U.S. Environmental Protection Agency Office of Criminal Enforcement, Forensics, & Training Jeffrey Denny, Resident Agent in Charge Indianapolis Resident

U.S. Environmental Protection AgencyOffice of Criminal Enforcement,

Forensics, & Training

Jeffrey Denny, Resident Agent in Charge

Indianapolis Resident Office2030 Market Tower10 W. Market Street

Indianapolis, IN 46204(317) 226-1001

[email protected]

Report Suspected Environmental Crimeswww.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


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




• ChoicesA. 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?




• DecisionC. 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



• 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





• 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




• 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


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



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



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.



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.”


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 gettingpublic attention in the business world.”

- Judge David Hamilton