Arville W. Sargent, Workers' Compensation Insurance Fraud, West Virginia 2013

A former workers' compensation insurance premium field auditor employed by BrickStreet Mutual Insurance Company has admitted to his role in orchestrating a multimillion-dollar fraud against the state's leading workers' comp provider, announced U.S. Attorney Booth Goodwin.

Arville W. Sargent, 52, of Chapmanville, Logan County, W.Va., pleaded guilty to honest services mail fraud and tax evasion on March 27, 2013.

Two other co-defendants involved in the scheme to defraud BrickStreet were the principals of 'employee leasing' companies Aracoma Contracting, LLC, Jerome Eddie Russell, 50, of Williamson, W.Va., and Frelin Workman, 58, of Belfrey, KY.

Russell and Workman each pleaded guilty to honest services mail fraud and tax evasion. Russell and Workman admitted to paying a significant number of their employees in cash as part of a tax evasion scheme to avoid the associated premiums owed to BrickStreet.

Both defendants admitted that they paid Sargent approximately $1 million in cash bribes to falsify the audits performed for the Workers' Comp Commission and then BrickStreet. Russell and Workman estimated that the Workers' Comp Commission and BrickStreet were defrauded approximately $4 million in lost premiums over the course of the fraud scheme.

Sargent admitted that from its inception in January 2006 until at least February 1, 2011, he led a scheme to defraud BrickStreet by allowing certain policyholders operating in the coal mining industry to drastically underreport their payroll during annual field audits he conducted on behalf of BrickStreet for the intended purpose of confirming those policyholders were paying accurate workers' compensation insurance premiums.

Sargent faces up to 25 years in prison and a $500,000 fine when he is sentenced on July 8, 2013 by United States District Judge John T. Copenhaver, Jr.

Source: https://www.justice.gov/usao-sdwv/pr/federal-guilty-plea-field-auditor-who-organized-major-workers-compensation-insurance