ABINGDON, Va. (AP) — Five West Virginia coal operators and employees have been indicted in an alleged $10 million check cashing scheme that involved kickbacks and fraudulent currency transactions to skirt taxes, the government announced Monday.
The indictments are in addition to pleas already entered by 16 defendants from Virginia and West Virginia in a complex conspiracy from 2007 through February 2011, the U.S. attorney’s office and Internal Revenue System investigators said. Each of the 16 defendants face up to five years in prison and fines of $250,000.
The new operators and workers are charged with conspiracy, wire fraud and fraudulent currency transactions. Each could face up to 50 years in prison and fines totaling $1.5 million if convicted on all counts.
The Associated Press was unable to immediately reach any of the five at their businesses. Messages were also left at their residences.
The indictment unsealed Monday outlined the alleged relationships between the operators and workers and a supplier based in Virginia.
J.D. “Dot” McReynolds, 75, of Tazewell, Va., is the owner of mining supply companies and a trucking company with operations in both states. He has already pleaded guilty to felony charges.
According to the indictment, McReynolds and his associates provided cash and fraudulent invoices to the coal operations in exchange for a 10 percent fee. McReynolds, for instance, would give a coal operator $30,000 in cash and a bogus invoice showing a purchase totaling $33,000. The operator then would issue a check to McReynolds or one of his businesses in the amount of $33,000, with McReynolds pocketing $3,000.
The coal operators would use the cash obtained in the scheme to pay their workers to avoid paying taxes or to cloak a worker’s employment, the indictment said. Some coal operators would simply pocket the money, the government alleges.
More than $10 million in cash was exchanged, the indictment said.
The new indictment names: David Cline, 53, who operates Rock N Road Coal Co., of HJ&C Leasing, of Panther, W.Va.; his son, Joshua David Cline, 27, of Mohawk, W.Va., who worked at one of his father’s companies; John B. Ward, 40, of War, W.Va., who operated Warcreek Mining; William “Bill” F. Adams, 52, of Yukon, W.Va., who with Ward operated WA Mining, Illusions and RS Mining; and Michael W. Dunlap, 62, of Sumerco, W.Va., who made purchasing decisions for mines that he was affiliated with in West Virginia. Dunlap’s companies were not identified.
The transactions involving the Clines, Adams and Ward totaled $2.7 million, the government said.
Dunlap received kickbacks from McReynolds through inflated invoices to cloak the payments to Dunlap, the indictment alleges.
The U.S. attorney’s office said the government has collected more than $3 million in forfeitures from the 16 who have entered pleas.
It was not clear if the five named in the new indictment had secured attorneys. The U.S. attorney’s office did not immediately return telephone messages.