View this article online: https://www.claimsjournal.com/news/southeast/2013/10/17/238498.htm
A federal investigation into a multi-million-dollar workers’ compensation scheme extended to the Bank of Mingo in southern West Virginia, where authorities seized computer hard drives and documents.
FBI Special Agent James Lafferty said in a sworn statement he had “probable cause” to believe the bank and a bank official “conspired with or otherwise aided and abetted” Aracoma Contracting in structuring cash withdrawals to cover up the scheme.
Federal and state authorities have been investigating a scheme to lower workers’ compensation insurance premiums. The probe has focused on a group of coal-mining contract firms operating around Mingo County, including Aracoma Contracting.
Neither the bank nor any of its employees has been charged.
Lafferty’s sworn statement specifically mentioned Darrin McCormick, manager of the Bank of Mingo’s Williamson branch. McCormick also is mayor of Williamson.
The FBI agent said he had probable cause to believe McCormick had aided Aracoma Contracting in the scheme.
McCormick did not immediately return calls seeking comment Tuesday.
The bank’s board chairman, Harry Keith White, said McCormick had been placed on paid leave of absence.
“We’re fully cooperating with the investigation, and anything of any substantive matters we really can’t comment on since it’s an ongoing investigation,” said White, who is also majority leader of the West Virginia House of Delegates.
White said the bank is reviewing its procedures in light of the allegations.
Lafferty’s affidavit was unsealed Friday along with the search warrant and a list of potential evidence. The Charleston Gazette first reported on details of the affidavit.
The sworn statement was filed earlier this year as part of the government’s application for a search warrant. Agents carried out the search warrant in late February.
The unsealing came on the same day that former workers’ compensation auditor Arville Sargent was sentenced to six years in federal prison for taking bribes in exchange for allowing coal company contractors to underreport their payroll.
Sargent was an auditor for BrickStreet Mutual Insurance Company, the state’s largest workers’ compensation insurance provider. U.S. Attorney Booth Goodwin has said the fraud cheated BrickStreet out of millions of dollars in insurance premiums it was owed.
Besides Sargent, four others have been sentenced in the multimillion-dollar scheme.
Prosecutors have said that Aracoma used structured withdrawals at the Bank of Mingo to obtain the cash to bribe Sargent and to pay employees. The cash transactions were divided into amounts of less than $10,000 to avoid having banks report the withdrawals to the Internal Revenue Service.
In his statement, Lafferty said the search warrant recovered a series of faxes from Aracoma to McCormick that appeared to have occurred in advance of cash withdrawals.
“Someone from Aracoma would fill out a line of credit advance request identifying who would be at the bank to pick up the cash coupled with a second sheet identifying the particular denomination,” the FBI agent said in the statement.
All of the credit advance requests “purportedly” needed to be signed by McCormick for authorization, the statement said.