Man sentenced for extortion scheme at arch mine

MAN SENTENCED FOR EXTORTION SCHEME AT ARCH MINE

Charleston, W.Va. --  Former Mountain Laurel Mining Complex General Manager David E. Runyon, 45, of Delbarton, Mingo County, West Virginia, was sentenced today to 41 months in federal prison and ordered to pay a $15,000 fine for extortion and tax evasion, announced United States Attorney Booth Goodwin.

Runyon admitted that as general manager of the mining complex, he participated in and benefitted from a number of extortion schemes where he and other Arch Coal employees were paid cash kickbacks from complicit Mountain Laurel vendors in exchange for the vendors’ continued business at Mountain Laurel.  The cash kickbacks to Arch Coal employees totaled more than 1.8 million dollars between 2006 through 2013. These kickbacks included:

• The Rebuild Kickback Scheme, where Runyon and others received  kickbacks from companies engaged in rebuilding mine equipment 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, Carter Sales and Service and Apex Mining Construction and Repair, Inc, owned by Donald Carter.  Ellis, Carter, and later Herndon understood that they would no longer be vendors for Mountain Laurel 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”).  MRS performed rebuild and repair work on mining equipment at Mountain Laurel.  Barnette understood if he did not pay the kickbacks, MRS would no longer get rebuild work at Mountain Laurel.
• The Construction Work Kickback Scheme, where Runyon received kickbacks from Alvis Porter, who operated Quality Oil, Inc. d/b/a Southern Construction of Logan.  Porter’s company performed a variety of construction services at Mountain Laurel, and Porter paid the kickbacks to keep the Mountain Laurel 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 through these kickback schemes. He was ordered to pay restitution in the amount of $1 million to Arch Coal and $325,485 to the Internal Revenue Service.

“The payment of kickbacks is nothing more than negotiated bribery.  Kickbacks undermine fair and legitimate business practices, eliminate competition and inevitably impact costs passed along to consumers.  These are not victimless crimes, because in the end we all lose when the free market is compromised by such corruption,” said United States Attorney Booth Goodwin.

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