Four Sentenced For Roles In $10 Million Tax Fraud And Structuring Scheme
ABINGDON, VIRGINIA – Four defendants, who were part of a cash selling scheme designed to defraud the Internal Revenue Service, were sentenced today in the United States District Court for the Western District of Virginia in Abingdon.
United States District Judge James P. Jones sentenced J.D. “Dot” McReynolds, 77, of Tazewell, Va., to home confinement for a term of six months, based on McReynolds’ terminal cancer and substantial assistance to the government. In addition, McReynolds forfeited $500,000 to the government. Charles Edward “C.E.” McReynolds II, 44, of Vallscreek, W.Va., was sentenced to imprisonment for a term of three months. Timothy Gregory Allen, 43, of Hurley, Va., and Kermit Clayton Wiley, 64, of Princeton, W.Va., were each sentenced to imprisonment for a term of six months. Wiley forfeited $50,000 to the government.
The defendants were cash providers in a check cashing scheme that was designed to hide the withdrawal of cash from various coal and coal related companies by the companies’ operators. Each of the defendants who were sentenced today had pled guilty and cooperated in the investigation.
“Every United States citizen must fulfill his or her federal tax obligation," United States Attorney Timothy J. Heaphy said today. "When people like these defendants seek to evade that responsibility, we will aggressively pursue them with a coordinated effort. I congratulate all of the dedicated investigators and prosecutors who produced this result, which has recovered tax revenue for our communities.”
“No matter how the income is received, cash, check, etc., the obligations of the federal tax laws apply,” said Thomas J. Kelly, Special Agent in Charge, IRS Criminal Investigation, Washington DC Field Office. “Conspiring to defraud the government with a scheme to structure financial transactions in order to evade the payment of taxes is unlawful. The sentencing of those involved with this scheme are important reminders that IRS-CI is committed to bringing to justice those who shirk their federal income tax responsibilities.”
J.D. “Dot” McReynolds, Eddie McReynolds (deceased) and Eddie’s son, C.E. McReynolds provided cash and fraudulent invoices to the coal operators. In return, the coal operators paid the McReynoldses a ten percent fee, which they included in the check they made payable to the McReynoldses or one of their businesses. Many of the ten percent transactions involved fraudulent invoices. The transactions were designed to appear to be legitimate purchases of mine supplies. More than $10 million in cash was distributed as part of the scheme. To obtain the necessary cash to provide to the coal operators, the McReynoldses structured over $10 million in cash out of financial institutions in Virginia and West Virginia to evade currency transaction reporting requirements by making multiple withdrawals of $10,000 in cash or less. By federal law, all transactions with financial institutions involving more than $10,000 in cash are required to be reported to the government. Kermit Wiley and Timothy Gregory Allen also sold cash and disguised the transactions as sales of mine supplies, but on a smaller scale.
The investigation and prosecution resulted in the conviction of 25 defendants on felony charges in the Western District of Virginia. Twenty-three of those defendants pled guilty pursuant to plea agreements and two were convicted at trial.
The following defendants pled guilty to one felony count of conspiracy and agreed to cooperate in the prosecution. They received sentences ranging from probation to imprisonment for a term of 18 months and forfeited amounts as set forth below:
|Sandra Marahlee Addair||War, W.Va.||45||$ 50,000.00|
|Henry Lee Barnett||Tazewell, Va.||63||$ 200,000.00|
|Carl Demas Blevins||Tazewell, Va.||60||$ 10,000.00|
|David Lee Cordill||Doran, Va.||57||$ 45,000.00|
|Billy Ray Dotson||Meadowview, Va.||59||$ 45,000.00|
|Michael Wayne Dunlap||Sumerco, W.Va.||64||$ 50,000.00|
|Jeffrey Kennis Justus||Pounding Mill, Va.||62||$ 300,000.00|
|Truong “Hoppy” Van Nguyen||Tazewell, Va.||56||$ 200,000.00|
|Hung “Sang” Quoc Nguyen||Iaeger, W.Va.||39||$ 200,000.00|
|Angela Denise Payne||War, W.Va.||42||$ 1,000.00|
|Michael Dwaine Poskas III||North Tazewell, Va.||62||$ 30,000.00|
|David Raber||Tazewell, Va.||53||$ 200,000.00|
|Clinton Lester Ramey||Abingdon, Va.||57||$ 10,000.00|
The following defendants, who pled guilty to one felony count of conspiracy, have yet to be sentenced. They have already forfeited a total of $1,282,850 to the government.
|Darrell Wayne Felts||Ballard, W.Va.||64||May 6, 2014|
|Elmer Fuller||Bristol, Va.||58||To Be Scheduled|
|Melvin Parsley||Williamson, W.Va.||47||May 5, 2014|
|Rosie Diane Ritchie||War, W.Va.||39||April 7, 2014|
|John Duane Tolliver||Iaeger, W.Va.||57||April 7, 2014|
|Allen Henry Workman||Huddy, Ky.||56||May 5, 2014|
Sentencing dates have not yet been scheduled for the following defendants who were convicted after a two week jury trial:
|William "Bill" F. Adams, Jr.||Yukon, W.Va.||55|
|John B. Ward||War, W.Va.||42|
Adams was convicted of thirteen counts of structuring monetary transactions and one count of conspiracy. Ward was convicted of 24 counts of structuring monetary transactions and one count of conspiracy. At sentencing, they each face imprisonment of up to five years on the conspiracy count and up to 10 years on each structuring count. Also, they each face forfeitures of more than one million dollars.
So far, the defendants involved in the conspiracy have paid $3,476,682 in evaded taxes, $3,173,850 in forfeitures and $100,000 in delinquent Mine Safety and Health Administration penalties. In addition, information obtained during the investigation has led to several federal convictions in U.S. District Court in Beckley, WV.
Assistant United States Attorney Randy Ramseyer is prosecuting the case on behalf of the United States. The case was investigated by the Bristol, Virginia, Office of the Internal Revenue Service – Criminal Investigation. The Charleston, West Virginia, offices of the United States Attorney’s Office and the Internal Revenue Service – Criminal Investigation assisted in the investigation and prosecutions.