U.S. Environmental Protection Agency
Office of Criminal Enforcement,
Forensics, & Training
Jeffrey Denny, Resident Agent in Charge
Indianapolis Resident Office
2030 Market Tower
10 W. Market Street
Indianapolis, IN 46204
(317) 226-1001
denny.jeffrey@epa.gov
Report Suspected Environmental Crimes
www.epa.gov/compliance/complaints/index.html
U.S. Environmental Protection Agency
The Evolution of an Environmental Crime:
Choices, Decisions, Consequences & Accountability
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Began as a simple Business Plan to Increase Profitability
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Developed the Project
Set the Budget
Assigned Project Responsibilities
Established Landmark Dates
Identified Environmental Compliance Issues
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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
• Choices
A.
B.
C.
Downsize the scope of the project?
Request an increase in the already approved budget?
Eliminate certain non-revenue generating aspects of the project?
U.S. Environmental Protection Agency
The Evolution of an Environmental Crime:
Choices, Decisions, Consequences & Accountability
• Decision
C. 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
U.S. Environmental Protection Agency
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
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:
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18 Months Federal Prison
$4000 Fine
12 Months Supervised Release
50 Hours Community Service
•Missed Son’s High School Graduation (incarcerated)
•Filed Bankruptcy
U.S. Environmental Protection Agency
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
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Minor Source Screening Forms
Field Inspection Reports
Applications and Permits
Requests for Modifications
Quarterly and Annual Reports
U.S. Environmental Protection Agency
The Evolution of an Environmental Crime:
The Investigation
How did the Government substantiate the allegations?
• Business Records
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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 getting
public attention in the business world.”
- Judge David Hamilton