SMUGGLERS OF OZONE DEPLETING CFCS PLEAD GUILTY

Smugglers To Forfeit Ill-Gotten Mansion, Luxury Cars And Jewelry

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.

###

02-129