to the producer for payment showing that the mining operation tires requested had been delivered.
The tire seller was told he could inflate the false invoice.
The tire supplier immediately turned the information over to Alpha’s corporate security team and officials contacted the FBI and West Virginia State Police.
“Over the course of the next six months, the criminal investigation revealed that not only Mullins but other sourcing agents, including Phalin and Coleman, who were employed by another Alpha subsidiary, Marfork Coal Company, were also engaged in the false billing scheme,” Goodwin said.
Through the cooperation of the now-charged sourcing agents as well as other collected information, the FBI and the state police were able to confront Steele last month.
The significant evidence uncovered by the FBI and the state police led Steele to agree to cooperate immediately in the investigation, Goodwin said.
Mullins, Phalin, Coleman and Steele each face up to 20 years in prison and a $250,000 fine.
“Today’s announcement is the first step in an ongoing criminal investigation,” Goodwin said.
“People who accept bribes or who cheat their employers by approving fake bills are committing fraud – plain and simple – and my office will prosecute them to the fullest extent of the law.”
The investigation was conducted by the FBI and the West Virginia State Police with cooperation from Alpha Natural Resource’s internal security team.
Assistant US attorney Thomas Ryan is in charge of the prosecutions.
Alpha acquired Massey, including the operations along Route 3, in June 2011.
