WASHINGTON, D.C. – New York businessmen Dov Shellef and William Rubenstein were sentenced today to 70 months and 18 months, respectively, for conspiring to evade approximately $1.9 million in excise taxes due on sales of an ozone-depleting chemical called trichlorotrifluoroethane (CFC-113), the Justice Department and the Internal Revenue Service (IRS) announced today. In addition, each defendant was sentenced to pay approximately $1.9 million in restitution.
Both defendants were convicted on July 28, 2005 following a five-week trial in Central Islip, New York. Shellef, of Great Neck, New York, was also convicted of 87 counts of wire fraud, tax evasion, subscribing to false tax returns and money laundering. Rubenstein, of Colts Neck, New Jersey, was also convicted of wire fraud.
“Those individuals who act with a clear disregard for the welfare of the public and the environment can expect to be prosecuted for their actions,” said Assistant Attorney General Sue Ellen Wooldridge of the Justice Department’s Environment and Natural Resources Division. "Tough sentences, like those handed down today, are critical to the Department's enforcement efforts and to deterring future violators from breaking our environmental laws.”
The federal Clean Air Act banned the continued importation and production of CFC’s in the United States in 1996, though manufacturers were permitted to sell and export CFC that had been stockpiled prior to the ban. CFC’s are used primarily as refrigerants and industrial solvents, and when released into the atmosphere, destroy ozone. These chemicals are subject to a substantial excise tax on domestic sales of stockpiled CFCs.
“These defendants planned and executed a scheme that posed a threat to our environment, and defrauded the people of the United States of almost two million dollars in tax revenue,” said Roslynn R. Mauskopf, U.S. Attorney for the Eastern District of New York. “We are committed to protecting our citizens and preserving our environment, and we hope that the sentences imposed today will have a deterrent effect on those who would seek unlawful profits while placing our environment at risk.”
“For the last decade, the IRS has aggressively investigated all forms of excise tax evasion whether the tax is imposed on fuel, tires or ozone depleting chemicals,” said Richard Speier, Acting Chief, IRS/Criminal Investigation. “Schemes such as this not only defeat the tax but also threaten our environment.”
Investigators from the Environmental Protection Agency (EPA) and Drug Enforcement Administration (DEA) traced the supply of CFC-113 to California “meth labs.” The investigation revealed that a company called All Discount Lab Supplies was selling CFC-113 to individuals who used the product to produce methamphetamines. The principals of All Discount Labs have since pleaded guilty to selling CFC-113 with reasonable cause to believe it was being used for the illegal manufacture of methamphetamine. Although Shellef and Rubenstein were not indicted on drug charges, they were major suppliers of CFC-113 to All Discount Labs. When used in meth labs, the CFC-113 is typically released directly into the atmosphere.
The government’s case was prosecuted by Assistant U.S. Attorney Thomas R. Fallati of the U.S. Attorney’s Office for the Eastern District of New York, and Lary Larson, Trial Attorney with the U.S. Department of Justice, Environmental Crimes Section, Environmental and Natural Resources Division. The case was investigated by Special Agent Caroline Truesdell of the Internal Revenue Service, with assistance from EPA, DEA, and the Defense Criminal Investigative Service (DCIS).
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