Environmental Fraud

May 7, 2019

The owners of a Colorado biomass power plant agreed to pay $2.6 million to settle allegations concerning fraud impacting the U.S. Treasury’s “1603 Program,” which reimburses companies up to 30%, in lieu of tax credits, for placing renewable energy properties into service. The company at the center of the fraud, Eagle Valley Clean Energy, allegedly applied for and received a 30% advance on a fee it was to pay co-defendant Evergreen Clean Energy, LLC for unspecified development services. Eagle Valley wrote off the fee but failed to return the advance to the U.S. Treasury. As part of the settlement, Eagle Valley paid $2.4 million, and the two owners of Eagle Valley, Evergreen, and parent company Evergreen Clean Energy Corporation—Dean Rostrom and Kendric Wait—paid $125,000 each. USAO CO

May 1, 2019

A Pennsylvania man has been convicted of defrauding the EPA and IRS of $50 million over the course of five years.  Together with his co-defendant, Ralph Tomasso, David Dunham Jr. used their companies to illegally profit from the EPA’s Renewable Fuel Standard (RFS) Program by fraudulently applying for, receiving, and selling credits to renewable biofuels that they didn’t actually sell or never actually possessed. Now, the government is seeking forfeiture of $1.7 million in fraudulently obtained revenue.  DOJ (August 6, 2020 sentencing)

May 1, 2019

B. Charles Rogers Gas Ltd., a gas marketing company operating in New Mexico, together with its principals and an associated individual, have entered into a settlement agreement with the U.S. admitting that they made and used false records that under-reported the volume and value of natural gas they purchased from producers who had federal gas leases. This fraudulent conduct caused the producers to underpay royalties owed to the U.S. for gas extracted from those leases.  Defendants will pay $4.375 million.  DOJ

April 15, 2019

Defense contractor Lawrence Aviation Industries, Inc. and its owner and CEO, Gerald Cohen, have been found liable for $48 million in costs incurred by the Environmental Protection Agency to remediate groundwater contamination caused by defendants' unlawful discharge of a number of hazardous substances at LAI's facility in Port Jefferson, New York.  Civil penalties of $750,000 were also imposed against both LAI and Cohen.  USAO EDNY

March 22, 2019

A man in Colorado plead guilty to his role in a $7.2 million tax credit fraud scheme that ran from 2010 to 2013. To take advantage of a federal program that encourages the production and use of renewable fuels, Matthew Taylor and co-conspirators created a fake fuel production company, Shintan Inc., and filed false claims for tax credits with the IRS, even though their company produced no qualifying fuels. Altogether, their scheme netted them a total of $7.2 million, with $4.5 million going to Taylor. DOJ

February 8, 2019

In connection with alleged fraud on a multi-billion dollar Department of Energy contract, the United States has filed a False Claims Act complaint against Mission Support Alliance LLC (MSA), Lockheed Martin Services Inc. (LMSI), Lockheed Martin Corporation (LMC) and Jorge Francisco Armijo, currently VP of LMC but formerly president of MSA. The complaint alleges that defendant LMSI violated the FCA by submitting false statements about its profits to order to inflate its billing rate. The complaint also alleged that, in violation of the Anti-Kickback Act, defendant LMC paid Armijo and other MSA executives more than $1 million in order to win a $232 million subcontract to clean up the Hanford nuclear waste site in Washington State. DOJ; USAO EDWA

January 30, 2019

Sunoco Pipeline L.P. will pay the United States $5 million and pay Louisiana Department of Environmental Quality (LDEQ) $436,274 to resolve alleged violations of the Clean Water Act and state environmental laws by Sunoco and Mid-Valley Pipeline Company stemming from three crude oil spills in 2013, 2014, and 2015, in Texas, Louisiana, and Oklahoma. Additionally, Sunoco agreed to take actions to prevent future spills by identifying and remediating the types of problems that caused the prior spills. This includes performing pipeline inspections and repairing pipeline defects that could lead to future spills. Sunoco is also required to take steps to prevent and detect corrosion in pipeline segments that Sunoco is no longer using. Mid-Valley, the owner of the pipeline that spilled oil in Louisiana, is responsible, along with Sunoco, for payment of the civil penalties and state costs relating to the Louisiana spill. DOJ

January 28, 2019

A producer of fish oil and fishmeal products, Omega Protein Corp., has agreed to pay $1 million to resolve allegations that when the company applied for a $10 million federal loan, it falsely certified that it was complying with federal environmental laws when, in fact, it was knowingly violating the Clean Water Act by discharging oil into U.S. waters. In 2013, the company pleaded guilty to criminal violations of the CWA.   The civil settlement arises from a False Claim Act case filed by a former employee of Omega, Keland O. Harrison, who will receive $200,000 of the settlement proceeds.  DOJ