Billings man sentenced to 4 years in prison for defrauding customers in scrap metal business scheme

BILLINGS - A Billings man who never turned over promised payments to customers on scrap metal he sold was sentenced today to four years in prison, followed by three years of supervised release, a $50,000 fine, and $300 in assessment fees, Acting U.S. Attorney Mark Steger Smith said.

Chad Miller Costello, 36, pleaded guilty in May 2025 to one count of wire fraud, one count of money laundering, and one count of filing a false tax return.

U.S. District Judge Susan P. Watters presided.

The government alleged in court documents that from 2018 to 2023 Costello ran a scrap metal business in Billings under different names that stole money from customers.

The scheme involved Costello promising to buy scrap metal at premium prices from various businesses across the United States and selling it to recyclers. When it was time to buy the scrap from customers, Costello would only pay a portion or nothing of the contract price, promising to pay later. He would then pick up the scrap metal, sell it to recyclers and keep the money. When the customers contacted him about the money he owed them, Costello would offer excuses, delay responses, and then stop communicating altogether. Costello would then launch a new business and repeat the scheme. The business names he used include M&M Recycling, Industrial Surplus Buying, A-1 Surplus, and ABC Iron & Metal.

The contracts typically involved large sums. In October 2022, Costello paid $150,000 in an initial installment for scrap metal that he took from a company in Coolidge, Arizona. Costello then sold the material to a recycler for more than $1 million and did not pay the balance he owed to the seller. Costello also filed his taxes in 2020, falsifying the documents and claiming an annual income significantly smaller than what he was making from his sales of scrap metal.

Assistant U.S. Attorney Colin Rubich prosecuted the case. IRS Criminal Investigation conducted the investigation.

On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division ("Fraud Division"). The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people. The Department's work to combat fraud supports President Trump's Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.