U.S. Attorney's Office
Southern District of West Virginia
(304) 345-2200
August 7, 2014

Logan Man Admits Receiving Kickbacks at Arch Mine

CHARLESTON, WV—A 45-year old Mingo County man faces up to 25 years in federal prison after pleading guilty today to extortion and tax evasion, U.S. Attorney Booth Goodwin announced. Former Mountain Laurel Mining Complex General Manager David E. Runyon, of Delbarton, West Virginia, entered a guilty plea in federal court in Charleston.

Runyon admitted that as general manager of the mining complex, he participated in and benefitted from a number of extortion schemes in which he and other Arch Coal employees received cash kickbacks from complicit Mountain Laurel vendors in exchange for continuing to hire those vendors. The cash kickbacks to Arch Coal employees totaled more than $1.8 million dollars between 2006 and 2013.

“This kind of pay-to-play scheme hurts honest vendors in the coal industry—business people who refuse to pay bribes as a way to get customers,” said U.S. Attorney Booth Goodwin. “The corrupt way that this defendant did business should be a thing of the past. It’s bad for the economy and, ultimately, bad for consumers.”

Runyon admitted receiving kickbacks from numerous vendors who did work for Mountain Laurel. His schemes included:

  • The Rebuild Kickback Scheme, in which Runyon and others received kickbacks from companies performing rebuild jobs at Mountain Laurel. These companies included Tri-State Mine Service, Inc., owned by Scott Ellis and later joined by Stephen Herndon after he left employment at Arch Coal, and Carter Sales and Service and Apex Mining Construction and Repair, Inc., owned by Donald Carter. Ellis, Carter, and later Herndon understood that they would be excluded from being vendors if they stopped paying kickbacks.
  • The Miner/Bolter Repair Kickback Scheme, where Runyon and others received kickbacks from Ronald Barnette, who owned Mining Repair Specialist, Inc. (“MRS”), which performed rebuild and repair work on mining equipment at Mountain Laurel. Barnette understood if he did not pay the kickbacks, MRS would no longer be permitted to perform rebuild work at Mountain Laurel.
  • The Construction Work Kickback Scheme, where Runyon received kickbacks from Alvis Porter, who operated Quality Oil, Inc., which was doing business at Mountain Laurel as Southern Construction of Logan. Porter’s company performed a variety of construction services at Mountain Laurel, and Porter paid the kickbacks to keep that work.
  • The Contract Labor Kickback Scheme, where Runyon received kickbacks from David Herndon. David Herndon owned and operated MAC Mine Service, Inc., which provided contract labor at Mountain Laurel. David Herndon paid the kickbacks because he believed that he would lose the business at Mountain Laurel if the kickbacks were not paid.

Runyon admitted that he received approximately $1 million as a result of his participation in these kickback schemes. He also admitted that he owed $426,122 in federal taxes to the Internal Revenue Service (IRS).

Runyon is scheduled to be sentenced on November 19, 2014, in Charleston.

Today’s charge stems from an investigation being conducted by the Federal Bureau of Investigation, IRS Criminal Investigation, United States Postal Inspection Service, and the West Virginia State Police. Assistant United States Attorney Meredith George Thomas is in charge of the prosecution.

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