According to an EPA Office of Inspector General (OIG) memo dated September 4, 2024, the EPA’s failure to timely report fraudulent activity by a business entity resulted in the U.S. Attorney’s Office declining to pursue criminal charges against the business owner.
“In early 2024, the EPA OIG and partner law enforcement agencies presented information to the U.S. Attorney’s Office regarding an active criminal investigation into several potential criminal violations by a business entity related to the importation of engines prohibited under the CAA,” the memo says. “Central to that presentation were two documents, sent via email in 2019, from the owner of a business entity to EPA employees who worked in the compliance and enforcement sections of the Office of Air and Radiation.
“The first document purported to be an ‘endorsement letter’ from Department of Defense (DoD) personnel and stated that certain submersible engines would be purchased by the business entity and be used to support DoD objectives. The intent of the document, according to Office of Air and Radiation personnel, was to convince the EPA that the engines referenced above were ‘national security exempt,’ which they were not. The national security exemption was necessary because the engines did not meet CAA requirements nor did the business entity have a certificate of conformity, also required by the CAA.
“DoD personnel confirmed that they neither sent nor signed that document. Office of Air and Radiation compliance and enforcement personnel should have known that the document was fraudulent since they evaluate and grant these types of exemptions. In fact, in an email between EPA compliance and enforcement staff, one employee wrote, ‘I would question their endorsement letter.’”
The second document in question was a letter sent by the owner to Office of Air and Radiation compliance and enforcement personnel.
In that letter, the “owner apologized ‘for the mistake in sending you an unauthorized letter’ from DoD personnel, noting that the owner took ‘full responsibility for [his] actions and behavior in modifying the letter.’ This document would not have prevented OIG criminal investigators from evaluating the potential fraudulent nature of the first document,” the OIG memo continues.
Together, the two documents provide “unmistakable indicators of fraud against the EPA, the CAA and the EPA’s programs and operations,” the memo adds. “Furthermore, the actions of the business entity owner reasonably indicated attempts to interfere with or obstruct the EPA’s lawful governmental functions by ‘deceit, craft, or trickery, or at least by means that are dishonest.’”
To address these concerns and prevent similar incidents in the future, the OIG recommends the following measures:
- Conduct training to ensure all EPA personnel understand their public service obligations and long-standing EPA policy.
- Conduct training to ensure all EPA and state personnel who implement or regulate delegated programs understand what constitutes fraud.
While fraud typically involves cheating the government out of property or money, “it also means to interfere with or obstruct one of its lawful governmental functions by deceit, craft, or trickery, or at least by means that are dishonest. It is not necessary that the Government shall be subjected to property or pecuniary loss by the fraud, but only that its legitimate official action and purpose shall be defeated by misrepresentation, chicane, or the overreaching of those charged with carrying out the governmental intention” (Hass v. Henkel, 216 U.S. 462 (1910)).
- Implement procedures to ensure the OIG is notified of all complaints, allegations, and evidence of wrongdoing, fraud, waste, abuse, or corruption involving any EPA programs, operations, or environmental laws or regulations that the EPA implements or delegates to state authorities in a timely manner.