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Semiannual Report to Congress April 1-September 30, 1996
EPA Office of Inspector General
Semiannual Report to Congress
April 1-September 30, 1996
Section 3 -- Prosecutive Actions
The following is a summary of investigative activities during this reporting period. These include investigations of alleged criminal violations which may result in prosecution and conviction, investigations of alleged violations of Agency regulations and policies, and OIG personnel security investigations. The Office of Investigations tracks investigations in the following categories: preliminary inquiries and investigations, joint investigations with other agencies, and OIG background investigations.
Summary Of Investigative Activities
Pending Investigations as of March 31, 1996: 181
New Investigations Opened This Period: 45
Investigations Closed This Period: 71
Pending Investigations as of September 30, 1996: 155
Prosecutive and Administrative Actions
In this period, investigative efforts resulted in 6 convictions and 10 indictments, not including indictments obtained in cases in which we provided investigative assistance.
Fines and recoveries, including those associated with civil actions, amounted to $1.6 million.
Twelve administrative actions were taken as a result of investigations (This total does not include suspensions and debarments resulting from Office of Investigations activities or actions resulting from reviews of personnel security investigations)
Reprimands: 6
Resignations/Removal: 3
Reassignments: 1
Restitutions 2
Profiles of Pending Investigations by Type
Description of Selected Prosecutive and Administrative Actions
Below is a brief description of some of the prosecutive actions which occurred during the reporting period. Some of these actions resulted from investigations initiated before April 1, 1996.
Midwest Engineering Firm and VP Sentenced
On April 15, 1996, Tenney Pavoni Associates, Inc. (TPA), a Midwest engineering firm, was fined $474,048 and ordered to pay restitution of $372,771. On April 4, 1996, TPA vice-president Gary T. Boblitt was sentenced to three years probation, fined $2,000, and ordered to pay restitution of $19,463 and a special assessment of $50. In February 1995, TPA was charged with submitting false and inflated claims to the EPA for its engineering and inspection services on the construction of a nitrification project through the Hammond, Indiana, Sanitary District, and to the U.S. Department of Transportation on a federally-funded bridge project in Hammond, Indiana. Boblitt was charged with and pleaded guilty to filing a false and inflated claim to the Hammond Sanitary District, which was submitted to EPA for reimbursement.
TPA was the primary engineering firm on over $17 million of EPA-funded grant work at the Hammond Sanitary District, Hammond, Indiana. According to the criminal information, Mark W. Tenney, chief executive officer, and Joseph L. Pavoni, company president, established policies and practices which resultedin the falsification of time sheets to reflect inflated hours worked by their employees on cost-reimbursement contracts that TPA received from EPA and the U.S. Department of Transportation. Further, the information charged that persons supervised by Tenney and Pavoni reviewed time sheets of engineers and others and also boosted the amount of hours reflected for these government contracts, resulting in the company submitting invoices seeking payment for work that had not been performed. Vice-president Gary T. Boblitt was charged with submitting an inflated invoice to the Hammond Sanitary District.
As previously reported, Mark W. Tenney pleaded guilty of making a false claim and aiding and abetting. He was sentenced to five months incarceration, five months home detention, 300 hours of community service, restitution of $372,771, a fine of $250,000, and a special fee of $50. Joseph L. Pavoni pleaded guilty of making a false claim and was sentenced to three years probation, 500 hours of community service, restitution of $372,771, a fine of $250,000 and a special fee of $50. The restitution of $372,771 and fine of $250,000, were imposed jointly and severally on co-defendants Mark Tenney, Joseph Pavoni and TPA.
This case was investigated jointly by the EPA OIG, FBI, and the Department of Transportation OIG.
Florida Export Company And Official Sentenced
On July 11, 1996, Marman USA, Inc. (Marman), a Florida pesticide export company, and its vice president, Robert T. Renes, were sentenced after each pleaded guilty to charges of forging a government seal. Thecorporation was sentenced to two years probation, a fine of $350,000, and a special assessment of $1,200. Renes was sentenced to three years probation, a fine of $150,000, and a special assessment of $300.
Marman falsified documentation that was included in a package submitted for a pesticide product registration in Ecuador, along with notarized documents signed under the official seal of the EPA, with the signatures of EPA employees. Renes asked a Marman employee to sign the name of an EPA employee on certificates of registration and sign certificates of chemical analysis, although she was not a chemist. Another employee signed illegible names to certificates of origin, and Renes told him to use rubber stamps from Chambers of Commerce in England on these certificates, which were then sent to Latin American countries.
This case was investigated by the EPA OIG with the assistance of the EPA Criminal Investigations Division and the U.S. Customs Service.
Training Provider Guilty of Selling Certificates
On July 15, 1996, Robert G. Cooley, former owner and operator of I.P.C. Chicago, Inc., a business authorized to provide certified asbestos abatement training, pleaded guilty to mail fraud. In June 1996, Cooley was charged with defrauding the Illinois Department of Public Health (IDPH) and EPA by selling training certificates to workers and contractors, without requiring class attendance. These certificates were used to obtain the initial and renewal state licenses to work on various state and federally-funded projects, including asbestos abatement projects in public schools. Dependingon the course, Cooley charged $75 to $550 for the training certificates.
Federal laws and regulations require workers who remove asbestos from schools and other public buildings to be accredited and delegate the authority to states to administer the training programs. Before students receive a state license in the form of a photo identification card, IDPH requires the private trainers to provide a list of students completing the courses and the students to submit the certificates.
This investigation was conducted jointly by the EPA OIG, the FBI, the General Services Administration OIG, and the EPA Criminal Investigations Division.
EPA Employee Spouse Guilty of Bankcard Fraud
On July 31, 1996, Gregory Chambers, the spouse of an EPA employee, pleaded guilty of intentionally using a government credit card to make unauthorized charges at different retail stores totaling $3,039. Chambers was indicted in June 1996, after the investigation revealed that he made 14 unauthorized charges to an EPA Government bankcard. Chambers admitted that he had stolen the bankcard from the desk of his wife in early December 1995.
This investigation was conducted jointly by the EPA OIG and the U.S. Secret Service.
Illinois Businessmen Charged with Conspiracy
On May 2, 1996, William Foss, president of Loyalty Environmental, Inc. (Loyalty), of Skokie, Illinois, a private company engaged primarily in asbestos abatement, was indicted for conspiracy and making false statements. Also charged were Mark Zander, a Loyalty estimator and salesman; Michael Cahill, an estimator and salesman employed by Eau Claire Mechanical Insulation of Orland Park, Illinois; and David Shewmake, an insurance agent from Crestwood, Illinois.
In 1991, under the Asbestos School Hazard Abatement Act (ASHAA), EPA approved the spending of Federal funds by the Chicago Board of Education for asbestos abatement at Kennedy High School in Chicago. The Chicago Board of Education solicited bids from contractors to perform the abatement, including required bid bonds. Bid bonds accepted by the Chicago Board of Education were frequently accompanied by a power of attorney certifying that an agent of the surety was authorized to commit the surety to the promises made in the bid bond.
In March 1991, the Chicago Board of Education accepted Loyalty’s bid of $1,290,132, but the bid package did not include a bid bond. In May 1991, a second round of bids were accepted on the same job, including one from Loyalty of $1,444,015. The indictment charged that Loyalty’s bid package contained a fraudulent bid bond and power of attorney.
The indictment charges that David Shewmake obtained a power of attorney form reflecting authorizationof a bid bond on behalf of Indiana "Lumberman’s" Mutual Insurance Company and an embossing device bearing the name of the insurance company from a local printer. It is further charged that Mark Zander signed the fraudulent documents with the fictitious name "George McLena" as an authorized representative of the insurance company along with William Foss.
This investigation was conducted by the EPA OIG.
EPA Contractor Employee Indicted for Soliciting Kickback
On September 24, 1996, Keith McCullough, a contractor employee in EPA Region 3, was indicted for allegedly soliciting a kickback related to a government contract. According to the indictment, McCullough entered into an agreement with Cabletron Systems, Inc., Rochester, New Hampshire, for a ten-percent kickback on the value of a Local Area Network contract that he would facilitate EPA’s awarding to Cabletron. McCullough was an employee of Management Technology, Inc., which was contracted by General Services Administration to run the computer room in EPA Region 3.
This investigation was conducted jointly by the EPA OIG and the FBI.
Corporate President Pleads Guilty to Conspiracy
On April 19, 1996, Robert Feller, president of Non Hazardous Incineration (NHI), a non-hazardous waste broker in the state of New Jersey, pleaded guilty to conspiracyto create and distribute a phony EPA approval letter.
Under EPA regulations, once the date of transdermal nicotine patches expires, they are classified as hazardous wastes and cannot be sold. Feller knew that one of NHI’s major clients produced transdermal nicotine patches and attempted to persuade several people at the EPA to reclassify the patches as non-hazardous waste. When EPA refused Feller’s request, Feller conspired to create and distribute a phony EPA letter stating that transdermal nicotine patches were not classified as hazardous wastes.
This case was investigated by the OIG Office of Investigations.
Civil and Administrative Actions to Recover EPA Funds
Investigations and audits conducted by the Office of Inspector General provide the basis for civil and administrative actions to recover funds fraudulently obtained from EPA. Through the Inspector General Division (IGD) of the Office of General Counsel (OGC), the OIG uses a variety of tools to obtain restitution. These include cooperative efforts with the Department of Justice in filing civil suits under the False Claims Act, the Program Fraud Civil Remedies Act, and other authorities; working with grantees using their own civil litigation authorities; invoking the restitution provisions of the Victim and Witness Protection Act during criminal sentencing; using the Agency's authority to administratively offset future payments and to collect debts; and negotiating voluntary settlements providing for restitution in the context of suspension and debarment actions. Civil and administrativeactions to recover funds usually extend over several semiannual reporting periods.
Former ERCS Contractor Agrees to $589,000 Settlement
On May 6, 1996, OHM Remediation Services, a former EPA Emergency Response Cleanup Service (ERCS) contractor, agreed to pay $589,000 as part of a civil settlement with the government. This agreement was reached after an investigation on information that OHM and some of its subcontractors had allegedly double-billed and overbilled costs relative to the cleanup at the Fike Superfund Site in Nitro, West Virginia. Waste-Tron, Inc. (WT), a subcontractor, double-billed some costs, was paid twice in some instances and billed unsubstantiated off-specification charges for disposal of hazardous wastes. Also, OHM double-billed and overbilled WT costs and other subcontractor costs to the government.
This investigation was conducted by the EPA OIG.
Judgment Against Former Asbestos Contractor
On June 3, 1996, the U.S. District Court for the District of Nebraska granted summary judgment for the United States and awarded $480,428 in damages and civil penalties to the United States under the False Claims Act for Stanley Peters' role in defrauding EPA under the Asbestos School Hazard Abatement Act (ASHAA).
Stanley L. Peters Associates (SLPA) assisted the Fairbury Public Schools(FPS) in applying to EPA for grants under the ASHAA for removal of asbestos. On April 28,1989, EPA awarded the FPS a grant of $281,176 and a no-interest loan of $319,630 for asbestos removal. SLPA subsequently entered into an agreement with FPS to design and oversee the asbestos abatement procedure. On February 28, 1990, Brad’s Asbestos Removal, Inc. (BAR), owned and managed by Russell and Dean Curtis, was awarded the asbestos removal contract.
Between 1989 and 1991, Peters conspired with the Curtis brothers to submit claims to EPA for reimbursement for asbestos removal work that had not been performed, resulting in overpayment of $153,476. On December 21, 1993, Peters was convicted, and on June 28, 1994, he was sentenced to 24 months imprisonment, and ordered to pay restitution of $153,476. This case was investigated by the EPA OIG and the FBI.
Company Settles Imputed Interest Claims
On September 24, 1996, Versar, Inc. (Versar), entered into a settlement agreement with EPA and the United States Attorney’s Office, Middle District of North Carolina, to resolve allegations that Versar prematurely billed the Agency for subcontractor costs. Versar agreed to reimburse the government $47,941 for the imputed interest on the use of the prematurely billed costs and the administrative costs of the investigation. Versar further agreed to ensure that all current and future officers, managers, and contracts management and billing employees receive required training regarding proper implementation of billing policy and procedures; tomonitor on a monthly basis its government contracts to ensure compliance with the Federal Acquisition Regulation; and to submit to EPA annual certifications that all terms and conditions of the agreement have been met.
Settlement Of Civil False Claims
On September 20, 1996, the United States Attorney’s Office for the District of Columbia and Glenn H. Lovin, Director of the Small Community Environmental Council, reached an agreement under which Lovin paid $14,700 to settle a civil False Claims Act case. The agreement was the culmination of an OIG investigation of Lovin for alleged false claims under an EPA assistance agreement, which was awarded in September 1990 to the Small Community Environmental Council to develop a one-day education workshop addressing safe drinking water requirements for public water systems in small communities. On September 27, 1990, Lovin requested a reimbursement of $15,000, which EPA paid under the assistance agreement, for distributing hundreds of EPA information packets on safe drinking water to various governments, organizations, and individuals. The government alleged that Lovin never performed any of the services.
EPA Scientist Resigns Minus Two Degrees
An EPA Region 4 environmental scientist resigned after investigation revealed that he falsified the education claimed on his application for employment and variousappointment documents. The employee claimed to have received two Bachelor of Science degrees and an Associate in Business Administration degree. The employee provided copies of a transcript and a diploma which were fictitious.