The sealed indictment was handed down last week against Dale Edward Stanley, 53, of Clintwood.
Stanley appeared Monday before U.S. Magistrate Judge Dennis H. Inman in Greeneville. He was released pending arraignment, scheduled for 1:30 p.m. next Monday in U.S. District Court in Greeneville.
If convicted, Stanley faces a 20-year prison term on each count of fraud, a $250,000 fine and three years of supervised release.
According to the indictment, Stanley, the owner of Mountain Energy Resources Inc. in Norton, contracted with Eastman to provide steam coal that was to have a high BTU (heat content) rate and low ash content.
It is alleged that Stanley provided Eastman with lower quality coal, concealing the lower quality coal by placing it under higher quality coal in rail cars sent to Eastman.
Stanley is also alleged to have paid an employee of a testing service to submit unrepresentative samples for testing.
The indictment sets out 22 wire communications from early 2010 to February of this year in which invoices were sent by fax or email to Eastman for payment. The invoices were for more than $5.25 million.
The indictment is a result of an investigation by the Federal Bureau of Investigation.
Assistant U.S. Attorneys Neil Smith and Suzanne Kerney-Quillen are prosecuting the case.