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Top Ten Environmental Fraud Settlements of 2019

Posted  January 17, 2020

Between Greta Thunberg’s “Climate Strike” mass protests, the on-going saga over the Dakota Access Pipeline, the hoopla over plant-based diets, and record temperatures and ice melts – the environment was on everyone’s mind in 2019.  Whistleblowers can be eligible for financial rewards for reporting environmental violations in a number of different ways, and our review below features many recoveries – including from defense contractors, royalty payers, shipping companies, SEC-reporting companies, and involving tax fraud – where whistleblowers did, or could have, played a role.

    1. Fiat Chrysler  In January 2019 the multinational auto maker agreed to pay over $500 million to settle claims over its installation of “defeat devices” in 100,000 diesel automobiles to circumvent emissions testing requirements.  Jeep Grand Cherokees and Ram 1500s with the devices tested within legal limits, but exceeded emissions limits during ordinary operation.
    2. Lawrence Aviation Industries, Inc.  In April 2019 the defense contractor and its owner Gerald Cohen were found liable for $48 million for illegally discharging hazardous substances at LAI’s facility in Port Jefferson, New York.
    3. Hyundai – In September 2019, the auto maker agreed to pay $47 million to resolve allegations that it sold heavy construction vehicles that did not comply with emission standards.  The EPA’s investigation of Hyundai was prompted by a whistleblower tip in 2015.
    4. Ralph Tomasso and David Dunham Jr. – In May 2019 a Pennsylvania jury convicted two men of defrauding the EPA and IRS of $50 million by fraudulently applying for, receiving, and selling tax credits to renewable biofuels that they didn’t actually sell or never actually possessed.
    5. Lumber Liquidators – In March 2019 the lumber company agreed to pay $33 million for making false and misleading statements about laminate flooring it imported from China. The company filed an SEC Form 8-K broadly denying allegations from 60 Minutes episode that its laminate flooring did not meet California Air Resources Board (CARB) emission standards for formaldehyde, but omitted material facts known to the company.
    6. Princess Cruise Lines and Carnival Cruise Lines – In June 2019 the cruise companies were ordered to pay $20 million in criminal penalties for failing to implement an effective compliance program, seeking to evade compliance obligations, falsifying records, and illegally discharging waste. The companies were already on probation due to a 2017 criminal proceeding that also resulted in a $40 million criminal penalty.
    7. AutoZone – In June 2019 the auto parts retailer agreed to pay $11 million to resolve charges that it illegally disposed of hazardous waste by allowing customers to deposit hazardous automotive fluids and other waste items into regular trash containers in store parking lots throughout California.
    8. Taylor/Shintan – In March 2019 a Colorado man plead guilty to participating in a $7.2 million tax credit fraud scheme by creating a fake fuel production company and filing false claims for tax credits with the IRS to take advantage of a federal program promoting the production and use of renewable fuels.
    9. B. Charles Rogers Gas Ltd.This gas marketing company agreed to pay the U.S. $4.375 million to resolve claims under the False Claims Act that it had falsely under-reported the volume and value of natural gas they purchased from producers who had federal gas leases, resulting in them underpaying royalties to the U.S.
    10. d’Amico Shipping Italia S.p.A. – Pleading guilty to charges that it violated the Act to Prevent Pollution from Ships, this Italian shipping company agreed to pay $4 million.  The company admitted that the crew on its oil tanker had bypassed pollution prevention equipment and discharges bilge water and oily waste in U.S. waters, then altered the vessel’s books and records and made false statements to the U.S. Coast Goard.


Tagged in: Environmental Fraud, FCA Federal, Ocean Dumping, Securities Fraud, Top 10,