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NEW JERSEY TESTING LABORATORY AND EMPLOYEES ADMIT MISLEADING EPA ON REFORMULATED GASOLINE ANALYSES

Release Date: 09/25/2000
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FOR IMMEDIATE RELEASE ENRD
MONDAY, SEPTEMBER 25, 2000 (202) 514-2008
WWW.USDOJ.GOV TDD (202) 514-1888

WASHINGTON – A Linden, N.J.,testing laboratory and two of its supervisors pleaded guilty today to conspiring to mislead investigators about a scheme designed to falsify chemical analyses involving hundreds of millions of gallons of reformulated gasoline, the Justice Department announced.

The testing laboratory, Caleb Brett U.S.A., Inc., pleaded guilty to one count of conspiracy to make false statements to the EPA and the U.S. Postal Inspection Service, based on the conduct of certain of its managers. Two of those managers, Jay Fulmer, 44, of Brick, N.J., and Anthony Santiago, 44, of Howell, N.J., pleaded guilty today; a third former manager, Edward Bachar, 35, of Freehold, N.J. pleaded guilty on Friday.

The defendants admitted their involvement in a scheme in which testing data at the lab was changed on samples of reformulated gasoline (RFG) to make it appear that the samples complied with EPA standards for the cleaner-burning RFG. The result, according to the EPA, was that an estimated 200 million to 300 million gallons of gasoline distributed in the New York, New Jersey and Connecticut area from 1995 through early 1997 were certified to meet RFG pollution standards when in fact they did not.

All of the pleas were entered in federal court in Newark before U.S. District Judge Harold A. Ackerman. The individuals pleading guilty were:

• Fulmer, the northeast area manager for Caleb Brett, to a one-count Information charging him with obstructing proceedings of a federal agency. Fulmer faces a maximum of five years in federal prison and a $250,000 fine.

• Santiago, office manager for the Linden facility, to a one-count Information charging him with misprision of a felony for failing to disclose to authorities his knowledge of the data falsification scheme. Santiago faces a maximum of three years in prison and a $250,000 fine.

• Bachar, a former Caleb Brett operations manager, on Friday, to a two-count Information, charging him with obstructing proceedings of a federal agency and conspiracy to make false statements under the Clean Air Act. Bachar’s guilty plea on the conspiracy count relates to his role in a related scheme in which he admitted assisting heating oil wholesalers to sell substandard fuel oil to public utilities in New York City. Bachar faces a maximum of 10 years in prison and a $500,000 fine.

For its corporate guilty plea to the conspiracy count, Caleb Brett faces a maximum fine of $500,000, or up to twice its gain from the scheme, and up to five years of probation. Each of the individual defendants and the corporation also face an order of restitution and costs of prosecution.

Three other supervisors from the Linden facility pleaded guilty in September 1999 for their roles in the reformulated gasoline scheme.

Reformulated gasoline, or "RFG," is a cleaner-burning gasoline required by federal law to be used in nine major metropolitan areas of the United States with the worst ozone air pollution problems. Gasoline vapors and vehicle exhaust produce ozone, a major component of smog, and reformulated fuel is designed to reduce ozone emissions.

Caleb Brett is an independent testing laboratory for the petroleum industry. It samples petroleum products and provides quantitative and qualitative analyses to meet commercial and regulatory specifications. The laboratory is a wholly owned subsidiary of Intertek Testing Services, Ltd., a foreign holding company.

The Caleb Brett investigation began in February 1997, when Caleb Brett advised the EPA of improper activities at its Linden facility. The company sought consideration under EPA’s Voluntary Disclosure Program, which gives companies the opportunity to report environmental abuses. In return, companies can avoid civil penalties and receive a recommendation by EPA to the Justice Department against criminal prosecution. However, the EPA declined to give Caleb Brett consideration under the program because the company did not meet the program’s criteria.

But even after Caleb Brett made its voluntary disclosure to the EPA, certain managers within the company – including Bachar, Fulmer, Santiago and others – took steps to cover up the full nature and scope of the petroleum sample data falsification, according to admissions from the defendants at their plea hearings today and on Friday.

Because Caleb Brett informed the government about its employees conduct, it was not prosecuted for the underlying falsification scheme. It was, however, prosecuted criminally because it concealed activities that occurred after that disclosure.

The criminal informations charge that from early 1995 through early 1997 – when samples of RFG obtained from a particular gasoline blender and analyzed in the Linden laboratory did not meet the EPA’s requirements – data was changed in order to make it appear that the RFG met those EPA specifications. The batches of fuel associated with those samples – amounting to millions of gallons each – could not lawfully be marketed on the eastern seaboard without first complying with the RFG specifications, according to the EPA.

Santiago admitted that Caleb Brett employees falsified laboratory sheets and sent reports containing these false entries to the EPA on behalf of this blender. According to today’s plea by Caleb Brett’s representative, Charles Heaton, vice president of human resources, the employees were motivated by a desire to retain the blender’s business.

The prosecution followed investigation by the EPA Criminal Investigation Division, under the direction of Special Agent in Charge William Lometti of EPA CID Region II, New York; and U.S. Postal Inspectors in Newark, under the direction of Postal Inspector in Charge Kevin J. Burke. The Government was also assisted in the prosecution by New York State’s Department of Environmental Conservation.


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