Dale Edward Stanley received the 12 month and one day prison term following a lengthy sentencing hearing on Wednesday in U.S. District Court in Greeneville. Judge Ronnie Greer also sentenced Stanley to three years probation, 200 hours of community service and fined him $10,000.
Stanley, of Clintwood, Va., faced a maximum sentence of 20 years in prison and a $250,000 fine. Prosecutors had recommended 24 to 30 months in prison, while Stanley's attorney argued for probation.
Stanley was indicted in November 2012 on 22 counts of wire fraud in connection to the scheme and agreed to plead guilty to one count last June.
Wednesday's sentencing hearing was the third such hearing for Stanley, since Stanley has been objecting to the amount of restitution claimed by prosecutors. The plea agreement estimates Eastman's loss between $400,000 and $1 million; the pre-sentence report listed $933,000 as restitution while prosecutors had argued for $671,677 in restitution.
Following Wednesday's hearing, Greer ruled he would take the issue of restitution under advisement and issue a ruling on the final amount later this summer.
According to court records, Stanley is the owner of Mountain Energy Resources (MER), a Norton, Va., company in the business of purchasing and selling coal from the coalfields of Virginia and Kentucky.
In 2010, Eastman began purchasing coal on the spot market from Stanley; previously, Eastman had purchased coal from an Abingdon, Va.-based company Black Gold, which was supplied and loaded by MER, but in 2009 Black Gold ended its business relationship with MER.
Over the next two years, Stanley delivered more than $5.25 million worth of coal to Eastman, nearly 67,600 tons.
However, according to the plea agreement, Stanley provided Eastman with lower quality coal, concealing the lower quality product by placing it under higher quality coal in the rail cars sent to Eastman.
Eastman uses large quantities of steam coal for certain operations at its facility, coal that must have at least 12,500 BTUs or higher and an ash rate of 10 percent or lower. In its contract with Eastman, MER agreed to these terms.
Eastman contracted with a third-party inspection and testing company to determine if the coal purchased from MER met the requirements as set forth in the contract. The company performed "flow sample" testing of the coal, taking samples of the coal as it was being loaded onto the rail cars.
To circumvent the testing, Stanley paid off an employee of the testing company to sample coal from a pile of higher quality coal, which he kept on hand, and then submit the results to Eastman. Prosecutors say Stanley paid the employee on multiple occasions.
Subsequent testing by another company found the coal from MER, on average, had an ash rate of 16.57 percent and a BTU rate of 10,865.
In court records, Stanley says his commitment to community service is long-standing and exceptional and predates his arrest. Stanley also said he has given money to a variety of local charities such as the Wise County Christian School, the sheriff's department, Kiwanis and little league baseball.