Blending Marketing Services, Fraud, NJ 2004

Newark, NJ – A complex scheme to defraud the Environmental Protection Agency (EPA) under the reformulated gasoline program (RFG) culminated in significant penalties for Blending Marketing Services and multiple individuals, revealed through court records spanning from 1999 to 2004. The case originated with a self-disclosure by attorneys representing Caleb Brett, U.S.A. Incorporated, alleging potential falsification of laboratory data submitted to the EPA – a move consistent with Department of Justice and EPA guidelines encouraging proactive reporting of wrongdoing.

The investigation unveiled a widespread conspiracy involving multiple parties manipulating RFG testing results. The RFG program requires gasoline blenders to meet certain standards to reduce air pollution, and accurate testing data is crucial for enforcement. Blending Marketing Services, along with key personnel, allegedly submitted fraudulent data to conceal non-compliance, allowing them to profit while circumventing environmental regulations. The scheme involved falsifying laboratory reports and obstructing official proceedings.

The initial charges in September 1999 targeted several individuals, including Balogh, charged with conspiracy (18 U.S.C. 371), and Lehman, who pled guilty to withholding information regarding the criminal activity (18 U.S.C. 4). As the investigation deepened, additional indictments followed in 2000 and 2001, bringing in Intertek, Bachar, Fulmer, Santiago, Mark Schroeder, and Waldo Schroeder, all facing charges ranging from conspiracy and fraud to obstruction of justice and false statements. Intertek, a testing company, eventually pled guilty to conspiracy and received three years of probation and a $1 million federal fine in April 2001.

The sentencing phase, largely concentrated in September 2002, saw a variety of penalties handed down. Kaminski received 11 months of incarceration alongside a $20,000 fine after pleading guilty to obstruction of justice. Domnik and Balogh both received home confinement and probation, coupled with substantial fines. Mark Schroeder faced six months imprisonment, eight months of home confinement, and a $25,000 fine. The penalties reflect the severity of the crimes and the court’s determination to deter future violations.

Blending Marketing Services itself received a sentence of 24 months probation and a hefty $471,000 federal fine in September 2002. The company’s involvement as a central player in the fraudulent scheme underscored the importance of corporate accountability in environmental enforcement. Bachar, the final defendant to be sentenced in June 2004, received 36 months probation and a $5,000 fine after pleading guilty to conspiracy and obstruction.

Table of Contents

Key Facts

Defendant: Blending Marketing Services
State: New Jersey
Years Active: 1997-2004
Crime: Fraudulent submission of laboratory data to the EPA under the reformulated gasoline program (RFG).
Statutes Violated: 18 U.S.C. 1343 (Fraud), 18 U.S.C. 371 (Conspiracy), 18 U.S.C. 1001 (False Statements), 42 U.S.C. 7413(c)(4) (Clean Air Act Violation)
Penalties: Fines totaling over $1.5 million, probation, home confinement, and imprisonment ranging from 6 months to 11 months.
Self-Disclosure: The case originated with a self-disclosure from legal counsel representing Caleb Brett, U.S.A. Incorporated.

This case serves as a stark reminder of the consequences of environmental fraud and the EPA’s commitment to prosecuting those who attempt to undermine the integrity of vital regulatory programs. The investigation and subsequent convictions demonstrate the agency’s ability to unravel complex schemes and hold both corporations and individuals accountable for their actions.

Source: EPA ECHO Enforcement Case Database

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