Jerome Edward Russell of West Virginia, and father-and-son team Frelin and Randy Workman from Kentucky, pleaded guilty to tax evasion and aiding in the scheme.

US District Judge John Copenhaver sentenced Russell and the elder Workman to 30 months in prison. Randy Workman received a 15-month sentence.

Each had faced 25 years plus a $US500,000 fine. They were charged in mid-August.

Russell and Frelin Workman were principals in employee leasing group Aracoma Contracting.

In the worker’s compensation insurance premium-related charges against Aracoma Contracting, the US Attorney’s Office alleged Aracoma generated cash to bribe BrickStreet auditor Arville Sargent and also pay employees cash wages with money generated by structuring monies from accounts held at the Bank of Mingo.

The office clarified that “structuring” involved breaking down cash transactions into amounts of $10,000 or less for the tax evasion purpose of avoiding a financial institution’s reporting requirements to the Internal Revenue Service.

“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’s attorneys 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 Arville 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.”

Sergeant, who plead guilty in March to mail fraud and tax evasion and is facing the same sentence, was to have his punishment handed down August 28. That decision is still pending.

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 was in charge of the prosecutions.

The Charleston Gazette has since reported that as part of a bid to reduce their sentences, the three convicted men are providing assistance to federal authorities over similar schemes involving two other contracting firms.

They are also reportedly providing information over a kickback scheme involving an undisclosed mine superintendant who used contractors to work at his home before billing the mine operator for this service.