VIRGINIA COMPANIES PLEAD GUILTY TO ENVIRONMENTAL CRIMES

WASHINGTON, D.C.- Two Virginia companies and two individuals pleaded guilty this week announced Kelly Johnson, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division and Paul J. McNulty, U.S. Attorney for the Eastern District of Virginia. The two companies and individuals pleaded guilty to buying false training certificates for their employees working in the asbestos, lead abatement, and hazardous waste industries fraudulently obtaining 8(a) set-aside contracts for minority-owned companies by submitting false statements to the Small Business Administration (SBA).

Sentencing for all four defendants is scheduled for October 12, 2005. James Schaubach and Nicanor Lotuaco face a maximum penalty of 5 years imprisonment. Schaubach and Lotuaco have each agreed to pay a $1,000,000 fine. Each of the companies, ACS Environmental, Inc. and Air Power Enterprises, Inc., has agreed to pay a $500,000 fine.

“This should send a strong signal to companies that intentionally and persistently violate our environmental and workplace standards that this behavior will not be tolerated,” stated Kelly Johnson Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.

ACS Environmental, Inc., located in Norfolk, and Air Power Enterprises, Inc., located in Portsmouth, worked in the asbestos and lead abatement and hazardous waste removal industries as abatement and removal contractors. From 1999 through 2004, Air Power received $37 million in federal contracts under the SBA’s 8(a) program for minority owned businesses. ACS and Air Power admitted to conspiring to make false statements in connection with the certificates and to submitting false statements to the SBA regarding the ownership of Air Power in order to participate in the agency’s 8(a) set-aside program which enabled them to receive federal contracts as a minority-owned firm. James Schaubach, the president of ACS and vice president of Air Power, and Nicanor Lotuaco, the president of Air Power, admitted to making false statements in connection with the false certificates and the SBA’s 8(a) program.

ACS and Air Power admitted to buying these false certificates from F&M Environmental Technologies, Inc. a Virginia company, which pleaded guilty in February 2001 to selling hundreds of such false training certificates in Virginia, Maryland, and the District of Columbia.

Schaubach and Lotuaco obtained many of the asbestos, lead, and hazardous waste jobs on which the employees with false certificates worked through the SBA’s 8(a) program by misleading the SBA into believing that Air Power was owned and controlled by a minority, when in fact Schaubach, a non-minority, controlled the company and directed that environmental contracts be sub-contracted to ACS.

Under federal and state law, individuals who intend to work on asbestos and lead abatement projects are required to undergo an extensive training course instructing them how to properly and safely remove asbestos, lead and hazardous waste without contaminating either themselves, co-workers, or members of the public. ACS and Air Power falsely certified that the workers had taken the required courses, passed the exams and were otherwise entitled to work on such projects. In fact, these companies simply paid F&M Environmental Technologies, Inc. to deliver the certificates for workers supposedly taking the course.

Schaubach and Lotuaco purchased these false certificates for ACS and Air Power employees and then used them to obtain contracts to conduct asbestos, lead, and hazardous waste abatement at schools, hospitals, and other public and governmental facilities. These employees did not have the proper training to conduct the abatement, although the falsified certificates were presented to state and federal agencies as proof of appropriate training.

Asbestos has been designated by the U.S. Environmental Protection Agency (EPA) and Congress in the Clean Air Act as a hazardous air pollutant. It causes a wide range of illnesses, including various forms of cancer and asbestosis, a usually fatal lung disease. The EPA has determined that there is no safe level of exposure to asbestos.

These guilty pleas are the result of a new initiative by the Environmental Crimes Section of the Department of Justice to identify and single out for prosecution the nation's most egregious environmental and workplace safety violators.

Investigation of this case was conducted by special agents of the Defense Criminal Investigative Services; the Federal Bureau of Investigation; the Criminal Investigative Division of the U.S. EPA; the Small Business Administration; Office of Inspector General; NASA Office of Inspector General; Army Criminal Investigations Division; Defense Contract Audit Office; and the Virginia Department of Professional and Occupational Regulation.

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