Hartford, CT – Advanced Fluorinated Products, Inc. and several individuals were embroiled in a complex scheme to illegally import and sell chlorofluorocarbon (CFC) gases, while simultaneously evading over $24.5 million in federal taxes, according to court documents unsealed this week. The investigation, spanning over two years, revealed a deliberate effort to defraud the United States government through the creation of shell companies and fraudulent reporting.
The scheme, which began to unravel in early 2001, centered around the importation of CFCs – gases historically used in refrigeration and as industrial solvents – and their subsequent sale without proper tax remittance. Investigators discovered that Advanced Fluorinated Products, along with key personnel, intentionally failed to pay approximately $20 million in federal excise taxes and an additional $4.5 million in income taxes. The operation relied on a network of deliberately obscured financial transactions designed to conceal the true nature of the sales and the identities of those profiting from the tax evasion.
Federal charges were levied against a total of nine individuals connected to the company, including company executives and associates. The first indictments, alleging conspiracy violations under 18 U.S.C. 371, were filed in February 2001 against Advanced Fluorinated Products. Subsequent charges were brought against Endres, Gorbea, Keigwin, Himes, Pelletier, Barlen, Salazar, Castle, and Mucha. The investigation quickly expanded to include violations of 26 U.S.C. 7203, pertaining to the willful failure to collect or pay any tax.
Sentencing & Penalties
The fallout from the investigation resulted in a range of penalties for those involved. Barlen received 24 months probation and a $2,000 fine after pleading guilty in December 2001. Keigwin faced 12 months probation and a $5,000 fine in May 2002. Gorbea, Perlov, and Advanced Fluorinated Products each received six to eighteen months of probation and $2,000 to $5,000 fines. Salazar and Castle received jail time, with Salazar receiving 8 months incarceration and 24 months probation and Castle receiving 15 months incarceration and 36 months probation. The most severe sentences were handed down to Mucha, Himes, and Pelletier, who received 48, 78, and 33 months incarceration respectively, along with substantial probation periods and hefty restitution orders totaling over $3.3 million to the victims of their scheme.
The case highlights the EPA’s commitment to pursuing criminal enforcement against companies and individuals who attempt to circumvent environmental regulations and tax laws. While CFCs are now largely phased out due to their ozone-depleting properties, the illegal importation and sale of these substances pose both environmental and economic risks. The use of shell companies to mask illegal activity and evade taxes is a recurring theme in white-collar crime investigations, making thorough financial tracing and forensic accounting crucial to successful prosecution.
Key Facts
- Defendant: Advanced Fluorinated Products, Inc.
- Crime: Tax Evasion & Conspiracy
- State: Connecticut
- Year: 2003
- Total Tax Evasion: Over $24.5 million ($20M excise, $4.5M income)
- Statutes Violated: 18 U.S.C. 371, 26 U.S.C. 7203
- Sentences: Ranged from probation and fines to 48 months incarceration and over $3.3 million in restitution.
GrimyTimes will continue to follow this case and report on any further developments.
Source: EPA ECHO Enforcement Case Database
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