WASHINGTON, DC - A Connecticut businessman who made millions by illegally importing and selling ozone depleting chlorofluorocarbon gases has been sentenced to spend the next six and a half years in prison. Barry Himes, who has already forfeited a $3 million mansion, a BMW sedan and a three-carat diamond ring, was also ordered to pay $1.8 million in restitution.
Himes is the lead defendant in a case involving a complex multi-year, multimillion dollar conspiracy to import and sell ozone depleting chlorofluorocarbon gases (CFCs) and to avoid taxes. Sentenced along with Himes on Tuesday was co-conspirator John Mucha, who will spend four years in prison and must pay $1.2 million in restitution.
Another defendant, accountant Richard Pelletier, is expected to be sentenced later this week and face similar penalties. So far, a total of 10 individuals have pleaded guilty to federal charges in connection with the investigation. The case is the second largest prosecution regarding ozone depleting substances and is part of a nationwide CFC anti-smuggling initiative by the Justice Department, the U.S. Environmental Protection Agency and the Customs Service. To date, more than 114 individuals have been convicted in numerous illegal CFC import schemes, and courts have imposed significant prison terms and several millions of dollars in fines and restitution in a number of these cases.
"We will not tolerate criminal conduct that is detrimental to our environment," said Tom Sansonetti, assistant attorney general for the Justice Department's environment and natural resources division. "The Environment Division will continue its strong enforcement efforts against anyone who tries to gain an unfair advantage at the expense of the environment."
CFCs, which are used primarily as refrigerants and industrial solvents, are ozone depleting substances that are subject to strict regulations under the Clean Air Act because of the danger that they present to the Earth's protective ozone layer. When released into the air, CFCs migrate into the upper atmosphere where they destroy ozone, a naturally occurring gaseous compound that protects the Earth from the sun's harmful ultraviolet radiation.
Restrictions on the use of ozone depleting substances helped to shrink the hole over Antarctica last year. In September 2002, the hole had thinned and divided in two.
These chemicals are subject to an excise tax of about $5 per pound, which is imposed to discourage their use and to promote the transition to more ozone friendly replacement products.
Himes, Mucha and Pelletier concealed more than $6 million in profits from the sale of more than a million pounds of CFCs between 1996 and 1998. The defendants admitting smuggling about 660 tons of CFCs into the U.S., and importing another 1,100 tons without paying excise taxes.
The defendants used the name of various shell companies to conceal their control of these transactions to defeat efforts by the Internal Revenue Service to collect the excise and income taxes. They used multiple offshore bank accounts in the Bahamas and Antigua as well as other corporate bank accounts in Nevada and New York, to launder the money, hide their income, and create a false appearance that the income from the CFC sales proceeds was going to unrelated third parties.
Smuggling of ozone depleting substances is a worldwide problem. These canisters were seized in India. (Photo courtesy Environmental Investigation Agency)
Dozens of wire transfers and checks were made payable to contractors building a multi-million home for Himes, to a boat dealer for Himes's purchase of a 45 foot cruiser, to a jeweler for a diamond ring and other diamond jewelry for Himes, and to car dealerships for the purchase of vehicles for Himes, Mucha and Pelletier.
Under the terms of a plea agreement with the U.S. attorney's office, Himes forfeited his mansion - a 5,400 square foot custom built home on the Connecticut River which the government auctioned off for $3.4 million - a luxury car and a diamond ring, on top of the $1.8 million in restitution and a $12,500 fine that he must pay. Mucha has forfeited his BMW sedan and will pay $1.2 million in restitution.
The defendants could have faced even greater penalties: up to 20 years in prison and fines of $500,000 or more for money laundering charges, for example. All three pleaded guilty in March 2002 and reached plea agreements with the government.
"As these defendants learned the hard way, CFC smugglers get caught, prosecuted, fined and sent to federal prison," said John Peter Suarez, EPA's assistant administrator for enforcement and compliance assurance." "This settlement sends a clear message that pollution doesn't pay. We will take all actions necessary to enforce our laws against those who put the public at risk." The cases are not the first to bring hefty penalties for violations of federal law involving CFCs. In May 2001, Aurelio and Joseph Vigna were sentenced in Miami to spend more than a year in jail and pay $750,000 in excise taxes after they pled guilty to conspiracy in a case involving the illegal distribution of CFCs.
source: http://ens-news.com/ens/jan2003/2003-01-09-06.asp 9dec02
Douglas E. Castle, of Huntington, N.Y., was sentenced on Nov. 7 in U.S. District Court for the District of Connecticut in New Haven for conspiracy to defraud the United States of taxes due on hundreds of tons of chlorofluorocarbon refrigerant gasses (CFCs). His sentence included 15 months in prison, followed by three years of supervised release. Castle admitted that he assisted his co- defendants Barry Himes, John Mucha and Richard Pelletier in their conspiracy. Castle set up a shell company in Wyoming that was used to import CFCs. He also used a false loan agreement to conceal the receipt of income and processed more than $1.3 million of CFC sales from offshore bank accounts and a Nevada bank account through his New York bank. CFCs are highly regulated because their release into the atmosphere damages the earth's ozone layer, which protects people, animals and plants from the harmful effects of ultraviolet radiation. The case was investigated by EPA's Criminal Investigation Division, the Internal Revenue Service's Criminal Investigation Division and the U.S. Customs Service. It was prosecuted by the U.S. Attorney's office in New Haven.
Teresa Libera 202-564-7873/libera.teresa@epa.gov
source: http://yosemite.epa.gov/opa/admpress.nsf/34cef4854b892b8b8525645a004de9a4/1890ab7821c2ce9585256c780064a618?OpenDocument 9jan03
HARTFORD, CT – Barry Himes, John Mucha and Richard Pelletier pled guilty today to conspiring to smuggle ozone depleting chlorofluorocarbon gases ("CFCs") into the United States by means of false statements to U.S. Customs and the Environmental Protection Agency, and to defrauding the Internal Revenue Service in its attempts to collect excise and income taxes on proceeds from the sale of the contraband. Under the terms of plea agreements approved today by the Court, Himes has agreed to a term of 78 and 97 months in prison, and Mucha and Pelletier have agreed to a term of between 70 and 87 months in prison as a consequence of the illegal importation scheme to import over 660 tons of CFCs.
In pleading guilty today, the defendants admitted to conspiring to make false statements to U.S. Customs and EPA, and to conspiring to defraud the IRS, according to plea agreements filed in U.S. District Court in Hartford, Connecticut. The defendants used shell companies to deceive EPA and the Customs Service as to the true ownership and control of the imports and to impede the IRS from collecting excise and income taxes.
These three defendants admitted to receiving a total of more than $6 million of income that was not reported on their federal income tax returns (the defendants have reserved the right to dispute the remaining $20 million in excise tax through civil tax litigation). The 660 tons of smuggled product combined with an additional 1,100 tons imported without payment of excise tax makes this the second largest CFC prosecution to date.
Today's guilty pleas were accompanied by agreements to civilly forfeit a $2 million mansion on the Connecticut River, a three-carat diamond ring, and two luxury BMW automobiles, all of which were purchased from the smuggling proceeds. A total of ten individuals have pleaded guilty to federal charges in connection with this investigation. Nationwide to date, 114 individuals have been convicted in illegal CFC import schemes and over 56 years of imprisonment and $67 million in fines and restitution have been imposed.
"We are committed to vigorously prosecuting individuals who seek to make illegal profits at the expense of our environment," said Tom Sansonetti, Assistant Attorney General for the Justice Department's Environment and Natural Resources Division. "Those who engage in illegal CFC import schemes should be aware that the Department's nationwide CFC anti-smuggling initiative will continue its enforcement efforts until the phase out of these chemicals is complete."
Michael E. Hubbard, the Special Agent in Charge of Boston EPA's Criminal Investigation Division Office said, "This case highlights human greed at its worst – people flaunting black market profits at the expense of human health and the environment."
"The District of Connecticut has a long tradition of moving aggressively to protect the environment, and this prosecution epitomizes that tradition," said United States Attorney John A. Danaher III. "This case sends the message that those who would damage our environment for personal gain can expect to find the combined weight of skilled federal law enforcement agents, supported by dedicated and talented prosecutors."
Since 1990, ozone depleting substances have been subject to strict regulations under the Clean Air Act because of the danger that they present to the Earth's protective ozone layer. Scientific studies have established that airborne releases of CFCs and other ozone depleting substances migrate into the upper atmosphere where they destroy ozone, a naturally occurring compound, that protects the Earth from harmful UV-B radiation. CFCs, which are used primarily as refrigerants and industrial solvents, are also subject to a substantial excise tax of several dollars per pound. The tax is imposed to discourage industry use of these chemicals and to promote the transition to more ozone friendly replacement products.
The defendants admitted in court papers that they engaged in elaborate steps, including the use of multiple offshore bank accounts in the Bahamas and Antigua as well as other corporate bank accounts in Nevada and New York, to conceal their receipt of income and to create a false appearance that the income from the CFC sales proceeds was going to unrelated third parties.
The case was investigated by the United States Environmental Protection Agency Criminal Investigation Division, the Internal Revenue Service/ Criminal Investigation, and the United States Customs Service. The case is being prosecuted by the U.S. Attorney's Office for Connecticut and the Environmental Crimes Section of the Department of Justice.
source: http://www.usdoj.gov/opa/pr/2002/March/02_enrd_129.htm 9jan03
WASHINGTON, D.C. - A federal grand jury in New Haven, Conn. has returned an indictment charging five men for allegedly engaging in a scheme to trade in chemicals that deplete the Earth's ozone layer and that are strictly regulated in the United States.
The U.S. District Court in New Haven today unsealed the indictment charging Barry Himes of Lyme, Connecticut; John Mucha of Guilford, Connecticut; Richard Pelletier of Bolton, Connecticut.; Douglas Castle of Huntington, New York; and Alfredo Vega of Hato Rey, Puerto Rico. Himes, Mucha and Castle were arraigned today. Pelletier was arraigned last week.
The men are charged with several felonies related to the importation and sale of hundreds of tons of chlorofluorocarbons (CFCs) from 1995 to 1998, including conspiracy to make false statements to the U.S. Environmental Protection Agency and the U.S. Customs Service; conspiracy to defraud the IRS; filing false tax returns; money laundering; and conspiracy to obstruct a federal grand jury. According to the indictment, the defendants developed a complicated importation and sale scheme with the purpose of bringing CFCs into the United States from China, Russia and Canada, and concealing the sales proceeds.
CFCs are subject to strict regulation under the Clean Air Act, because their airborne release damages the Earth's ozone layer. The United States has international treaty obligations under the Montreal Protocol to reduce the production and consumption of ozone depleting chemicals, and the importation of CFCs into the United States is generally limited to already-used CFCs. In addition, CFCs are subject to a substantial excise tax upon sale within the United States.
The indictment alleges that Himes, Mucha, Pelletier and Vega arranged to import CFCs into the United States in the name of shell corporations, in order to impede the IRS in its effort to collect more than $20 million in excise taxes. Himes, Mucha, Pelletier and Castle concealed millions of dollars in profits from the sale of CFCs, according to the indictment. Himes, Mucha and Pelletier are alleged to have concealed about $4.5 million of income received, principally through the diversion of CFC sales proceeds to offshore accounts and shell entities. In turn, dozens of wire transfers and checks were made payable to contractors building a multi-million home for Himes, to a boat dealer for Himes's purchase of a 45-foot cruiser, to a jeweler for a diamond ring and other diamond jewelry for Himes, and to car dealerships for the purchase of vehicles for Himes, Mucha and Pelletier.
Four other individuals in connection with this investigation already have pled guilty to federal charges. Pavel Perlov of Chelsea, Massachusetts pled guilty in February 2001 to conspiracy to obstruct a grand jury investigation. In April 2001, Rudi Endres of Berwyn, Pennsylvania pled guilty to income tax evasion and Juan Carlos Gorbea of San Juan, Puerto Rico pled guilty to conspiracy to defraud the IRS. In May 2001, Alicia Keigwin of Berwyn, Pennsylvania admitted to a misdemeanor tax charge.
Those defendants charged with the false statements conspiracy, the conspiracy to defraud the IRS, the interstate wire fraud, or the conspiracy to obstruct a federal grand jury investigation each face up to five years' imprisonment and a $250,000 fine for each count, if convicted. If Himes, Mucha and Pelletier are convicted on the individual false tax return counts in which they are charged, each face up to three years' imprisonment and $100,000 in fines for each count. If convicted on the money laundering charges, Himes Mucha and Pelletier each face up to twenty years' imprisonment and a $500,000 fine or twice the value of the proceeds they laundered. Himes and Pelletier are charged with fifteen money laundering transactions involving nearly $2 million. Mucha is charged with nine money laundering transactions involving more than $1.8 million.
The case is being investigated by the U.S. EPA, the IRS and the U.S. Customs Service. The case is being prosecuted by the U.S. Attorney's Office for the District of Connecticut and the Environmental Crimes Section of the Justice Department.
Today's indictment is part of an ongoing, nationwide initiative by the Justice Department, the EPA., the U.S. Customs Service, and the IRS to enforce federal laws and regulations that restrict the use of substances that destroy the Earth's ozone layer. Other investigations that have been completed recently include:
Florida - On May 25, 2001, Aurelio and Joseph Vigna, were sentenced in Miami to serve 24 and 18 months imprisonment, respectively, and to pay $750,000 in excise taxes after they pled guilty to conspiracy to evade federal excise taxes; conspiracy to violate the Clean Air Act; illegal distribution of CFC-12 in violation of the Clean Air Act; and the evasion of excise taxes from 1992 through 1994. The defendants distributed the chemical dichlorodifluoromethane (known as "CFC-12") within the United States in violation of EPA regulations. As part of the scheme, they filed false documents with the U.S. Customs Service, the EPA and the IRS.
Kentucky - On March 12, 2001, the Kentucky Commonwealth Attorney's Office filed a 167-count indictment against 16 individuals, alleging the existence of a multi-state operation involving the theft and sale of CFC-12. The refrigerants were allegedly stolen from the Louisville Packaging Co. and transported to a farm in Henry County, Kentucky, where they were repackaged and sold to distributors who, in turn, sold them to customers in several states. Approximately ten tons of the product, with an estimated value of $1 million, was seized following an investigation of the Jefferson County Police Department, EPA's Criminal Investigation Division, the Federal Bureau of Investigation, the Internal Revenue Service, the U.S. Department of Transportation, and the Kentucky Vehicle Enforcement program with the assistance of EPA's National Enforcement Investigations Center. The men charged face a possible sentence of between 10 and 20 years on state charges of criminal syndication.
California - On December 20, 2000, in the Northern District of California, All Discount Laboratory Supply ("ADLS"), a chemical supply company located in Hayward, California, two of its owners (Mark Alexander Kesel and Vladimir Kotlyarenko), two of its employees (Diane Marie Engle and William Albert Gifford), and 12 other defendants were charged in a four count indictment arising out of their sale and distribution of trichlorotrifluoroethane (known as "CFC-113") to methamphetamine-manufacturing organizations in California. The indictment charges the defendants with conspiracy to manufacture and to aid and abet the manufacture of methamphetamine, distribution and possession of chemicals, equipment and materials used to manufacture methamphetamine, and distribution of laboratory supplies to persons who use or attempt to use them to manufacture methamphetamine. The company sold over 59,000 gallons of CFC-113, for over $12 million, between August 1996 and December 2000, which could potentially have been used to manufacture over 88 tons of methamphetamine. The investigation resulted in the seizure of chemicals, weapons, currency and vehicles.
Despite an Indictment, every defendant is presumed innocent, unless and until found guilty beyond a reasonable doubt following a trial at which the defendant has all of the trial rights guaranteed by the U.S. Constitution and federal law.
source: http://www.justice.gov/enrd/cfc.htm 9jan03
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