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									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

•   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

• Choices
      A.    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

• 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:
                 »   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
               »   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
               »   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

								
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