Bi State Pipe Company, Fraud, IN 2007

Gary, Indiana – Bi State Pipe Company, Inc. and several individuals were embroiled in a complex fraud scheme involving false reporting to the Indiana Department of Natural Resources (IDNR) and subsequent financial crimes, culminating in federal convictions and significant penalties in 2007. The case, investigated by the Environmental Protection Agency’s Criminal Investigation Division, revealed a deliberate effort to defraud the state and profit from substandard work on a well-plugging contract.

The scheme centered around a contract Bi State Pipe Company held with the State of Indiana to properly plug abandoned oil and gas wells. Instead of adhering to industry standards and installing required cast iron bridge plugs, the company submitted falsified Plugging and Abandonment Reports to the IDNR, falsely certifying the installation in 23 of the 51 wells they were contracted to service. This deception allowed the company to collect payments for work that was never properly completed, posing potential environmental risks and jeopardizing groundwater safety.

The initial indictment in December 2004 targeted the company itself, as well as individuals Hanisch and Veatch, with 21 counts of making false statements under 18 U.S.C. § 1001. The investigation quickly expanded, revealing a network of fraudulent activity. In October 2005, Veatch faced additional charges of bank fraud, violating 18 U.S.C. § 1344, and subsequently pleaded guilty to both the initial false statement charges and the new bank fraud count. Further investigation led to a superseding indictment in February 2006, charging Boisture with false statements, mail fraud (18 U.S.C. § 1341), and money laundering, ultimately leading to a full trial and conviction on all counts, including a charge under 18 U.S.C. § 1957.

The fallout from the investigation resulted in a range of penalties. Bi State Pipe Company was sentenced to 24 months of probation, a $200 special assessment fee, and was ordered to pay $275,100 in restitution – jointly and severally with Hanisch. Hanisch received 12 months of probation and a $2,100 assessment. Veatch faced a more substantial sentence of 12 months of home confinement followed by 36 months of probation, a $2,200 assessment, and $385,034 in restitution. The most severe penalty was handed down to Boisture, who received a 60-month prison sentence alongside 36 months probation, a $200 assessment, and a hefty $492,571 restitution order.

Federal prosecutors emphasized the seriousness of the offenses, highlighting the deliberate and calculated nature of the fraud. The case serves as a stark reminder of the potential consequences of environmental crimes and the importance of honest reporting in contracts with state and federal agencies. The EPA’s successful prosecution demonstrated its commitment to holding companies and individuals accountable for defrauding the government and endangering public resources. The restitution orders were intended to cover the costs associated with re-plugging the improperly abandoned wells.

Key Facts

Defendant: Bi State Pipe Company, Inc.
Location: Indiana
Year of Conviction: 2007
Scheme: False reporting of well-plugging services to the Indiana DNR, coupled with kickbacks.
Statutes Violated: 18 U.S.C. § 1001 (False Statements), 18 U.S.C. § 1344 (Bank Fraud), 18 U.S.C. § 1341 (Mail Fraud), 18 U.S.C. § 1957 (Money Laundering)
Penalties: Ranging from probation and fines to 60 months imprisonment and over $492,000 in restitution.

GrimyTimes will continue to follow environmental crime cases and provide updates as they develop.

Source: EPA ECHO Enforcement Case Database

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