Brandy Horvath, 39, was formerly president of New West Virginia Mining. She was appointed by her longtime boyfriend James Trent for the purpose of concealing his interest in the company, US attorney Booth Goodwin said.
Horvath pleaded guilty last week before US district judge Irene Berger in Beckley, and also has admitted guilt on behalf of NWVM to structuring cash withdrawals from company bank accounts to avoid Internal Revenue Service reporting requirements.
Goodwin said the scheme dated back to July 2007, when Horvath was appointed and the company began mining coal for Riverside Energy at a mine in McDowell County.
“Once operations began, Horvath routinely withdrew cash for her and Trent’s personal use from New WV Mining’s bank accounts and intentionally misrepresented the nature of the withdrawals as legitimate business expenses,” he said.
“Horvath knew that the personal cash withdrawals should have been attributed to her as officer compensation.”
The US attorney said that, in May 2010, Horvath signed and caused New WV Mining’s accountant to file a corporate income tax return with the IRS for the year 2008 that she was aware did not disclose the actual amount she and her boyfriend had skimmed from the company.
Goodwin said that the structured cash withdrawals took place between October 2007 and November 2010, when she acted on behalf of the company and intentionally withdrew cash totaling $10,000 or less each time to avoid the financial institution’s IRS reporting requirements.
Aided by several others, Horvath drew at least $503,648 out of New WV Mining accounts held at First Community Bank and at least $227,933 from Bank of America between March 2006 and December 2009.
New WV Mining has already agreed to forfeit $731,581, including a 2011 Nissan 370Z purchased by Horvath, to the United States as part of a corporate plea agreement.
Horvath is not the first to go before the law for the crime. Last February Horvath associate Jill Sells, 28, pleaded guilty to conspiring with Horvath and New WV Mining to structuring the cash withdrawals.
Sells was sentenced to 18 months in prison in November 2012 for her role.
New WV Mining superintendent Steven Rocky Justus, 53, pleaded guilty to income tax evasion in June 2012 after admitting that he and Trent made a deal to pay his wages through a defunct company, Ruby Helen Coal Company, and permitted Justus to evade personal income taxes.
The agreement also allowed New WV Mining to avoid the payment of payroll taxes for Justus, Goodwin noted.
Last October, Justus was sentenced to 12 months in prison for his part in the scheme.
Horvath’s boyfriend James Trent pleaded guilty to federal income tax fraud last month.
“In November 2007, Trent sold the lease and accompanying mining permits of a McDowell County-based mining company he once owned,” the attorney said.
“Trent received a personal check for $100,000 at the close of that agreement.
Trent filed a 2008 personal income tax return which indicated that he had no earnings to report for that year. Trent knew that the 2008 income tax return he filed was inaccurate.”
At sentencing October 24, Trent faces up to three years in prison and a $250,000 fine.
Horvath could get the same prison sentence and fine when she is sentenced by Berger on November 14.
The investigation was conducted by the IRS and assistant US attorney Thomas Ryan is in charge of the prosecution.
