United State
&EPA

       Environmental Crimes Case Bulletin
                  U.S. Environmental Protection Agency
           Office of Criminal Enforcement, Forensics and Training


                            January 2013


 This bulletin summarizes publicized investigative activity and adjudicated cases con-
 ducted by OCEFT Criminal Investigation Division special agents, forensic specialists,
 and legal support staff.


Defendants in this edition:

• Gene Cornell Smith — Region 2

• Frank Zuspan — Region 3

• Michael Pinski — Region 5

• W&T Offshore — Region 6

• BP Exploration and Production Inc. — Region 6

• Connie M. Knight — Region 6

• Bruce Raymond Morris — Region 7

• Hurley Enterprises, MON-DAK Water and Septic Services, LLC — Region 8

• Cenex Harvest States, Inc. — Region 8
                                                          EPA Bulletin January 2013  1

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                           DEFENDANT SUMMARY:
          REGION
         DEFENDANTS
     CASE TYPE/STATUTES
Region 2
Gene Cornell Smith
CAA/Illegal asbestos removal
Region 3
Frank Zuspan
CWA/Illegally dumping raw sew-
age into U.S. waters
Region 5
Michael Pinski
CAA/Illegal asbestos removal
Region 6
W&T Offshore
CW A/Disguised dirty discharges
Region 6
BP Exploration and Production, Inc.
CWA & Migratory Bird Act/
Felony manslaughter, obstruction
of Congress
                                                                          EPA Bulletin January 2013 2

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                           DEFENDANT SUMMARY:
          REGION
         DEFENDANTS
      CASE TYPE/STATUTES
Region 6
Connie M. Knight
ID fraud and impersonating a gov-
ernment official
Region 7
Bruce Raymond Morris
CWA/Submitting false  water sam-
ples for testing
Region 8
Hurley Enterprises, MON-DAK
Water and Septic Services, LLC
CWA/Illegal dumping of untreated
wastewater
Region 8
Cenex Harvest States, Inc.
CAA/Failure to report release of
hazardous substance
                                                                         EPA Bulletin January 2013  3

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 Quick Links:
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 •  Trials
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p. 4-7
p. 8
p. 9- 11
                                               (Back to Quick Links)
Final Defendant Sentenced in  Illinois Clean Air Act Asbestos Case - On January 14, 2013,  MI-
CHAEL PINSKI, who previously pled guilty to violation of the Clean Air Act related to illegal and un-
safe asbestos removal from a Kankakee, Illinois, building he owned, was sentenced in federal district court
for the Central District of Illinois to serve six months in prison, followed by two years  of supervised re-
lease including six months of home detention.  He was ordered to report to the federal Bureau of Prisons
on Feb. 20, 2013.
       On Aug. 19, 2011, Pinski  entered a plea of guilty to violating the Clean Air Act by failing to notify
the Illinois EPA of an asbestos removal job that took place at a  warehouse he owned in Kankakee. He was
                                    [charged in June 2010,  along with  Duane "Butch" O'Malley, of
                                    Bourbonnais, and James A. Mikrut, of Manteno.
                                    Mikrut, who pled guilty to five counts of violating the Clean Air
                                    Act, was sentenced on September 20, 2012, to twelve months and
                                    one day in prison, followed by one year of supervised release un-
                                    der home detention. Mikrut  was ordered to pay restitution of
                                    $47,085 to EPA along with co-defendant  O'Malley.  On July 25,
                                    2012, O'Malley, convicted by a jury in September 2011, was sen-
                                    tenced to ten years in prison, fined $15,000, and ordered to remain
                                    on supervised  release for a period of three years following com-
 Bags filled with asbestos-containing insula-
 tion dumped in an open field by workers re-  pletion of his prison sentence.
        cruited by James Mikrut                Under provisions of the Clean  Air Act, EPA has promul-
gated rules, regulations and requirements to control the removal, handling and disposal of asbestos, a haz-
ardous air pollutant. Any owner or operator of a renovation  or demolition activity  which  involves removal
of specified amounts of asbestos-containing material must comply with the EPA regulations.
      Pinski pled guilty to violation of the Clean Air Act related to the illegal and unsafe removal of as-
bestos-containing insulation from pipes in a five-story building in Kankakee,  that he owned through his
company, Dearborn Management, Inc.  In August 2009, Pinski hired O'Malley, owner and operator of Ori-
gin Fire Protection. During O'Malley's trial, the government presented evidence that neither O'Malley nor
his company was trained to perform the asbestos removal work and that O'Malley agreed to remove the
asbestos insulation for an amount that  was substantially less than a trained asbestos abatement contractor
would have charged to perform the work. Further, O'Malley arranged for Mikrut to recruit and oversee
workers to remove the asbestos.
       The government's evidence showed that there was no notification of the planned  asbestos removal
work given to the Illinois EPA or the U.S. EPA, among other various violations of the Clean Air Act and
EPA regulations.
       The case was investigated by EPA's Criminal Investigation Division with  assistance from the Illi-
nois Environmental Protection Agency and the U.S. EPA's  Superfund Division.  Assistant U.S. Attorney
Eugene L. Miller and Special Assistant U.S. Attorney James  Cha prosecuted the case.
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                                                                              EPA Bulletin January 2013 4

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Montana Company Fined for Failing to Report Release of Hazardous Substance - On January 22,
2013, CENEX HARVEST STATES, INC. was fined $500,000 in federal  district court in Great Falls,
Montana, for failure to report release of a  hazardous substance. The company was also ordered to pay the
Phillips County Rural Fire Department $50,000 and given a $400 special assessment. The terms of CHS's
sentence were agreed upon in an October 2012 plea agreement.
                                                       According  to  court  documents, Milk River
                                                 Cooperatives, a retail sale business  in Malta, which
                                                 is owned  by CHS,  caught fire on November 21,
                                                 2009.  Feed,  seed, fertilizers,  pesticides and herbi-
                                                 cides,  including approximately  1,800 pounds of ma-
                                                 terials containing the chemical 2,4-D, were stored at
                                                 the facility.  According to a chemical  summary by
                                                 EPA, 2,4-D is a widely used commercial  broadleaf
                                                 herbicide that occurs in crystalline form. In humans,
                                                 chronic exposure to 2,4-D has been linked to blood,
                                                 liver and kidney toxicity.  Acute exposure to high
                                                 concentrations of 2,4-D can lead to  burning feelings
                                                 in the lungs, loss of muscular coordination, nausea,
 The photo above and below (incorrectly date stamped) were   vomiting and coma, among Others.
taken by a Cenex employee.  Afire broke out at the Coopera-        Court documents indicate the Phillips County
tive's warehouse, and a substantial amount of chemical prod-  ,T.         .                      .  .     .   .,  '
  ucts were combusted causing the release of heavy smoke.    Volunteer Fire Department responded to  the  fire,
                                                 during which large barrels  of chemicals,  including
2,4-D,  burned. The  MRC facility manager was also on the scene and,  later, the general manager for all
MRC facilities. The general manager called the CHS environmental, health and safety manager to notify
him of the fire. The  state Disaster and Emergency Planning Services was notified, and understood the fire
was in a warehouse that stored chemicals. MDES understood that "the fire was small and of no signifi-
cance. The MDES planner was not told that chemicals were released onto the ground or that the chemicals
posed any risk," according to court documents.
       Another CHS  manager later came to the  scene  and
provided an inventory of the chemicals located at the facility
to the Malta fire department. "The manager later stated that if
the wind had been blowing west, towards Malta, they would
have evacuated the town."
       According to court documents,  14 calves  died on a
ranch east of the facility, and a veterinarian stated toxic smoke
from the fire "could not be ruled out as  a  cause  of death."
CHS paid the owner fair market value for  the calves and pur-
chased approximately 473 head of cattle that  had been ex-
posed to smoke from the MRC facility fire. Court documents
indicate cleanup after the fire included collection of 6,750 gallons of a water/chemical mixture created by
fire suppression efforts. Impacted soils, including 130 cubic yards of soil contaminated by 2,4-D, was dis-
posed of.
       According to CHS, MRC employees cooperated with Phillips County Sheriffs Department depu-
ties and Phillips County Volunteer Fire Department in alerting proper authorities, evacuating nearby homes
and fighting the spread of the fire and chemicals. MRC employees notified state authorities  of a possible
chemical spill.
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                                                                              EPA Bulletin January 2013  5

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BP Exploration  and Production Inc. Pleads  Guilty; Is Sentenced to Pay Record $4 Billion for
Crimes Surrounding Deepwater Horizon Incident - On January 29, 2013, BP EXPLORATION AND
PRODUCTION, INC. pleaded guilty in federal district court for the Eastern District of Louisiana to 14
criminal counts for its illegal conduct leading to and after the 2010 Deepwater Horizon disaster, and was
sentenced to pay $4 billion in criminal fines and pen-
alties, the largest criminal resolution in U.S. history.
       During the guilty  plea  and sentencing pro-
ceeding,  the judge in the case found, among other
things, that the consequential fines imposed under the
plea agreement far exceed any imposed in U.S.  his-
tory, and  are structured so that BP will feel the full
brunt of the penalties.  The judge also noted that the
agreement provides just punishment and  significant
deterrence,  requiring detailed  drilling  safeguards,
monitors  and other  stringent,  special conditions of
probation so that BP's future conduct will be closely
watched.
       BP pleaded guilty to each count charged in an
information filed in U.S. District Court in the Eastern District of Louisiana, including 11 counts of felony
manslaughter, one count of felony obstruction of Congress and violations of the Clean Water and Migra-
tory Bird  Treaty Acts.  In  its guilty plea, BP admitted that on April 20, 2010, the two highest-ranking BP
supervisors onboard the Deepwater Horizon, known as BP's "Well Site Leaders" or "company men," neg-
ligently caused the deaths  of 11 men and the resulting oil spill.  The company  also admitted that on that
evening, the two Well Site Leaders observed clear indications that the Macondo well was not secure and
that oil and gas were flowing into the well, but chose not to take obvious and appropriate steps  to prevent
the blowout.  Additionally, BP admitted that as a result of the Well Site Leaders' conduct, control of the
Macondo  well was lost, resulting in catastrophe.
       BP also admitted during its guilty plea that the company, through a senior executive, obstructed an
inquiry by the U.S. Congress into the amount of oil being discharged into the Gulf while the spill was on-
going. BP also admitted that the senior executive withheld documents, provided false and misleading in-
formation in response to the U.S. House of Representatives' request for flow-rate information, manipu-
lated internal estimates to  understate the amount of oil flowing from the well and withheld data that con-
tradicted BP's public estimate of 5,000 barrels of oil per day.  At the same time that the senior executive
was preparing his manipulated estimates, BP admitted, the company's internal engineering response teams
were using sophisticated methods that generated significantly higher estimates.  The Flow Rate Technical
Group, consisting of government and independent scientists, later concluded that more than 60,000 barrels
per day were leaking into the Gulf during the relevant time, contrary to BP's representations to Congress.
       According to the sentence imposed pursuant to the plea agreement, more than $2 billion dollars
will directly benefit the Gulf region.  By order of the court, approximately $2.4 billion of the $4.0 billion
criminal recovery is  dedicated to acquiring, restoring, preserving and conserving - in consultation with
appropriate state and other resource managers - the marine and coastal environments, ecosystems and bird
and wildlife habitat in the Gulf of Mexico and bordering states harmed by the Deepwater Horizon oil  spill.
This portion of the criminal recovery is also to be directed to significant barrier island restoration and/or
river diversion off the coast  of Louisiana to further benefit and improve coastal wetlands affected by the
oil  spill.   An additional $350 million will be used to fund improved oil spill prevention and response ef-
forts in the Gulf through research, development, education and training.
       BP was also sentenced to five years of probation - the maximum term of probation permitted under
                                                                               EPA Bulletin January 2013 6

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law. The company is also required, according to the order entered by the court pursuant to the plea agree-
ment, to retain a process safety and risk management monitor and an independent auditor, who will over-
see BP's process safety, risk management and drilling equipment maintenance with respect to deepwater
drilling in the Gulf of Mexico. BP is also required to  retain an ethics monitor to improve its code of con-
duct to ensure BP's future candor with the U.S. government.
                                                                  The  charges  and  allegations
                                                            pending  against  individuals  in related
                                                            cases are merely  accusations, and those
                                                            individuals  are   considered  innocent
                                                            unless and until proven guilty.
                                                                  The guilty plea and sentence are
                                                            part of the ongoing criminal investiga-
                                                            tion by  the Deepwater Horizon Task
                                                            Force  into matters related to the April
                                                            2010 Gulf oil  spill. The Deepwater Ho-
                                                            rizon Task Force, based in New Orleans,
                                                            is  supervised  by Assistant  Attorney
                                                            General  Breuer and led by Deputy As-
sistant Attorney  General John D. Buretta, who serves  as the director of the task force.  The task force in-
cludes prosecutors from the Criminal Division and Environment and Natural Resources Division of the
Department of Justice;  the U.S. Attorney's Office for the Eastern District of Louisiana, as well as other
U.S. Attorneys'  Offices; and investigating agents from: the FBI; EPA's Criminal  Investigative Division;
EPA's Office of Inspector General; Department of Interior, Office of Inspector General; National Oceanic
and Atmospheric Administration Office of Law Enforcement; U.S. Coast Guard; U.S. Fish and Wildlife
Service; and the Louisiana Department of Environmental Quality.
       The case was prosecuted by Deepwater Horizon Task Force Director John D. Buretta, Deputy Di-
rectors Derek A. Cohen and Avi Gesser, and task force prosecutors Richard R. Pickens II, Scott M. Cullen,
Colin Black, and Rohan Virginkar.
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West Virginia Man Sentenced to Prison for Illegally Dumping Raw Sewage - On January 15, 2013,
FRANK ZUSPAN, of Mason County, West Virginia, was sentenced to a year and a half in federal prison
for dumping a pollutant into waters of the United States without i
a permit. Zuspan pleaded guilty in September 2012.  He admit-
ted that in or about December 2010, he took a 2400-gallon sew-
age hauling truck to property in Mason County  and illegally
dumped sewage onto the property. Zuspan further admitted that
the sewage was  dumped into a lake and stream watershed in
Mason County that connected to the Ohio River.  He also ad-
mitted that  he discharged untreated sewage  onto  the Mason
County property on  multiple occasions between November
2010 and February 2011.
       The case  was investigated by EPA's Criminal Investiga-
tion Division. It was prosecuted by Assistant U.S. Attorney Erik
S. Goes and Special Assistant U.S. Attorney Perry McDaniel.
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The sewage hauling truck Zuspan used to dis-
        charge untreated sewage.
                                                                              EPA Bulletin January 2013  7

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                                   Trials  (Back to Quick Links)
Jury Convicts New Jersey Man of Asbestos  Violations  - On January  18, 2013, GENE CORNELL
SMITH, of Lumberton, New Jersey, was convicted in federal district court for the Eastern District of Penn-
sylvania of conspiring with contractor Clarence Cole, a co-defendant who previously pleaded guilty to rip-
ping out a boiler and asbestos insulated pipes illegally, after finding out how much it cost to properly re-
move asbestos.  The jury also convicted Smith of five separate counts of Clean Air Act violations.  Smith
faces a maximum possible sentence
of  30  years  imprisonment;  three
years of supervised release; a fine of
up to $1,500,000; and a $600 special
assessment.  The case was investi-
gated by EPA's Criminal  Investiga-
tion Division  and is being  prose-
cuted  by   Assistant  U.S. Attorney
Elizabeth  Abrams and Special Assis-
tant   U.S.   Attorney  Thomas
Moshang.  This matter was brought
to EPA's  attention  by  the City  of
Philadelphia  Air Management  Ser-
vices and City of Philadelphia Law
Department.
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                                     Bags of illegally abated asbestos left in front of Smith's warehouse in Philadel-
                                     phia, PA. Smith had Cole illegally remove the asbestos from the HVAC system
                                     and leave these bags on the street for regular trash collection. Residential hous-
                                    ing is directly across the street. EPA's Superfundprogram ultimately remediated
                                    the site due to extreme asbestos contamination, at a cost of approximately $450k.
                                                                                  EPA Bulletin January 2013  8

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                          Plea Agreements (Back to Quick Links)
Missouri  Man Pleads Guilty to Submitting False Water Samples - On January 22, 2013, BRUCE
RAYMOND MORRIS, of Taney County, Missouri, pleaded guilty in federal district court in the Western
District of Missouri to submitting false water samples for testing from a wastewater treatment facility that
dumped raw, untreated sewage into Table Rock Lake for much of 2008  in violation of the Clean Water
Act. Under federal statutes, Morris is subject to a sentence of up to two years in federal prison without
parole, plus a fine up to $250,000.
       Morris was  employed by  Light Environmental,  Inc.,  which provides environmental and waste
treatment  services. Landmarc Estates, a Taney County subdivision, hired Light Environmental to operate
its wastewater treatment facility, to conduct wastewater sampling at the facility, and to submit wastewater
sample results to the Missouri Department of Natural Resources as required by its federal permit. Morris
was responsible for operating the wastewater treatment facility serving Landmarc Estates  from March
2008 to January 2009.
       The Landmarc Estates wastewater treatment  facility was located  less than 100 yards from Table
Rock Lake. It discharged into a roadside ditch, and from there the discharged  materials flowed downhill
into Table Rock Lake. From March 2008 to January  2009, the Landmarc Estates facility did  not properly
treat its wastewater. Its electrically-operated motor, providing the only source of operating power for the
facility, was inoperable for this entire period. As a  result, raw, untreated sewage was released into the
roadside ditch, and that untreated sewage flowed directly into Table Rock Lake.
       Morris knew the Landmarc Estates facility did not properly treat its wastewater, and was in viola-
tion of its permit. As operator of the facility, Morris was responsible for its upkeep  and repair; however,
Morris did not repair the facility. Knowing that wastewater samples taken from the facility would not pass
state tests, Morris substituted test samples from another wastewater treatment facility. Morris  submitted
those substituted test samples for biochemical analysis, falsely certified on the  quarterly Wastewater Dis-
charge Monitoring Reports that the test samples  and  laboratory test results were for the Landmarc Estates
facility, and caused those false reports to be submitted to the state. A state inspector found at  least 10 vio-
lations by the wastewater treatment facility, the  most egregious of which was that raw, untreated sewage
was released directly into the environment.
       This case was investigated by EPA's Criminal Investigation Division and the  Missouri Depart-
ment of Natural Resources. It is being prosecuted by  Assistant U.S. Attorney Steven M. Mohlhenrich.
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                                                                              EPA Bulletin January 2013  9

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Two Service Companies for Oil Drilling Activity (Bakken Shale) Plead Guilty to CWA Crimes -  On
January 4, 2012, HURLEY ENTERPRISES and MON-DAK WATER & SEPTIC SERVICE, LLC
(MON-DAK), each pled guilty to a felony violation of the Clean Water Act for dumping untreated domes-
tic wastewater (sewage) in locations where it caused pollution of
waters of the state.  As part of the  plea agreements, the subjects
are expected to pay a $50,000 criminal  fine and comply with
Clean Water Act pertinent regulations.  Subsequent proceedings
(i.e. initial appearance or change of plea hearing)  have not been
scheduled as of the date of this submission.  The increased oil
production activity in the Bakken shale has significantly  in-
creased the volume of waste disposal needs in the Williston Ba-
sin in North Dakota. Hurley Enterprises and MON-DAK admit-
ted to illegally dumping waste from drilling rigs and man-camps
                                           posing    signifi-
                                           cant  threats  to
                                           the safety of the
                                           public  in water
                                           in  the  Williston
                                           Basin.  In total, it
                                                              Septage waste dumped by Hurley Enterprises
                                                                  on land where it caused pollution to
                                                                         waters of the U.S.
 MON-DAK truck observed dumping septage waste.
                                           is estimated that Hurley Enterprises disposed of approxi-
                                           mately 400K gallons of septage waste  over an  18-month
                                           period.  It is estimated that MON-DAK disposed of 2,236
                                           loads of  domestic septage  which  totaled  approximately
                                           5,146,127 gallons from January 2011 through May 2012.
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Louisiana Offshore Oil Company Admits to Coffee Filter Sample Scheme, Settles for $1 Million - On
January 3, 2012, W&T OFFSHORE agreed to a $1 million penalty for running water samples that were
subject to pollution tests through coffee filters to collect the oil and other pollutants, and disguise the dirti-
ness of their discharge.  The coffee filter coverup was used at least nine times in 2009. As a result of run-
ning the samples through the filters, the company did not have to pay any laboratory or regulatory costs,
                                           I since they did not fail the tests.  W&T was also faulted for
                                            a light oil sheen that discharged around one  of their oil
                                            platforms after an angry worker shot a flare on the facility
                                            on Nov. 27, 2009. The flare ignition left a light coating of
                                            oil that workers attempted - but  failed - to  clean for three
                                            weeks following  the  incident. The sheen was associated
                                            with the  cleaning efforts, and never reported to the Coast
                                            Guard. In addition to the seven-figure penalty, W&T Off-
                                            shore will be on probation for three years. While on proba-
                                            tion, W&T will comply with an extensive  Environmental
                                            Compliance Plan requiring them to complete a Safety and
                                            Environmental  Management System audit on  nearly 90%
                                            of the platforms W&T operates in the Gulf of Mexico.  The
                                            company operates 107 facilities in the Gulf.
 W& T owned Outer Continental Sh elf production plat-
 form identified as Swing Banks 910 from which oil   Back to Top
    had been discharged into the Gulf of Mexico.
                                                                               EPA Bulletin January 2013  10

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Woman Pleads Guilty to ID Fraud and Impersonating an OSHA Official in Wake of Gulf Oil Spill —
On January 24, 2013, CONNIE M. KNIGHT, previously of Belle Chasse, Louisiana, pleaded guilty in fed-
eral district court for the Eastern District of Louisiana to three felony criminal charges and one misdemeanor
criminal charge for creating false identification documents and impersonating a federal official
       According to the plea agreement, in the wake of the Deepwater Horizon oil spill, Knight imperson-
ated a high-ranking Occupational Safety and Health Administration (OSHA) hazardous waste safety instruc-
                                                        tor  and inspector in order to collect money
                                                        from individuals who hoped  to work on the
                                                        cleanup effort that followed  the  spill.  The
                                                        plea agreement  describes Knight's methods,
                                                        which included creating a false federal identi-
                                                        fication badge  declaring that she  was  an
                                                        "OSHA Master Level V Instructor and Inspec-
                                                        tor."  In reality,  OSHA has no such  designa-
                                                        tion. Knight also created false federal identifi-
                                                        cation  badges for her  employees, who be-
                                                        lieved that they were working  for OSHA. The
                                                        employees were residents of  Southeast Asian
                                                        fishing  communities in  Southern  Louisiana,
                                                        and provided  Knight  a way  to access those
                                                        communities.
Federal agents seizing evidence in connection with Knight's crimes.
       From the time of the spill through the end of 2010, many fisheries were closed and Gulf fishermen
were seeking other means of employment.  Knight held fake OSHA training seminars and assured attendees
that they would receive lucrative employment working on the Deepwater Horizon oil spill cleanup once they
paid for and completed her course.  Knight did not, however, actually have any connection to the cleanup
effort.
       Court documents also describe the training seminars themselves.  Knight required each attendee to
pay between $150 and $400 cash to enter a class. She claimed her classes satisfied the various safety require-
ments that all individuals were to complete in order to be employed  at a Deepwater Horizon hazardous waste
cleanup site. Knight's classes lasted as little as two hours, while the legitimate  certifications would take at
least six days of classroom training and three days of on-site training. Though many of her attendees were
Vietnamese, Laotian or Cambodian, Knight spoke only English at the classes, and all materials were in Eng-
lish. At least some attendees later gained access to hazardous waste cleanup sites  based on the fraudulent
certifications created by Knight.
       Producing fraudulent federal identification documents carries a maximum sentence of fifteen years in
prison  and a fine of $250,000. Possessing a fraudulent federal identification document carries a maximum
sentence of one year in prison and a fine of $100,000. The two counts of falsely impersonating a federal em-
ployee each carry a maximum sentence of three years in prison and a fine of $250,000.
       The case was investigated by EPA's Criminal Investigation  Divison and the  U.S. Department of La-
bor Office of Inspector Genera with assistance from the Occupational Safety and Health Administration, the
FBI, and investigators from the Florida Fish and Wildlife Conservation Commission and the Plaquemines
Parish, La., Sheriffs office.
       The case is being prosecuted by Patrick M. Duggan of the Environmental Crimes  Section of the  Jus-
tice Department's Environment and Natural Resources Division and Emily Greenfield of the U.S. Attorney's
Office  for the Eastern District of Louisiana.
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                                                                               EPA Pub. 310-N-13-001
                                                                              EPA Bulletin January 2013  11

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