Sevenson Environmental Services Inc., a Niagara Falls, N.Y., waste cleanup contractor, has agreed to repay more than $2.72 million to the U.S. government—under a federal laws that requires an employer to cover costs of alleged employee misdeeds.
The firm claims it was unaware of the rogue project managers’ bid-rig and fraud schemes on two federal Superfund projects and is also a victim.
The U.S. Justice Dept. said on Nov. 17 that the reimbursement was mandated under the False Claims Act and Anti-Kickback Act, which can hold an employer liable for such illegal employee actions.
The settlement amount covers the costs overcharged to the U.S. Environmental Protection Agency for cleanup activities at one of the sites, Federal Creosote in Manville, N.J., resulting from a bid-rigging and inflated-charge scheme involving subcontractors and two Sevenson site project managers between 2000 and 2007.
The Sevenson employees were terminated after the scheme was discovered. The reimbursement covers the costs of kickbacks from the subs for contract awards and bid information and for inflated contaminated-soil disposal costs submitted to the government.
Under the settlement, Sevenson did not admit liability nor was it criminally charged by Justice , says the firm’s Buffalo, N.Y.-based attorney Alan Bozer. He says the government never alleged that Sevenson or any of its officers knew or were involved in the illegal activities and that the settlement was a “proactive” step.
Bozer says Sevenson also has reimbursed the private-sector site owner, or “potentially responsible party” (PRP), of the Diamond Alkali site in Newark, N.J., to cover managers’ illegal activities there.
A U.S. district court judge in Newark last month ordered one of the managers, Gordon McDonald, to pay $4.36 million in restitution for his activities at the two sites. He was convicted last September on multiple counts and now is serving a 14-year prison term. The judge also ordered about $314,000 of the judgement to be paid to Sevenson for restitution.
Subcontractors Bennett Environmental Inc., JMJ Environmental Inc. and National
Industrial Supply and several of their executives pleaded guilty last spring and have been sentenced to varying prison terms.
Justice on Nov. 17 also said John Bennett, former CEO of Bennett Environmental, Oakville, Ontario, was extradited to the U.S. on Nov. 14 to face fraud charges. He appeared in federal district court in Newark on that day, said the agency.
The firm is believed to no longer be operating. Bennett, who could not be reached, faces a maximum $1.25-million penalty and 15 years in prison if convicted.
The Federal Creosote site was removed from the cleanup list last March. Work at Diamond Alkali continues.
“We are happy to be getting this behind us,” says Alan Elia, Sevenson president. He says the Justice Dept. and a federal district court found the firm “to be a victim of these individuals’ crimes.”
Elia says Sevenson has not been restricted as a federal contractor and currently is working on Superfund site cleanups in EPA’s New York City-based region, New England and the Midwest.
Since the wrongdoing was discovered, the firm has implemented new and upgraded ethics rules and training for employees, subcontractors and vendors, with quarterly
company-wide review meetings.