UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
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UNITED STATES OF AMERICA,
v.
NORMAN STOERR,
Defendant.
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Criminal No.
Filed:
Violations: |
08-cr-00521-JAG
7/29/08
15 U.S.C. § 1
18 U.S.C. § 371
26 U.S.C. § 7206(2)
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INFORMATION
The United States of America, acting through its attorneys, charges:
- Norman Stoerr ("Stoerr") is hereby made a defendant on the charges
stated below.
COUNT ONE - SHERMAN ACT CONSPIRACY
(15 U.S.C. §1)
I. RELEVANT PARTIES AND ENTITIES
During the period covered by this Count:
- Stoerr resided in East Amherst, NY.
- Stoerr was employed by a prime contractor ("P-C") with its headquarters
in Niagara Falls, NY, at various environmental remediation sites from
approximately 1980 until approximately October 2003. Stoerr was an
Assistant Project Manager/Contracts Administrator ("Contracts Administrator")
from approximately January 2002 to approximately October 2003 on an
environmental remediation project at the Federal Creosote Superfund
Site in Manville, New Jersey ("Federal Creosote").
- "CC-1" was a co-conspirator who was a former superior of Stoerr's
at Federal Creosote.
- "CC-2" was a co-conspirator who owned a wastewater treatment and
chemical supply company that submitted bids for sub-contracts to provide
supplies and services to P-C at Federal Creosote.
- "CC-3" was a co-conspirator who owned a heating and air conditioning
services company that submitted bids for sub-contracts to provide
supplies and services to P-C at Federal Creosote.
- "CC-4" was a co-conspirator who owned a wastewater treatment and
supplies manufacturing company that submitted bids for sub-contracts
to provide supplies and services to P-C at Federal Creosote.
- Whenever in this Count reference is made to any act, deed, or transaction
of any corporation, such allegation shall be deemed to mean that the
corporation engaged in such act, deed, or transaction by or through
its officers, directors, agents, employees, or representatives while
they were actively engaged in the management, direction, control,
or transaction of its business or affairs.
- Various other persons, not made defendants herein, participated
as co-conspirators in the offense charged herein and performed acts
and made statements in furtherance thereof.
II. BACKGROUND
- Federal Creosote is an environmental remediation site in Manville,
NJ that is partly funded by the Environmental Protection Agency ("EPA").
Since late 1999, the Army Corps of Engineers ("ACOE") has overseen
the procurement process for the remediation of the site. Pursuant
to an interagency agreement between the EPA and ACOE, prime contractors
were used to perform different functions at the site.
- P-C was the prime contractor responsible for managing the remedial
action at Federal Creosote. The remedial action was divided into separate
phases by geographic boundaries. P-C awarded separate sub-contracts
under each phase to various vendors. As a prime contractor, P-C was
paid a fixed fee plus the cost of the remedial action by the EPA.
- P-C was required to award sub-contracts at Federal Creosote subject
to a competitive bidding policy under the Federal Acquisition Regulation
system ("FAR"). The FAR's bidding policy sought to ensure that P-C
obtained supplies and services at competitive, fair market prices.
P-C was required to solicit at least three competitive bids before
entering into any sub-contract for supplies or services in excess
of $5,000, and award those sub-contracts to the bidder offering the
best value, based on cost, quality and timeliness.
- As a Contracts Administrator at Federal Creosote, Stoerr was responsible
for soliciting bids from vendors for sub-contracts in excess of $5,000
and otherwise ensuring that P-C's procurement process was in accordance
with the FAR. In addition, Stoerr was responsible for acquiring supplies
and services in connection with purchases less than $5,000, which
were not subject to the FAR's competitive bidding policy.
- The FAR also prohibited employees of P-C, including Stoerr, from
soliciting or attempting to solicit or accepting any kickback, including
any money, fee, commission, credit, gratuity, gift, thing of value
or compensation of any kind for the purpose of improperly obtaining
or rewarding favorable treatment in connection with a sub-contract
relating to a prime contract.
III. TRADE AND COMMERCE
- From approximately October 2002 to approximately October 2003,
pursuant to sub-contracts that are the subject of this Count, P-C
awarded approximately $208,000 in sub-contracts for wastewater treatment
supplies and services to CC-2's company.
- During the period covered by this Count, CC-2's company provided
wastewater treatment supplies and services to P-C, including granulated
activated carbon obtained from distributors located outside the State
of New Jersey pursuant to the sub-contracts that are the subject of
this Count, which were shipped across state lines, in a continuous
and uninterrupted flow of interstate commerce. Granulated activated
carbon is used in wastewater treatment plants to filter hazardous
chemicals.
- The activities of the defendant and co-conspirators with respect
to the sale of wastewater treatment supplies and services to P-C,
including the sale of granulated activated carbon pursuant to sub-contracts
that are the subject of this Count, were within the flow of, and substantially
affected, interstate trade and commerce.
IV. DESCRIPTION OF THE OFFENSE
- From approximately October 2002 to approximately October 2003,
the exact dates being unknown to the United States, the defendant
and co-conspirators engaged in a combination and conspiracy in unreasonable
restraint of trade and commerce in violation of Section 1 of the Sherman
Act (Title 15, United States Code, Section 1).
- The aforesaid combination and conspiracy consisted of a continuing
agreement, understanding, and concert of action among the defendant
and co-conspirators, the substantial terms of which were to rig bids
and allocate sub-contracts for wastewater treatment supplies and services
to P-C at Federal Creosote.
- For the purpose of forming and effectuating the aforesaid combination
and conspiracy, the defendant and co-conspirators did those things
which they combined and conspired to do, including, among other things:
- Stoerr and CC-1 designated in advance whether CC-2's company
would be the low bidder on sub-contracts for wastewater treatment
supplies and services to P-C;
- Stoerr, CC-1 and CC-2 discussed and agreed on the prices that
would be bid on sub-contracts for wastewater treatment supplies
and services to P-C;
- Stoerr and CC-1 received substantial kickbacks from CC-2 for
their role in allocating sub-contracts to CC-2's company, and
Stoerr, CC-1 and CC-2 agreed to include the kickback amounts in
the sub-contract prices;
- Stoerr and CC-1 requested that CC-2 obtain two other, intentionally
high, noncompetitive bids to submit on sub-contracts for wastewater
treatment supplies and services to P-C; and
- CC-3 and CC-4 agreed with CC-2 to submit intentionally high,
non-competitive bids in order to make it appear that there had
been competition for the sub-contracts.
- As a result of the aforementioned conspiracy, the EPA paid more
for the wastewater treatment supplies and services it purchased pursuant
to the sub-contracts that are the subject of this Count than it would
have had the sub-contracts been awarded pursuant to truly competitive
bidding, or otherwise competitive pricing.
V. JURISDICTION AND VENUE
- The aforesaid combination and conspiracy was formed and carried
out, in part, within the District of New Jersey within the five years
preceding the filing of this Information.
IN VIOLATION OF TITLE 15, UNITED STATES CODE, SECTION
1.
COUNT TWO KICKBACK and FRAUD CONSPIRACY
(18 U.S.C. § 371)
VI. THE RELEVANT PARTIES AND ENTITIES
The United States of America further charges:
- Paragraphs 1 through 5 and 8 through 14 of Count One of this Information
are repeated, realleged and incorporated in Count Two as if fully
set forth in this Count.
- Stoerr was the Superintendent of P-C from April 2000 to January
2002 on an environmental remediation project at the Diamond Alkali
Superfund Site in Newark, NJ ("Diamond Alkali"). In approximately
February 2003, Stoerr formed a shell company, Environmental Consulting
Services, Inc. ("ECS"), with an address at Stoerr's residence in East
Amherst, NY. ECS was used to conceal the receipt of kickback payments.
- CC-1 was also a superior of Stoerr's at Diamond Alkali. During the
period covered by this Count, CC-1 owned a shell company ("Vendor
1"), which he used to conceal the receipt of kickback payments. Vendor
1 operated out of addresses associated with CC-1's wife's flower shop,
CC-1's home and CC-1's parents' home.
- CC-2 owned a wastewater treatment and chemical supply company that
provided supplies and services as a sub-contractor to P-C at Federal
Creosote and Diamond Alkali.
- "CC-5" was a co-conspirator who owned a pipe and valve supply company
that provided supplies and services as a sub-contractor to P-C at
Federal Creosote and Diamond Alkali.
- "CC-6" was a co-conspirator who was the Vice President of Sales
at a contaminated-soil treatment and disposal company that provided
services as a sub-contractor to P-C at Federal Creosote.
- "CC-7" was a co-conspirator who had an ownership interest in a wholesale
sand and gravel company that provided supplies and services as a sub-contractor
to P-C at Federal Creosote.
VII. BACKGROUND
- Diamond Alkali is an EPA-designated Superfund site in Newark, NJ.
The site was divided into three geographic regions one of which was
the 80 and 120 Lister Avenue properties. The EPA initiated emergency
remedial action in 1983 with respect to the Lister Avenue properties.
An interim remediation plan was later implemented under a Consent
Decree between Tierra Solutions, Inc. ("Tierra Solutions"), the EPA
and the New Jersey Department of Environmental Protection for the
Lister Avenue properties whereby, under ACOE oversight, Tierra Solutions
would be financially responsible for the remedial action and maintenance
of the site. Remedial action began in approximately April 2000 when
P-C was selected by Tierra Solutions as the general contractor for
the Lister Avenue properties.
- As a Superintendent, Stoerr was responsible for acquiring supplies
and services in connection with purchases less than $5,000. Purchases
above $5,000 were usually awarded by CC-1 and/or officials in the
Niagara Falls, NY office of P-C.
VIII. DESCRIPTION OF THE OFFENSE
- From approximately the Fall of 2000 until approximately the Spring
of 2004, the exact dates being unknown to the United States, in the
District of New Jersey and elsewhere, Stoerr, CC-1, CC-2, CC-5, CC-6,
and CC-7 unlawfully, willfully and knowingly did combine, conspire,
confederate, and agree together and with each other to defraud the
United States or an agency thereof, namely the EPA, and to commit
offenses against the United States, to wit, to violate Title 41, United
States Code, Section 53(2) and (3) and Title 18, United States Code,
Section 1341 in violation of Title 18, United States Code, Section
371.
- It was a part and an object of the conspiracy that Stoerr, CC-1,
CC-2, CC-5, CC-6, and CC-7, and others known and unknown, unlawfully,
willfully, and knowingly would and did conspire, combine, confederate,
and agree to defraud the United States of America and the EPA and
to commit offenses against the United States by soliciting and attempting
to solicit kickbacks and accepting and attempting to accept kickbacks
from certain sub-contractors of P-C at Federal Creosote and causing
certain sub-contractors to include the amount of the kickbacks in
the sub-contract prices charged by the prime contractor to the United
States, in violation of Title 41, United States Code, Sections 53(2)
and (3).
- It was further a part and an object of the conspiracy that Stoerr,
CC-1, CC-2, CC-5, CC-6, and CC-7, and others known and unknown, unlawfully,
willfully, and knowingly, having devised and intending to devise a
scheme and artifice to defraud the EPA at Federal Creosote and Tierra
Solutions at Diamond Alkali, including a scheme to obtain money and
property from the EPA and Tierra Solutions by means of false and fraudulent
pretenses, representations, and promises, for the purpose of executing
such scheme and artifice to defraud, and attempting to do so, would
and did place in post offices and authorized depositories for mail
matter, and would and did deposit, and cause to be deposited, matters
and things to be sent and delivered by the Postal Service and by private
and commercial interstate carriers, and would and did take and receive
such matters and things therefrom, and would and did cause such matters
and things to be delivered by mail and by such carriers according
to the directions thereon, and at the places at which they were directed
to be delivered by the persons to whom they were addressed, in violation
of Title 18, United States Code, Section 1341.
IX. THE MANNER AND MEANS BY WHICH THE
CONSPIRACY WAS CARRIED OUT
The manner and means by which the conspiracy was sought to be accomplished
included, among others, the following:
- Stoerr and CC-1 selected vendors based on a vendor's willingness
to provide kickbacks to Stoerr, CC-1 and other co-conspirators known
and unknown at Federal Creosote and/or Diamond Alkali.
- Stoerr and CC-1 solicited and accepted kickbacks from CC-2, CC-5,
CC-6, and CC-7, and other co-conspirators known and unknown at Federal
Creosote and/or Diamond Alkali.
- In approximately the Fall of 2000 and continuing until approximately
the Spring of 2004, Stoerr, CC-1 and other co-conspirators known and
unknown solicited and accepted kickbacks from CC-5 for the purpose
of improperly obtaining and rewarding favorable treatment in connection
with sub-contracts awarded by P-C to CC-5's company at Federal Creosote
and at Diamond Alkali. CC-5 provided to Stoerr kickbacks in the form
of cash payments, a cruise, an air compressor and payments to ECS.
At times, Stoerr and CC-1 caused CC-5 to pay kickbacks by issuing
CC-5 company's checks to Stoerr, ECS and Vendor 1 pursuant to false
invoices issued by Stoerr, ECS and Vendor 1 to CC-5's company. The
kickbacks to Stoerr were valued at approximately $20,000. Stoerr,
at times, assisted CC-1 in providing favorable treatment to CC-5's
company in awarding sub-contracts at Federal Creosote and at Diamond
Alkali without CC-5's company having to submit competitive price quotes.
Stoerr and CC-1 knowingly permitted CC-5's company to fraudulently
inflate the prices of the sub-contracts at Federal Creosote and at
Diamond Alkali to include the costs of the kickbacks, which, in turn,
caused P-C to include the costs of the kickbacks in the prices it
charged to the EPA at Federal Creosote and to Tierra Solutions at
Diamond Alkali.
- Beginning in approximately January 2002 and continuing until approximately
the Spring of 2004, Stoerr and CC-1 received payments from CC-2 for
the purpose of improperly obtaining and rewarding favorable treatment
for the award of sub-contracts at Federal Creosote and at Diamond
Alkali through a scheme to submit inflated and fictitious invoices
to P-C. Pursuant to this scheme, Stoerr solicited and accepted at
least $26,000 in kickbacks from CC-2. At times, Stoerr accepted the
kickbacks in the form of cash from CC-2 at locations near Diamond
Alkali and Federal Creosote and then gave the cash to CC-1 who would
return half of the amount of cash to Stoerr. At other times, Stoerr
and CC-1 caused CC-2 to pay kickbacks by issuing CC-2's company's
checks to ECS and Vendor 1 pursuant to false invoices issued by ECS
and Vendor 1 to CC-2's company. Stoerr and CC-1 knowingly permitted
CC-2's company to fraudulently inflate the prices of the sub-contracts
to include the cost of the kickbacks, which, in turn, caused P-C to
include the costs of the kickbacks in the prices it charged to the
EPA at Federal Creosote and to Tierra Solutions at Diamond Alkali.
- Beginning in approximately October 2002 and continuing until approximately
October 2003, Stoerr, CC-1 and other co-conspirators known and unknown
solicited and accepted kickbacks from CC-6 for the purpose of improperly
obtaining and rewarding favorable treatment in connection with the
award of sub-contracts for the removal and treatment of contaminated
soil to CC-6's company by P-C at Federal Creosote. Stoerr solicited
and accepted kickbacks from CC-6 some of which were in the form of
air fare and a cruise. These kickbacks to Stoerr were valued at approximately
$5,000. Stoerr and CC-1 knowingly permitted CC-6's company to fraudulently
inflate the prices of the sub-contracts to include the costs of the
kickbacks, which, in turn, caused P-C to include the costs of the
kickbacks in the prices it charged to the EPA at Federal Creosote.
- Beginning in approximately the Spring of 2002 and continuing until
approximately the Spring of 2004, Stoerr, CC-1 and other co-conspirators
known and unknown solicited and accepted kickbacks from CC-7 for the
purpose of improperly obtaining and rewarding favorable treatment
in connection with sub-contracts to deliver backfill soil awarded
by P-C to CC-7's company at Federal Creosote. Typically, the kickbacks
were in the form of cash to Stoerr and CC-1 and calculated as $0.50
per ton of backfill soil delivered to Federal Creosote. Stoerr solicited
and accepted the kickbacks in the form of cash from CC-7 during off-site
meetings at a local coffee shop and then delivered the cash to CC-1
who returned half of the amount in cash back to Stoerr. These kickbacks
to Stoerr totaled approximately $21,000. Stoerr and CC-1 knowingly
permitted CC-7's company to fraudulently inflate the prices of the
sub-contracts to include the costs of the kickbacks, which, in turn,
caused P-C to include the costs of the kickbacks in the prices it
charged to the EPA at Federal Creosote.
- The kickback payments by CC-5 and CC-7 to Stoerr ceased approximately
six months after Stoerr was dismissed from his employment by P-C in
October 2003.
X. OVERT ACTS
- In furtherance of the conspiracy and to effect the illegal objects
thereof, the defendant and others known and unknown, committed the
following overt acts, among others, in the District of New Jersey
and elsewhere:
- On or about January 22, 2002, Stoerr and CC-1 caused P-C to
send through the mails a purchase order to CC-2's company for
the supply and installation for flow meters in the treatment facility
at Diamond Alkali pursuant to a CC-2 company invoice that was
inflated to cover a portion of the kickbacks from CC-2 to Stoerr
and CC-1;
- On or about January 6, 2003, Stoerr and CC-1 caused CC-2 to
create a false and fraudulent invoice for $9,187.24 that was billed
to P-C for chemical supplies to be delivered to P-C at Federal
Creosote that, in fact, were never delivered to P-C;
- On or about February 18, 2003, Stoerr caused CC-6 to purchase
two tickets for a cruise through the Carribean for Stoerr and
a guest valued at approximately $3,225; and
- On or about September 17, 2003, Stoerr caused CC-5 to send through
the mails an air compressor that CC-5 purchased for $2,685 to
Stoerr's home address in New York.
IN VIOLATION OF TITLE 18, UNITED STATES CODE, SECTION 371.
COUNT THREE - AIDING AND ASSISTING IN THE PREPARATION
OF A
FALSE RETURN
(26 U.S.C. § 7206(2))
The United States of America further charges:
- Paragraphs 1 through 3, 5, 8, and 10 through 14 of Count One and
Paragraphs 24, 26, 31 and 38 of Count Two of this Information are
repeated, realleged, and incorporated in Count Three as if fully set
forth in this Count.
- On or about February 2003, Stoerr and CC-2 agreed to incorporate
ECS for the purpose of disguising the kickback payments to Stoerr
as CC-2's legitimate business expenses on CC-2's company's tax forms.
Thereafter, Stoerr created and submitted four false invoices totaling
approximately $21,132 to CC-2's company for the purpose of concealing
the nature of the kickbacks from CC-2 to Stoerr and causing CC-2 to
falsely and fraudulently deduct the payments of those invoices as
legitimate business expenses for the calendar year of 2003.
- On or about April 15, 2004 near Laurel Springs in the District of
New Jersey and elsewhere, Stoerr did knowingly and willfully aid and
assist in, and procure, counsel, and advise the preparation and presentation
to the Internal Revenue Service of a Form 1120S, U.S. Corporate Income
Tax Return, for CC-2's company for the calendar year 2003, which was
false and fraudulent as to a material matter, in that the return falsely
claimed kickback payments made to Stoerr by CC-2 as business expenses,
whereas, as Stoerr then well knew and believed, the kickback payments
were not CC-2's company's legitimate business expenses.
IN VIOLATION OF TITLE 26, UNITED STATES CODE, SECTION
7206(2)
Dated: 7/23/08
_______________/s/________________
THOMAS O. BARNETT
Assistant Attorney General
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SCOTT D. HAMMOND
Deputy Assistant Attorney General
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MARC SIEGEL
Director of Criminal Enforcement
Antitrust Division
U.S. Department of Justice |
_______________/s/________________
RALPH T. GIORDANO
Chief, New York Office
_______________/s/________________
JEFFREY D. MARTINO
_______________/s/________________
ELIZABETH PREWITT
_______________/s/________________
HELEN CHRISTODOULOU
Attorneys, Antitrust Division
U.S. Department of Justice
26 Federal Plaza, Room 3630
New York, New York 10278
(212) 264-0653
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