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Feds target false billing scheme at Alpha

CHARLESTON, W.Va. (AP) -- Three now-former employees of Alpha Natural Resources and the owner of one of its major suppliers will plead guilty to ripping off the coal operator with false invoices, federal prosecutors said Monday.

U.S. Attorney Booth Goodwin unveiled wire fraud and aiding and abetting charges against Edward Ellis Mullins, 41, of Peytona, Joey R. Phalin, 36, of Crab Orchard, Nicholas R. Coleman, 29, of Lester, and Donald Bryan Steele, 43, of Barboursville.

Steele owns M&S Hydraulics, while the others were local sourcing agents for mines along W.Va. Route 3 in Boone and Raleigh counties that Alpha acquired when it bought Massey Energy in mid-2011. Assigned to order needed goods and services, these agents obtained cash and gifts from M&S — and apparently other suppliers — by having them paid for through false billings to Alpha, prosecutors said.

U.S. Attorney Booth Goodwin called Monday's charges the first step in an ongoing criminal probe, and likened such cheating of an employer to accepting bribes.

"Schemes like this create unfair obstacles for suppliers who want to do business honestly," Goodwin said in a statement. "They drive up prices for everyone. There's no place for that in the American economy."

A vehicle-equipment supplier alerted Alpha after Mullins asked it to provide tires and wheels for the personal vehicles of his and other Alpha employees in November 2011. Mullins was the agent for subsidiary Elk Run Coal.

Alpha contacted the FBI and the State Police. The resulting investigation revealed roles in the scheme by Phalin and Coleman, agents for subsidiary Marfork Coal, prosecutors said. The FBI and the State Police confronted Steele last month. All four are cooperating with investigators.