A former workers’ compensation insurance premium field auditor employed by Brickstreet Mutual Insurance Company admitted Wednesday to federal charges linked with his role in orchestrating a multimillion-dollar fraud against the state’s leading worker’ comp provider.
According to a release from U.S. Attorney Booth Goodwin’s office, Arville W. Sargent, 52, of Chapmanville, pleaded guilty to honest services mail fraud and tax evasion.
According to the release, Sargent was paid approximately $1 million in cash bribes to falsify the audits performed for the Workers’ Comp Commission and then BrickStreet. In addition, he helped help four other co-defendants evade payroll taxes.
The release stated that the Workers’ Comp Commission and BrickStreet were defrauded approximately $4 million in lost premiums over the course of the fraud scheme lasting from January 2006 until at least February 1, 2011.
Two other men, Jerome Eddie Russell, 50, of Williamson, and Frelin Workman, 58, of Belfrey, KY, admitted to paying employees in cash as part of a scheme to avoid premiums owed to BrickStreet. They also admitted to paying Sargent the false bribes to falsify the audits.
Both men were the principals of “employee leasing” companies Aracoma Contracting, LLC. They also plead guilty to honest services mail fraud and tax evasion.
In addition, Randy Workman, 36, of Belfrey, KY, pleaded guilty to aiding and abetting honest mail fraud and tax evasion in connection with utilizing a similar cash payroll scheme to evade payroll taxes, according to the release.
From October 1, 2007 through June 30, 2009, Workman admitted he structured approximately $800,000 in cash out of Community Trust Bank and used the funds to pay employees in cash. He further admitted that he underpaid approximately $280,000 in premiums owed to BrickStreet.
A fifth co-defendant, Arthur J. White, Jr., 60, of Lenore, pleaded guilty to tax evasion and structuring in connection with a scheme to defraud BrickStreet.
According to Goodwin’s release, White admitted that he paid a portion of the payroll for T&W Services, LLC through a shell company, also evading taxes. White estimated that he skimmed approximately fifteen percent of the premium actually owed to BrickStreet over a four-year period, resulting in a loss of approximately $154,527 to BrickStreet.
Sargent, Russell, Frelin and Randy Workman each face up to 25 years in prison and a $500,000 fine when they are sentenced on July. White faces up to ten years in prison and a $500,000 fine.