Consultant, subcontractor fined for submitting inflated invoices

A Tustin-based environmental consulting firm and subcontractor accused of submitting inflated invoices to the Underground Storage Tank Cleanup Fund has agreed to pay $650,000 to the State Water Resources Control Board to resolve criminal charges and an administrative civil liability complaint.

An investigation by the State Water Board into the billing practices of The Reynolds Group Inc., and its subcontractor Mobi Dos Inc. prompted the board’s fraud prevention staff to engage the Department of Justice and Department of Toxic Substances Control’s criminal investigations units.

The inquiry uncovered schemes of affiliated subcontractor markup, inflated subcontractor costs, concealed finance charges and inflated hours, along with evidence that The Reynolds Group fraudulently sought reimbursement of ineligible costs by misrepresenting the property where the costs were accrued.

“These are serious violations that take money away from legitimate petroleum cleanup projects,” said Yvonne West, director of the board’s enforcement unit. “This settlement imposes the appropriate remedies to deter contractors from taking advantage of state funds.”

In addition to the $50,000 the Reynolds Group paid to the state’s tank cleanup fund to resolve the criminal proceeding last July, the company will deposit another $250,000 in the fund, with an additional $300,000 permanently suspended if the company spends that amount and completes the supplemental environmental project for vapor intrusion mitigation at a low-income residential duplex property in South Los Angeles.

The Juan Piche Residence Tetrachloroethylene Mitigation Project involves the installation and ongoing operation of a soil vapor extraction system to prevent toxic chemicals from migrating through the floor and into homes, reducing the health risk to occupants and nearby residences.

The consultant, who pleaded guilty to one criminal misdemeanor count, also agreed in the April 20 settlement to pay the Department of Toxic Substances Control $18,000 for environmental project oversight costs and $10,229 for enforcement costs incurred in the collection of electronic evidence during the investigation.

Mobi Dos pleaded guilty to one criminal felony county for submitting a false statement, material misrepresentation or false certification to the cleanup fund and was sentenced to two years of probation. To resolve the administrative civil liability complaint, the subcontractor will deposit $50,000 in the underground tank cleanup fund.

Additionally, Mobi Dos is disqualified from participating in any of the board’s financial assistance programs.