Operation 10% Results In Multi-Year Prison Sentences For West Virginia Coal Operators Convicted Of Tax Evasion And Structuring
ABINGDON, VIRGINIA – Two defendants, who were part of a cash selling scheme involving over $10 million dollars in structured transactions which was designed to defraud the Internal Revenue Service, were sentenced today in the United States District Court for the Western District of Virginia in Abingdon.
Calling this “a very serious crime,” United States District Judge James P. Jones sentenced William "Bill" F. Adams, Jr., 55, Yukon, W.Va., and John B. Ward, 43, War, W.Va. to imprisonment for a term of 36 months. He also ordered Adams to forfeit $2.1 million and Ward to forfeit $2.2 million dollars. The defendants operated various coal mines near Caretta, West Virginia, including RS Mining, WA Mining and War Creek Mining. At the conclusion of a three week jury trial in January 2014, both defendants were found guilty of the felony charge of conspiring to defraud the United States in the collection of taxes and structuring cash transactions to avoid reporting requirements. In addition, Ward was found guilty of 24 felony counts of illegally structuring transactions and Adams was convicted of 13 counts of illegally structuring transactions.
Ward and Adams were investigated and prosecuted as part of an investigation titled “Operation 10%.” The name was based on the fact that the people who sell cash to coal operators for purposes of tax evasion typically charge a fee of 10 percent. The scheme typically involved a coal operator’s company writing a check to a cash seller for a certain amount of money – for example, $77,000. The cash seller, disguised as a mine supply business, would then deposit the check in a bank and then make multiple cash withdrawals of $10,000 or less to avoid reporting requirements. Using this example, the cash seller would provide the coal operator $70,000 in cash and keep a fee of 10% - $7,000. The coal operator than pocketed the cash or used it to pay his employees in cash. The coal operator deducted the payment to the cash seller as a business expense and did not report the cash he kept as personal income and did not pay employment taxes on the cash paid to employees.
Operation 10% has resulted in seizures and recovery by the United States of over $8.7 million to be forfeited or applied to evaded taxes. In addition to Ward and Adams, the following twenty-three defendants previously pled guilty to felony charges and received sentences ranging from probation to imprisonment for a term of 24 months:
Name
|
City
|
Age
|
---|---|---|
Sandra Marahlee Addair
|
War, W.Va.
|
46
|
Timothy Gregory Allen
|
Hurley, Va.
|
44
|
Henry Lee Barnett
|
Tazewell, Va.
|
43
|
Carl Demas Blevins
|
Tazewell, Va.
|
55
|
David Lee Cordill
|
Doran, Va.
|
64
|
Billy Ray Dotson
|
Meadowview, Va.
|
61
|
Michael Wayne Dunlap
|
Sumerco, W.Va.
|
58
|
Darrell Wayne Felts
|
Ballard, W.Va.
|
60
|
Elmer Fuller
|
Bristol, Va.
|
64
|
Jeffrey Kennis Justus
|
Pounding Mill, Va.
|
59
|
Charles Edward "C.E." McReynolds
|
Vallscreek, W.Va.
|
63
|
J.D. "Dot" McReynolds
|
Tazewell, Va.
|
44
|
Truong “Hoppy” Van Nguyen
|
Tazewell, Va.
|
78
|
Hung “Sang” Quoc Nguyen
|
Iaeger, W.Va.
|
40
|
Melvin Parsley
|
Williamson, W.Va.
|
57
|
Angela Denise Payne
|
War, W.Va.
|
48
|
Michael Dwaine Poskas III
|
North Tazewell, Va.
|
63
|
David Raber
|
Tazewell, Va.
|
54
|
Clinton Lester Ramey
|
Abingdon, Va.
|
58
|
Rosie Diane Ritchie
|
War, W.Va.
|
40
|
John Duane Tolliver
|
Iaeger, W.Va.
|
58
|
Kermit Clayton Wiley
|
Princeton, W.Va.
|
64
|
Allen Henry Workman
|
Huddy, Ky.
|
57
|
Information obtained as part of Operation 10% also led to several federal convictions in U.S. District Court in Beckley, WV.
Assistant United States Attorney Randy Ramseyer prosecuted 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.