The owner of a chain of gas stations located in Delaware and Maryland has paid $2,889,351 to the U.S. in settlement of a federal lawsuit filed to undo the owner’s fraudulent transfer of assets just prior to agreeing to pay a court sanctioned $2 million penalty for violating underground fuel tank regulations.
The government’s settlement with Robert M. Duncan, of Dover, Delaware and several corporate entities under his control, includes the original penalty plus nearly $900,000 in interest, additional penalties, and attorneys’ fees and costs. The Justice Department filed the lawsuit and settlement documents in federal court in Delaware, on behalf of the Environmental Protection Agency (EPA).
“This case should send a clear message that EPA and the Justice Department takes seriously our duty to enforce environmental laws, and pursue appropriate remedies, including monetary penalties, against violators,” said Charles M. Oberly III, U.S. Attorney for the District of Delaware. “Defendants who fraudulently convey assets to avoid paying penalties should expect to pay a far greater amount, including additional penalties, interest and attorneys’ fees.”
The settlement ends a decade of administrative and judicial proceedings by EPA and the Justice Department against Duncan, Duncan Petroleum Inc., and affiliated entities.
In September 2004, EPA filed an administrative complaint against Duncan Petroleum, citing violations of federal regulations designed to detect and prevent leaks of petroleum and other hazardous substances from underground storage tanks (UST) at five Maryland gas stations.
That complaint was settled in a February 2006 consent agreement which imposed a $65,000 penalty, and required measures to ensure continuing compliance with UST safeguards.
After the company failed to carry out the compliance measures, EPA inspected 13 additional Duncan Petroleum gas stations, documenting UST violations at each facility.
In December 2008, the U.S. filed a civil action against Duncan and Duncan Petroleum. After two days of jury trial, the claims were resolved in August 2010 by a stipulated order, agreed to by Duncan, requiring payment of a $2 million penalty by December 15, 2010.
Duncan failed to pay the agreed penalty, claiming an inability to pay. After analyzing his financial information, the government discovered that 6 months prior to trial, Duncan conveyed assets worth about $10 million to several LLCs, trusts and foundations under his control.
In August 2011, the U.S. filed a new complaint against Duncan, seeking to void these asset transfers. On the eve of trial, Duncan stipulated that the U.S. had sufficient evidence that most of the transfers were fraudulent, and Duncan was to settle his liability by selling assets.
As of August 6, 2014, the U.S. has received total payments of $2,889,351.41, which includes $2 million penalty imposed in 2010, plus interest, as well as attorneys’ fees and costs exceeding $450,000, and daily stipulated penalties exceeding $300,000.
Published in the October 2014 Edition of American Recycler News