“Walmart Pleads Guilty to Federal Environmental Crimes, Admits Civil Violations, and Will Pay More Than $81 Million”

May 29, 2013

The Federal Bureau of Investigation (FBI) on May 28, 2013 released the following press release:

“Retailer Admits Violating Criminal and Civil Laws Designed to Protect Water Quality and to Ensure Proper Handling of Hazardous Wastes and Pesticides

WASHINGTON—Walmart Stores Inc. pleaded guilty today in cases filed by federal prosecutors in Los Angeles and San Francisco to six counts of violating the Clean Water Act by illegally handling and disposing of hazardous materials at its retail stores across the United States. The Bentonville, Arkansas-based company also pleaded guilty today in Kansas City, Missouri, to violating the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) by failing to properly handle pesticides that had been returned by customers at its stores across the country.

As a result of the three criminal cases brought by the Justice Department, as well as a related civil case filed by the U.S. Environmental Protection Agency (EPA), Walmart will pay approximately $81.6 million for its unlawful conduct. Coupled with previous actions brought by the states of California and Missouri for the same conduct, Walmart will pay a combined total of more than $110 million to resolve cases alleging violations of federal and state environmental laws.

According to documents filed in U.S. District Court in San Francisco, from a date unknown until January 2006, Walmart did not have a program in place and failed to train its employees on proper hazardous waste management and disposal practices at the store level. As a result, hazardous wastes were either discarded improperly at the store level—including being put into municipal trash bins or, if a liquid, poured into the local sewer system—or they were improperly transported without proper safety documentation to one of six product return centers located throughout the United States.

“By improperly handling hazardous waste, pesticides, and other materials in violation of federal laws, Walmart put the public and the environment at risk and gained an unfair economic advantage over other companies,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Today, Walmart acknowledged responsibility for violations of federal laws and will pay significant fines and penalties, which will, in part, fund important environmental projects in the communities impacted by the violations and help prevent future harm to the environment.”

“Federal laws that address the proper handling, storage, and disposal of hazardous wastes exist to safeguard our environment and protect the public from harm,” said André Birotte, Jr., the U.S. Attorney for the Central District of California. “Retailers like Walmart that generate hazardous waste have a duty to legally and safely dispose of that hazardous waste, and dumping it down the sink was neither legal nor safe. The case against Walmart is designed to ensure compliance with our nation’s environmental laws now and in the future.”

“As one of the largest retailers in the United States, Walmart is responsible not only for the stock on its shelves but also for the significant amount of hazardous materials that result from damaged products returned by customers,” said Melinda Haag, U.S. Attorney for the Northern District of California. “The crimes in these cases stem from Walmart’s failure to comply with the regulations designed to ensure the proper handling, storage, and disposal of those hazardous materials and waste. With its guilty plea today, Walmart is in a position to be an industry leader by ensuring that not only Walmart but all retail stores properly handle their waste.”

“This tough financial penalty holds Walmart accountable for its reckless and illegal business practices that threatened both the public and the environment,” said Tammy Dickinson, U.S. Attorney for the Western District of Missouri. “Truckloads of hazardous products, including more than two million pounds of pesticides, were improperly handled under Walmart’s contract. Today’s criminal fine should send a message to companies of all sizes that they will be held accountable to follow federal environmental laws. Additionally, Walmart’s community service payment will fund important environmental projects in Missouri to help prevent such abuses in the future.”

“The FBI holds all companies, regardless of size, to the same standards,” said FBI Special Agent in Charge David J. Johnson of the San Francisco Field Office. “We will continue to work closely with our law enforcement partners to ensure there is a level playing field for all businesses and that everyone follows the rules.”

“Today, Walmart is taking responsibility for violating laws that protect people from hazardous wastes and chemicals,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Walmart is committing to safe handling of hazardous wastes at all of its facilities nationwide, an action that will benefit communities across the country.”

Walmart owns more than 4,000 stores nationwide that sell thousands of products which are flammable, corrosive, reactive, toxic, or otherwise hazardous under federal law. The products that contain hazardous materials include pesticides, solvents, detergents, paints, aerosols, and cleaners. Once discarded, these products are considered hazardous waste under federal law.

Walmart pleaded guilty this morning in San Francisco to six misdemeanor counts of negligently violating the Clean Water Act. The six criminal charges were filed by the U.S. Attorney’s Office in Los Angeles and San Francisco (each office filed three charges), and the two cases were consolidated in the Northern District of California, where the guilty pleas were formally entered before U.S. Magistrate Judge Joseph C. Spero. As part of a plea agreement filed in California, Walmart was sentenced to pay a $40 million criminal fine and an additional $20 million that will fund various community service projects, including opening a $6 million Retail Compliance Assistance Center that will help retail stores across the nation learn how to properly handle hazardous waste.

In the third criminal case resolved today, Walmart pleaded guilty in the Western District of Missouri to violating FIFRA. According to a plea agreement filed in Kansas City, beginning in 2006, Walmart began sending certain damaged household products, including regulated solid and liquid pesticides, from its six return centers to Greenleaf LLC, a recycling facility located in Neosho, Missouri, where the products were processed for reuse and resale. Because Walmart employees failed to provide adequate oversight of the pesticides sent to Greenleaf, regulated pesticides were mixed together and offered for sale to customers without the required registration, ingredients, or use information, which constitutes a violation of FIFRA. Between July 2006 and February 2008, Walmart trucked more than two million pounds of regulated pesticides and additional household products from its various return centers to Greenleaf. In November 2008, Greenleaf was also convicted of a FIFRA violation and paid a criminal penalty of $200,000 in 2009.

Pursuant to the plea agreement filed in Missouri and accepted today by U.S. District Judge John T. Maughmer, Walmart agreed to pay a criminal fine of $11 million and to pay another $3 million to the Missouri Department of Natural Resources, which will go to that agency’s Hazardous Waste Program and will be used to fund further inspections and education on pesticide regulations for regulators, the regulated community, and the public. In addition, Walmart has already spent more than $3.4 million to properly remove and dispose of all hazardous material from Greenleaf’s facility.

In conjunction with today’s guilty pleas in the three criminal cases, Walmart has agreed to pay a $7.628 million civil penalty that will resolve civil violations of FIFRA and Resource Conservation and Recovery Act (RCRA). In addition to the civil penalties, Walmart is required to implement a comprehensive, nationwide environmental compliance agreement to manage hazardous waste generated at its stores. The agreement includes requirements to ensure adequate environmental personnel and training at all levels of the company, proper identification and management of hazardous wastes, and the development and implementation of Environmental Management Systems at its stores and return centers. Compliance with this agreement is a condition of probation imposed in the criminal cases.

The criminal cases announced today are a result of investigations conducted by the FBI and the EPA, which received substantial assistance from the California Department of Substance and Toxics Control, and the Missouri Department of Natural Resources.

In Missouri, the case was prosecuted by Deputy U.S. Attorney Gene Porter and ENRD Senior Trial Attorney Jennifer Whitfield of the Environmental Crimes Section of the Environment and Natural Resources Division. In California, the cases were prosecuted in Los Angeles by Assistant U.S. Attorney Joseph O. Johns and in San Francisco by Assistant U.S. Attorney Stacey Geis.”


Douglas McNabb – McNabb Associates, P.C.’s
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Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

Environmental waste recycling company and 2 senior executives indicted by federal grand jury for fraud and international environmental crimes

September 19, 2011

The U.S. Immigration and Customs Enforcement (ICE) on September 16, 2011 released the following:

“DENVER — A local environmental waste recycling company, Executive Recycling Inc., its chief executive officer, and its former vice president of operations were indicted by a federal grand jury on Thursday on charges of wire and mail fraud, and environmental crimes.

Executive Recycling Inc., Brandon Richter, 36, of Highlands Ranch, Colo., who was the owner and chief executive officer, and Tor Olson, 36, of Parker, Colo., vice president of operations, were indicted by a federal grand jury on Sept 15. The indictment includes the following charges: wire and mail fraud; and environmental crimes in connection to the failure to file a notification to export hazardous waste; exportation contrary to law; and destruction, alteration, or falsification of records.

The indictments were announced by the following agency heads: U.S. Attorney John Walsh, District of Colorado; U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge David M. Marwell; and EPA Criminal Investigation Division Special Agent in Charge Lori Hanson. The criminal defendants and a representative of the corporation have been summonsed to make their initial appearance in U.S. District Court in Denver on Sept. 22, where they will be advised of their rights and the charges pending against them.

According to the indictment, Executive Recycling was an electronic waste (e-waste) recycling business located in Englewood, Colo., with affiliated locations in Utah and Nebraska. The company collected e-waste from private households, businesses, and government entities. Executive Recycling was registered with the Colorado Department of Public Health and Environment as a “Large Quantity Handler of Universal Waste.” Richter, as owner and CEO, was responsible for supervising all aspects of the company. Olson, the vice president of operations, was responsible for running day-to-day operations.

A significant portion of e-waste collected by the defendants was cathode ray tubes (CRTs). CRTs are the glass video display components of an electronic device, usually a computer or television monitor, and contain large amounts of lead. The defendants engaged in the practice of exporting e-waste, including CRTs, to foreign countries, including the People’s Republic of China. The defendants regularly negotiated the sale of e-waste to brokers who represented foreign buyers or who sold the e-waste overseas. The foreign buyers often paid the defendants directly. To transport the e-waste, the defendants used shipping cargo containers which were loaded at the company’s facility. The containers were then transported by rail to domestic ports for export overseas.

Executive Recycling appeared as the exporter of record in over 300 exports from the United States between 2005 and 2008, including at least 10 exports that departed from the Port of Tacoma, Wash. About 160 of these exported cargo containers contained a total of more than 100,000 CRTs.

Between February 2005 and continuing through January 2009, the defendants knowingly devised and intended to devise a scheme to defraud various business and government entities that wanted to dispose of their e-waste, and to obtain these business and government entities’ money by means of materially false and fraudulent pretenses. The defendants represented themselves on a website to have “extensive knowledge of current EPA requirements. The defendants falsely advertised to customers that they would dispose of e-waste in compliance with all local, state and federal laws and regulations. It was part of the scheme that the defendants falsely represented that they would dispose of all e-waste, whether hazardous or not, in an environmentally friendly manner. Specifically, the defendants falsely represented that the defendant company recycled e-waste “properly, right here in the U.S.” They also stated that they would not send the e-waste overseas.

The defendants’ misrepresentation induced customers to enter into contracts or agreements with the defendants for e-waste disposal. Each victim paid the defendants to recycle their e-waste in accordance with the representations made by the defendants. Contrary to their representations, the defendants sold the e-waste they received from customers to brokers for export overseas to the People’s Republic of China and other countries.

“The proper disposal of our electronic waste is not only critical today, but will also become more important in the future,” said U.S. Attorney John Walsh. “U.S. law requires proper disposal of this type of waste not only for the protection of Americans, but also so that we in the United States live up to our responsibility to be good international environmental stewards.”

“Our ongoing 30-month investigation included cooperation from law enforcement agencies in the United States, Hong Kong and Canada,” said David M. Marwell, special agent in charge of ICE HSI in Denver. “The investigation confirmed that Executive Recycling repeatedly and illegally exported used cathode ray tubes to China. In addition, Executive Recycling also made false promises to its customers who believed that Executive Recycling was properly disposing of their electronic waste. Homeland Security Investigations stands ready to prevent any company from circumventing U.S. controls to export hazardous waste.”

“As consumer demand for electronic goods continues to grow, communities and individuals will look for safe, recycling options for electronics that are no longer needed,” said Lori Hanson, Special Agent in Charge of EPA’s criminal enforcement program in Colorado. “EPA is committed to ensuring that companies that offer fraudulent recycling services, where e-waste is illegally shipped abroad, are caught and prosecuted.”

Potential Penalties upon conviction:

  • If convicted of wire fraud, the defendants face not more than 20 years in federal prison, and a fine of up to $250,000, or twice the gross gain or loss from the offense, per count, for each of the 10 counts.
  • If convicted of mail fraud, the defendants face not more than 20 years in federal prison, and a fine of up to $250,000, or twice the gross gain or loss from the offense, per count, for each of the three counts.
  • If convicted of the one count of RCRA, the defendants face not more than two years imprisonment and a fine of up to $500,000, or either twice the gross gain or loss, or $50,000 per day of offense.
  • If convicted on the one count of smuggling goods from the U.S., the defendants face not more than 10 years in federal prison, and a fine of up to $250,000.
  • If convicted of one count of destruction of records during the course of EPA’s administrative process, the defendants face not more than 20 years in federal prison, and a fine of up to $250,000. The indictment includes an asset-forfeiture allegation, which states that upon conviction the defendants shall forfeit to the United States any and all property or proceeds derived from their illegal activity.

This case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Environmental Protection Agency’s Criminal Investigation Division.

The defendants are being prosecuted by Assistant U.S. Attorney Suneeta Hazra and Special Assistant U.S. Attorney Lillian Alves, District of Colorado.

The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until found guilty.”

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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