Carolina Upgrading, Tank Fraud, SC 2002

Columbia, SC – Carolina Upgrading, a South Carolina-based company, and its key personnel engaged in a widespread conspiracy to falsify underground storage tank (UST) tests across six southeastern states, defrauding customers out of approximately $500,000, according to federal court records. The scheme, which ran from March 1994 to October 1999, involved the fabrication of over 1,500 test results submitted to gasoline stations, and both state and federal facilities.

The EPA’s criminal enforcement case revealed a deliberate effort to bypass legally mandated UST inspections. Federal law requires periodic testing to detect leaks in underground storage tanks, preventing the release of hazardous substances like benzene into the soil and groundwater. Benzene is a known carcinogen, and leaks pose a significant public health risk. Carolina Upgrading’s fraudulent testing created a false sense of security, potentially exposing communities to environmental contamination.

The investigation, which culminated in indictments and guilty pleas in late 2000 and 2001, identified Fletcher and Scruggs as early participants. Both initially faced a single count of fraud (18 U.S.C. 1341) and pleaded guilty in October 2000, receiving sentences of five months of home detention, 24 months probation, and a $100 special assessment fee each. However, the scope of the conspiracy extended far beyond these initial charges, leading to a broader indictment against Carolina Upgrading and Adams in March 2001.

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Legal Violations and Penalties

The indictment detailed fifteen counts encompassing serious federal crimes. These included conspiracy (18 U.S.C. 371), making false statements (18 U.S.C. 1001), fraud (18 U.S.C. 1341), and making false claims (18 U.S.C. 287). The charges stemmed from the systematic falsification of test data and the submission of inaccurate reports to clients and regulatory agencies.

In August 2001, Carolina Upgrading and Adams pleaded guilty to all fifteen counts of conspiracy. The sentencing, handed down in January 2002, reflected the severity of the offenses. Carolina Upgrading was placed on 36 months of probation and ordered to pay a $6,000 federal fine. Adams, however, received a significantly harsher sentence of 27 months incarceration, followed by 36 months of probation. The disparity in sentencing likely reflects Adams’s greater involvement in orchestrating the fraud.

Key Facts

Defendant: Carolina Upgrading
Crime: Conspiracy, Fraudulent UST Testing
State: South Carolina (and impacted states: NC, FL, GA, VA, TN)
Years Active: 1994-1999
Financial Impact: Approximately $500,000 defrauded
Tests Falsified: Over 1,500
Laws Violated: 18 U.S.C. 287, 18 U.S.C. 1341, 18 U.S.C. 1001, 18 U.S.C. 371
Adams Sentence: 27 months incarceration, 36 months probation
Carolina Upgrading Sentence: 36 months probation, $6,000 fine

The case serves as a stark reminder of the potential for environmental fraud and the importance of rigorous oversight in the operation of underground storage tanks. GrimyTimes will continue to follow environmental crime cases and report on those who put profit above public safety.

Source: EPA ECHO Enforcement Case Database

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