Six Sentenced in Connection with Major False Billing Scheme at Alpha
Seven Defendants Charged to Date in Ongoing Fraud Investigation at Massey Legacy Mines
| U.S. Attorney’s Office January 16, 2014 |
CHARLESTON, WV—A total of six individuals have been sentenced for their roles in a major false billing scheme involving sourcing agents at former Massey Legacy Mines (“Massey”)—now Alpha Natural Resources (“Alpha”)—and certain companies that provided supplies, equipment, and services to Alpha, U.S. Attorney Booth Goodwin announced today. Donald Bryan Steele, the former owner of M&S Hydraulics, a major Alpha supplier, was sentenced today to 18 months in federal prison. Steele, 43, of Barboursville, previously pleaded guilty to wire fraud and aiding and abetting in connection with the fraud scheme.
When approached by law enforcement in February 2013, Steele admitted to investigators that during the scheme, he illegally provided cash and other things of value to former Massey sourcing agents Joey R. Phalin, Edward Ellis Mullins, and Nicholas R. Coleman in exchange for bogus invoices for payment that M&S Hydraulics knowingly had not provided. Between at least July 2007 through 2012, Steele falsely billed, through the sourcing agents, approximately $1.3 million for goods and services that were not provided.
The sourcing agents, who were generally responsible for ordering goods and services for mining operations from Alpha suppliers, participated in the illegal scheme to obtain goods for their own personal benefit. The sourcing agents hid numerous illegal transactions by creating false invoices.
Phalin, 36, of Crab Orchard, West Virginia, was sentenced today to five years’ probation, the first three months of which are to be served on home confinement. Mullins, 41, of Peytona, West Virginia, was sentenced yesterday to five years’ probation, the first 10 months of which are to be served on home confinement. Coleman, 29, of Lester, West Virginina, was sentenced yesterday to five years’ probation for his role in the scheme.
Through his cooperation, Steele identified other sourcing agents involved in the scheme. Last week, former sourcing agent Ricky R. Smith, of 49, Glen Daniels, was sentenced to one-and-a-half years in federal prison. James Rodger Long, II, 34, of Beckley, also a sourcing agent, was sentenced to one-and-a-half years in prison.
Harold Wayne Brown, II, a former Alpha underground maintenance chief, previously pleaded guilty to making a false statement to federal authorities regarding benefits he had received from the false billing scheme. Brown, II, 41, of Madison, West Virginia, is scheduled to be sentenced on January 21, 2014.
The investigation was conducted by the FBI and the West Virginia State Police with cooperation from Alpha Natural Resource’s internal security team. Assistant United States Attorney Thomas Ryan is in charge of the prosecutions.
In June 2011, Alpha Natural Resources finalized the purchase of Massey, including the mining divisions located along WV Route 3 in Boone and Raleigh Counties.