CHARLESTON, W.Va. — David Herndon’s guilty plea in the court proceedings surrounding the Arch Coal kickback scheme has been rejected by U.S. District Judge Thomas Johnston.
Court documents filed Aug. 18 outline Johnston’s decision making process regarding the rejection of the plea as being related to specificities in the statute used to charge Herndon. Overall, Johnston found that Herndon’s mental state and actions did not wholly satisfy the requisite details of the charge to which he pled guilty.
The memorandum opinion and order filed by Johnston details the minutiae of the scheme. In early 2009, Herndon entered in a kickback scheme with David Runyon, the general manager of the Mountain Laurel Mining Complex, an Arch Coal subsidiary, at Sharples, W.Va.. Herndon allegedly admitted to initially providing Runyon with $10,000 each quarter to keep the lucrative labor contract his company, MAC Mining Services, held with Mountain Laurel. In 2012, Runyon reportedly began demanding $20,000 each quarter from Herndon. By early 2013, the scheme ended when Herndon stopped making the payments.
An Information was filed against Herndon May 30, 2014 charging him with entering into an unlawful money transaction. On July 18, 2014, Herndon entered a guilty plea on that charge. Notwithstanding the guilty plea, the court is required to determine there is a factual basis for the plea. The memorandum opinion and order filed by Johnston says, “The requirement to find a factual basis is designed to ‘protect a defendant who is in the position of pleading voluntarily with an understanding of the nature of the charge but without realizing that his conduct does not actually fall within the charge.’”
Specifically, the documents cite the charge to which Herndon pled as, “Whoever…knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity…shall be guilty of an offense against the United States.”
The statute under which Herndon was charged has four requisite criteria. The documents filed by Johnston state, “…the government must show that [the defendant] (1) knowingly engaged or attempted to engage in a monetary transaction (2) in criminally derived property (3) of a value greater than $10,000…and (4) derived from specified unlawful activity.”
While the record in the case states Herndon knew the kickback scheme was illegal insofar as Runyon was extorting him, Johnston found Herndon’s statements did not reflect he held the requisite mental state to satisfy the criteria of the charge. The document says Herndon, “…did not believe the payments made by Arch Coal under the contract were criminal proceeds.” Herndon allegedly did not receive any further benefits other than the sustained labor contract by making payments to Runyon.
In essence, Herndon knew the scheme was illegal; however, he believed the funds he used to pay Runyon were obtained legally under the labor contact. Thusly, Johnston found that Herndon lacked one of the criteria for the guilty plea in that he did not believe the funds he used to play Runyon were derived from unlawful activity.
Herndon’s sentencing hearing set for Aug. 31 has been canceled.
Owen Wells is a reporter for Civitas Media. He can be reached at 304-752-6950 ext. 1729 or by email at [email protected]