Brandy Horvath withdrew hundreds of thousands of dollars of unreported income from New WV Mining’s accounts disguised as business expenses
BECKLEY, W.Va. - The former president of New West Virginia Mining Company (“New WV Mining") pleaded guilty on July 9 to federal income tax fraud amid jury selection to hear her case, announced U.S. Attorney Booth Goodwin. Brandy M. Horvath, 39, of Mercer County, W.Va., pleaded guilty in federal court in Beckley to income tax evasion. Horvath also pleaded guilty on behalf of New WV Mining to structuring cash withdrawals from the company bank accounts to avoid Internal Revenue Service (IRS) reporting requirements.
In July 2007, Horvath was named New WV Mining’s president and sole officer of the company by her longtime boyfriend, James E. Trent, for the purpose of concealing his interest in the company. New WV Mining began mining coal for Riverside Energy at a mine near Gary, McDowell County, West Virginia. Once operations began, Horvath routinely withdrew cash for her and Trent’s personal use from New WV Mining’s bank accounts and intentionally misrepresented the nature of the withdrawals as legitimate business expenses. Horvath knew that the personal cash withdrawals should have been attributed to her as officer compensation. On or about May 18, 2010, Horvath signed and caused New WV Mining’s accountant to file a corporate income tax return with the IRS for the year 2008 that she knew failed to disclose the true amount of money she and Trent had taken from the company.
Acting on behalf of New WV Mining, Horvath also engaged in a pattern of structuring cash withdrawals from the company’s bank accounts between October 2007 and November 2010. Horvath intentionally withdrew cash amounts of $10,000 or less to avoid the financial institution’s reporting requirements to the IRS. Horvath, aided by several associates, acknowledged that between March 2006 and December 2009, she structured at least $503,648 out of New WV Mining accounts held at First Community Bank in Wyoming County. Horvath also structured at least $227,933 out of New WV Mining accounts held at Bank of America, at its Wytheville, Va. branch. As a result, New WV Mining agreed to forfeit $731,581, including a 2011 Nissan 370z purchased by Horvath, to the United States as part of the corporate plea agreement.
In February 2012, Horvath’s friend, Jill R. Sells, 28, of Montcalm, W.Va., pled guilty to conspiring with Horvath and New WV Mining to structuring cash withdrawals. Sells was sentenced to eighteen months in prison in November 2012 for her role in the scheme.
In June 2012, New WV Mining’s superintendent, Steven Rocky Justus, 53, of Pounding Mill, Virginia, pled guilty to income tax evasion. Justus admitted that he and Trent agreed to pay his wages through a defunct company, Ruby Helen Coal Company, that allowed Justus to evade personal income taxes. The agreement also allowed New WV Mining to avoid the payment of payroll taxes for Justus. Justus was sentenced to twelve months in prison in October 2012 for his role in the conspiracy.
Last month, James E. Trent, 55, of Rock View, Wyoming County, W.Va., pleaded guilty to federal income tax fraud. In November 2007, Trent sold the lease and accompanying mining permits of a McDowell County-based mining company he once owned. Trent received a personal check for $100,000 at the close of that agreement. Trent filed a 2008 personal income tax return which indicated that he had no earnings to report for that year. Trent knew that the 2008 income tax return he filed was inaccurate.
Trent faces up to three years in prison and a $250,000 fine when he is sentenced on Oct. 24, 2013 by United States District Judge Irene C. Berger.
Horvath faces up to three years in prison and a $250,000 fine when she is sentenced on Nov. 14, 2013 by United States District Judge Irene C. Berger.
The investigation was conducted by the IRS. Assistant United States Attorney Thomas Ryan is in charge of the prosecution.
Source: U.S. Department of Justice, Office of the United States Attorneys
