U.S. Environmental Protection Agency Office of Criminal Enforcement, Forensics, & Training

U.S. Environmental Protection AgencyOffice of Criminal Enforcement,

Forensics, & Training

Jeffrey Denny, Resident Agent in Charge

Indianapolis Resident Office2030 Market Tower10 W. Market Street

Indianapolis, IN 46204(317) 226-1001

denny.jeffrey@epa.gov

Report Suspected Environmental Crimeswww.epa.gov/compliance/complaints/index.html

U.S. Environmental Protection Agency

The Evolution of an Environmental Crime:Choices, Decisions, Consequences & Accountability

• Began as a simple Business Plan to Increase Profitability• Developed the Project• Set the Budget• Assigned Project Responsibilities• Established Landmark Dates• Identified Environmental Compliance Issues

» Notifications» Permits» Applications

U.S. Environmental Protection Agency

The Evolution of an Environmental Crime: Choices, Decisions, Consequences & Accountability

• Implementation of the Business Plan• Contracted with private entities• Completed Purchase Agreements• Completed and Submitted Required Environmental Documents

» Permit Applications» Notifications

•Project Initiation•Budget Shortfall

•Cost Overruns

•Surpassed Landmark Project Dates

U.S. Environmental Protection Agency

The Evolution of an Environmental Crime: Choices, Decisions, Consequences & Accountability

• ChoicesA. Downsize the scope of the project?B. Request an increase in the already approved budget?C. Eliminate certain non-revenue generating aspects of the

project?

U.S. Environmental Protection Agency

The Evolution of an Environmental Crime: Choices, Decisions, Consequences & Accountability

• DecisionC. Eliminate certain non-revenue generating aspects of the project.

• Eliminated the Air Pollution Control Device for Press #3• Downsized the Air Pollution Control Devices for Press #4• Evaluated Risk v. Reward• Determined Reward was greater than the Risk

The Evolution of an Environmental Crime: Choices, Decisions, Consequences & Accountability

• Consequence #1: Enticed others to go along (aka: Conspiracy)• Consequence #2: Submitted False Permit Applications

• Schematics, Certifications, Documents reflected construction of APC Devices

• Consequence #3: Submitted False VOC Reports• Omitted VOCs from the 2 Newly Installed Presses

• Consequence #4: Board of Directors fired Conspirators• Consequence #5: Federal Criminal Investigation• Consequence #6: Federal Charges Filed

U.S. Environmental Protection Agency

U.S. Environmental Protection Agency

The Evolution of an Environmental Crime: Choices, Decisions, Consequences & Accountability

• Accountability: Defendant 1 enters into a plea agreement• Admission of Criminal Acts• Agrees to Testify in Grand Jury and Trial

• Consequences: • Convicted of Misprision of a Felony 18 USC 4• Sentence:

» 5 Years Probation» 6 Months Home Confinement» 500 Hours Community Service

U.S. Environmental Protection Agency

The Evolution of an Environmental Crime: Choices, Decisions, Consequences & Accountability

• Accountability: Defendant 2 enters into a plea agreement• Consequences:

•Convicted of False Statements CAA 42 USC 7413(c)(2)(A)•Sentence:

» 18 Months Federal Prison» $4000 Fine» 12 Months Supervised Release» 50 Hours Community Service

•Missed Son’s High School Graduation (incarcerated)•Filed Bankruptcy

The Evolution of an Environmental Crime: The Investigation

How did the Government substantiate the allegations?• Enforcement History Records from 3 State Agencies and the U.S. EPA• Environmental Records and Reports

» Minor Source Screening Forms» Field Inspection Reports» Applications and Permits» Requests for Modifications» Quarterly and Annual Reports

U.S. Environmental Protection Agency

U.S. Environmental Protection Agency

The Evolution of an Environmental Crime: The Investigation

How did the Government substantiate the allegations?• Business Records

» Purchase Agreements, Purchase Orders, Receipts» Contractors’ Records» Consultant’s Records» Employee Time Cards» Press Productivity & Sales Value Reports» Press Emissions Studies» Securities & Exchange Records (Form 10-K)

• Witness Interviews: Employees, Contractors and Consultants• Interviews of Defendant 1

U.S. Environmental Protection Agency

The Evolution of an Environmental Crime: The Investigation

What did we find?• Comparison of Press Studies to Permit Applications: As reflected in

the applications, the operational capacities of the APC devices were insufficient to handle even reduced emissions from the existing and newly installed presses.

• Review of the Project Budget: Defendant 2 did not request from the Board of Directors the acquisition and installation of APC devices – just 2 new presses.

• Comparison of VOC Reports to VOC Usage Records: From July 1997 –December 1997, more than 150 tons of VOCs & HAPs were vented directly to the atmosphere from the 2 newly installed presses.

• Analyses of Press Productivity Reports: From June 1997 – September 1997, labels having a sales value of more than $4 million were generated from the 2 presses.

U.S. Environmental Protection Agency

The Evolution of an Environmental Crime: The Investigation

What did we find?• Comparison of Permit Applications to Contractors’ Records: The

newly installed presses vented directly to the atmosphere – there were no APC devices.

• Analyses of SEC Records: Defendant 2 owned 120,000 shares in the company.

• Witnesses stated: Defendant 2 micro-managed the press construction activities.

• Enforcement Records: From 1985 – 1999, similar activities occurred in three states.

» Defendant 2 implicated in the civil enforcement actions• Defendant 1 stated: Defendant 2 commented “…make more money

than he could be fined…not worried about the EPA.”

U.S. Environmental Protection Agency

The Evolution of an Environmental Crime: The Judge

What did the Judge Say?• Defendant 2’s sentence reflected the seriousness of the offense and

should act as a deterrent to others• Defendant 2’s acts were deliberate fraud to evade the CAA requirements• Defendant 2’s acts reflected a cool calculation of cost v. benefit• Defendant 2 breached public trust

“…hopes it is a case that winds up gettingpublic attention in the business world.”

- Judge David Hamilton