U.S. Environmental Protection Agency Office of Criminal Enforcement, Forensics, & Training

1. 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

2. 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

3. 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

4. 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?

5. U.S. Environmental Protection Agency The Evolution of an Environmental Crime: Choices, Decisions, Consequences & Accountability • Decision • 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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.

12. 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 2micro-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.”

13. 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