Eco-Systems, Inc., Fraud, SC 1997

Columbia, SC – Eco-Systems, Inc., a South Carolina-based environmental remediation company, was sentenced in April 1997 after admitting to defrauding state and federal agencies. The company pled guilty to a single count of wire fraud (18 U.S.C. 1341) related to falsified laboratory reports submitted during a contracted project involving the removal and disposal of petroleum storage tanks and contaminated soil.

According to court documents, Eco-Systems was contracted to remove and properly dispose of contaminated soil. Their intended disposal method involved bioremediation – a process utilizing microorganisms to break down harmful substances – at a facility they operated. Crucially, the contract stipulated that soil samples be tested *before* removal and *after* the bioremediation process to ensure environmental standards were met. However, Eco-Systems circumvented this requirement by submitting fabricated analytical reports, falsely indicating successful bioremediation.

The scheme allowed Eco-Systems to avoid the costs associated with utilizing a certified laboratory for accurate testing. Investigators determined the company saved approximately $4,500 by submitting the fraudulent data. The reports were submitted to the South Carolina Department of Health and Environmental Control (DHEC) and were related to work performed for the U.S. Navy, raising concerns about potential national security implications regarding proper environmental safeguards at naval facilities.

The case originated with a criminal Information filed on January 10, 1996. Federal prosecutors pursued the charges under Title 18 of the U.S. Criminal Code, specifically focusing on the wire fraud statute (18 U.S.C. 1341) which prohibits the use of interstate communications – in this case, the submission of reports – to execute a fraudulent scheme. The investigation was spearheaded by the Environmental Protection Agency’s (EPA) Criminal Investigation Division.

On April 28, 1997, Eco-Systems, Inc. received a sentence of five years’ probation (60 months). In addition to probation, the company was ordered to pay a $200 special assessment fee and a $9,000 fine. Notably, the full fine amount was personally paid by one of the three owners of the company, indicating a degree of personal accountability.

This case serves as a stark reminder of the potential for fraud within the environmental remediation industry. The EPA continues to prioritize the prosecution of companies that prioritize profit over environmental compliance and public safety. The falsification of data not only undermines the integrity of the bioremediation process but also poses a significant risk to human health and the environment.

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Key Facts

Defendant: Eco-Systems, Inc.
Crime: Wire Fraud (18 U.S.C. 1341)
Location: South Carolina
Year: 1997
Victim: U.S. Navy & South Carolina DHEC
Financial Gain: Approximately $4,500
Penalty: 60 months probation, $200 assessment, $9,000 fine
Fraudulent Activity: Submission of false laboratory reports regarding soil bioremediation.

Source: EPA ECHO Enforcement Case Database

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