ABINGDON, Virginia — Two West Virginia coal operators each will spend three years in prison for participating in a $10 million cash selling scheme designed to defraud the Internal Revenue Service.
William "Bill" F. Adams, 55, of Yukon, West Virginia, and John B. Ward, 43 of War, West Virginia, are among 25 people in West Virginia, Virginia and Kentucky who were charged in the scheme. The other defendants previously pleaded guilty and received sentences ranging from two years in prison to probation, the U.S. Attorney's Office for the Western District of Virginia said in a news release.
Adams and Ward both were convicted in January 2014 of conspiring to defraud the government in the collection of taxes, and structuring cash transactions to avoid reporting requirements. They were sentenced Friday in U.S. District Court in Abingdon.
Some of the other defendants, called cash sellers by prosecutors, posed as a mine supply business and provided coal operators with cash and fraudulent invoices so they could evade taxes. Typically, a coal operator would issue a check to cash sellers, who then would deposit it in a bank and make multiple cash withdrawals of $10,000 or less to avoid federal reporting requirements, the U.S. Attorney's Office said.
The cash sellers would keep 10 percent of the money as a fee. The coal operators either would pocket the rest, without declaring the money as personal income, or pay their employees in cash to avoid paying employment taxes.
Adams and Ward operated RS Mining, WA Mining, War Creek Mining and other coal mines near Caretta, West Virginia, the U.S. Attorney's Office said.
In addition to the prison terms, U.S. District Judge James P. Jones ordered Adams to forfeit $2.1 million and Ward to forfeit $2.2 million.
As a result of the investigation, the federal government has recovered more than $8.7 million that will be forfeited or applied to taxes that were evaded.
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