The latest round of environmental enforcement includes egregious violations, big fines, and prison time for Chief Executive Officers (CEOs).
Defense Contractor and CEO Pay for Violations
A former Long Island defense contractor and its Chief Executive Officer were ordered to pay more than $48,000,000 for some shocking actions.
According to the Department of Justice (DOJ), Eastern District of New York, “…United States District Judge Joan M. Azrack entered judgment holding liable Lawrence Aviation Industries, Inc. (LAI), a former defense contractor, and its long-time owner and CEO, Gerald Cohen, for environmental cleanup costs and penalties under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980.”
Long History of Ignoring Environmental Laws
The DOJ’s office stated, “This case and the significant monetary penalties imposed by the Court should serve as a warning to would-be polluters, including individuals…” They also provide some background with respect to past violations at LAI. They state that both LAI and Mr. Cohen have a “long history of disregard for federal, state and county environmental laws.” In the 1980s, after the Suffolk County Department of Health issued a series of recommendations for LAI to come into compliance, LAI used a front-end loader to crush approximately 1,600 55-gallon drums. These drums contained trichloroethylene (TCE), among other pollutants.
Not surprisingly, the site was later listed on the National Priorities List (Superfund). The EPA has been remediating the TCE groundwater plume and has removed 18,000 tons of soil containing polychlorinated biphenyls.
It was also noted that, in 2008, Mr. Cohen and LAI pleaded guilty to violating the Resource Conservation and Recovery Act for storing hazardous waste without a permit. According to the DOJ’s office, this violation resulted in fines in excess of $100,000 and imprisonment of one year and one day.
This unfortunate case reminds me of what Albert Einstein said with respect to character, which, in my opinion, applies to us all: “Most people say that it is the intellect which makes a great scientist. They are wrong: it is character.”
Not So “Green” Recycling of Electronics
The owners and CEOs (Craig Lorch and Jeff Zirkle) of the electronic scrap processing company, Total Reclaim, were sentenced to 28 months in prison. The company was the largest electronic recycler in the Northwest United States. They have also agreed to pay $945,663 in restitution. This was after pleading guilty to federal charges related to their export of LCD devices to Hong Kong when they told US customers they would not send the waste to Asia.
One report said that the workers in Hong Kong were unaware of the dangers of being exposed to electronic waste and were crushing the screens without masks.
Hallmarks of Classic Fraud
According to the DOJ, Western District of Washington, the CEOs “earned millions of dollars…promising to recycle safely electronic products…” They even warned US consumers that “… the products contained hazardous materials that can cause serious health conditions if processed in unsafe conditions such as those that exist in developing countries in Asia.”
The prosecutors wrote in their sentencing memorandum that the CEO’s “crime has all the hallmarks of a classic financial fraud. It includes lies to customers and auditors, the falsification of hundreds of documents, millions of dollars in ill-gotten gains, and a cover-up after the fraud was discovered. But this offense stands apart from the typical fraud because the greatest damage is not measured in dollars and cents. Rather, it lies in the health consequences that resulted from defendants’ calculated choice to prioritize their own economic well-being over the health of faceless foreign workers.”
Statements by the CEOs at Sentencing
At the sentencing, Mr. Zirkle said, “My name will forever be associated with fraud …I’ve always been a proud man, but that pride is largely gone now.” Mr. Lorch said, “I can’t possibly express how ashamed I am … I will never forgive myself for the breach of trust against the customers, community and my family.”
These two cases are clearly blatant disregard for laws, regulations, human health, and the environment. Further, based on my 40-plus years of experience, these cases are in no way representative of the regulated community at large.
Even when you are determined to do it right, environmental compliance can be challenging. Keeping up with regulatory changes, nuisances, emerging contaminants, and communications with stakeholders is, at times, daunting.
If you are doing your best to stay in compliance with regulations, but you are not sure of your current status, we can help. Contact Matthew Schroeder, P.E., about a compliance assessment. You can reach Matt at 248-932-0228, Ext. 117.