Businessman sentenced to jail, fined $1 million for fraud
One other individual defendant, James Schaubach of Virginia, and two Virginia corporations, ACS Environmental, Inc. (ACS) and Air Power Enterprises, Inc. (Air Power), were also expected to be sentenced.
All defendants pleaded guilty in June 2005 to buying false training certificates for their employees and then using the unlicensed employees to remove asbestos, lead and hazardous waste from public buildings. The defendants also admitted to submitting false documents to the SBA regarding their eligibility to participate in the SBA's program for minority-owned businesses and fraudulently obtaining contracts at federal facilities under the program.
"Today's sentence should send a strong signal that the Justice Department will prosecute companies and individuals who violate our environmental and workplace standards," said Sue Ellen Wooldridge, Assistant Attorney General for the Justice Department's Environment and Natural Resources Division.
ACS, located in Norfolk, and Air Power, 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.
All four defendants 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 Section 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.
The guilty pleas are the result of an 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.