Two former Massey Energy employees were sentenced Monday for their role in a scheme that cost Alpha Natural Resources more than $1 million.
James Rodger Long II of Beckley and Ricky R. Smith of Daniels appeared for two separate sentencing hearings Monday before U.S. District Judge Thomas Johnston. They are the first of several to be sentenced in the scheme, which Johnston said grew out of a "culture of corruption" at the company.
Along with others, they procured equipment for personal use and then billed Massey, claiming the items were for use in mining operations.
Long, who was charged with wire fraud, will serve 18 months in federal prison and three years of supervised release. Although he wasn't fined, Long will have to pay about $1.8 million in restitution to Alpha.
Smith also was charged with wire fraud and was sentenced to 18 months in prison.
Investigators first discovered sourcing agents were billing Alpha for tires that were actually for personal use. It was later revealed the scheme involved much bigger pieces of equipment.
U.S. Attorney Booth Goodwin's office filed charges against Edward Ellis Mullins of Peytona, Joey R. Phalin of Crab Orchard and Nicholas R. Coleman of Lester.
All three, who were former sourcing agents for Massey legacy mines, were charged with wire fraud and aiding and abetting, according to a press release. All have pleaded guilty.
Mullins and Coleman will be sentenced Jan. 15. Phalin is scheduled for sentencing Jan. 16.
Prosecutors said Mullins approached a tire supplier and agreed to allow the supplier to submit false invoices to Alpha. The supplier provided this information to Alpha corporate security, who turned it over to the FBI and the State Police.
Prosecutors said Mullins admitted to the tire scheme but said it was small in scale to the M&S Hydraulics fraud.
In this scheme, Donald Bryan Steele, the owner of M&S Hydraulics, would fabricate invoices to give back to the sourcing agent to say the good was delivered. In exchange, he would receive sometimes thousands of dollars for processing.
Smith and Long were sourcing agents for Massey Energy legacy mines. As an example, prosecutors said Smith told Steele he wanted a tractor.