Top Ten Environmental Fraud Settlements for 2018

Our environment, natural resources, energy resources, and wildlife are subject to numerous laws and government programs that can give rise to fraudulent activity. Here is our look-back at the top 10 environmental fraud recoveries for 2018. Our 2016 and 2017 lists are also available on the Whistleblower Insider blog.

1. International Automated Systems and RaPower-3 – In October 2018, a federal court in Utah ordered RaPower-3 LLC and International Automated Systems, Inc. to stop all promotion and marketing and disgorge $50 million collected in an abusive tax scheme involving false tax deductions and solar energy credits. The companies and their principals marketed what they claimed was technology that could be used in the production of solar energy. However, the technology was phony and defendants knew that its purchasers would not be entitled to the tax deductions and credits.
2. IAV GmbH – In December 2018, the German engineering company plead guilty to conspiracy and agreed to pay a $35 million in connection with its role in Volkswagen’s scheme to evade U.S. diesel emission standards. IAV aided the scheme by designing and implementing software that cheated U.S. testing processes. The fraud was revealed by a whistleblower.
3. Home Depot – The retail giant resolved allegations that its California warehouses unlawfully disposed of hazardous waste (e.g. batteries, aerosol cans, and paint). These practices allegedly gave Home Depot a competitive advantage over entities that complied with the law. To settle the allegations, Home Depot agreed to pay just under $28 million.
4. NGL Crude Logistics – In September 2018, the company agreed to pay $25 million and retire another $10 million in fuel credits to settle allegations that it was abusing the renewable fuel credit programing and improperly transferring certain of those credits to other entities, in violation of the program’s rules. The company that received the renewal fuel credits, Western Dubuque, settled related allegations in 2016, paying $6 million.
5. North American Power Group – In July 2018, the company and its CEO, Michael Ruffatto, agreed to pay $14.4 million to settle allegations arising under the False Claims Act. The company had a contract with the Department of Energy to carry out data collection and carbon sequestration projects at a Wyoming site, but instead of submitting project-related expenses for reimbursement, Ruffatto submitted personal expenses, such as legal bills, car payments, jewelry, and vacations.
6. Tesla Energy Solutions – The company, formerly known as Solar City, and its accounting firm, Novogradac & Company, agreed to pay $13 million to settle claims that they defrauded the Oregon Department of Energy in seeking to receive tax credits for commercial solar projects built in the state. Subsequent investigation revealed that the cost of the projects was inflated by over 100%.
7. Andre Bernard – The New York resident was ordered to repay $10.5 million and was sentenced to 87 months in prison arising from his involvement in a multi-state scheme to defraud biodiesel buyers by selling fraudulent biodiesel credits, and claiming fraudulent tax credits.
8. Avin International – In November 2018, the shipping company was fined $4 million for illegally discharging oily waste off of the coast of Texas, in violation of the Act to Prevent Pollution from Ships. The Act has provisions that reward whistleblowers for bringing fraud to light and has generated over $30 million in whistleblower rewards.
9. Washington Closure Hanford – The company, which was performing environmental clean up at a Department of Energy site, paid $3.2 million to settle False Claims Act allegations that the company misrepresented itself as a small business in order to qualify for special contracts. The case was brought by whistleblowers.
10. Chevron – The oil company paid $3 million in fines, agreed to invest $150 million in refinery improvements, and to invest $10 million in environmental projects to resolve allegations that it violated provisions of the clean air act that are aimed at preventing accidental discharge of hazardous chemicals at several of its refineries in California, Mississippi, Utah, and Hawaii. The overall value of the settlement, topping $160 million, is the largest settlement in the EPA’s enforcement of the Risk Management Plan Rule under Clean Air Act Section 112(r).

Read More:

• Environmental fraud whistleblowers
• All of our Top Ten Lists
• I think I have a whistleblower case
• The Constantine Cannon Whistleblower team

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