FOR IMMEDIATE RELEASE                                         TAX
THURSDAY, SEPTEMBER 5, 1996                        (202) 616-2765
                                               TDD (202) 514-1888

MIAMI FEDERAL GRAND JURY INDICTS FOUR IN MULTI-MILLION DOLLAR "FREON" EXCISE TAX FRAUD SCHEME

WASHINGTON, D.C. -- In the largest environmental excise tax case ever, three Miami residents and a Miami company were indicted for unlawfully importing more than four thousand tons of an ozone-depleting refrigerant gas into the country and failing to pay more than $22 million in excise taxes.

The 164-count indictment unsealed late yesterday afternoon in U.S. District Court in Miami, charged Roland Wood, Diane McNally, Lisa Salazar, and Refrigeration U.S.A. Inc. with violating the Clean Air Act and anti-smuggling laws and conspiring to defraud the Internal Revenue Service (IRS).

According to the indictment, the defendants imported larger quantities of dichlorodifluoromethane, popularly known by one of its registered trademarks, "freon" or by its chemical abbreviation, CFC-12, than they were legally permitted, then sold the refrigerant without paying all the excise taxes.

CFC-12, a refrigerant gas and ozone depleting chemical (ODC), has been heavily regulated as a result of U.S. laws implementing an international treaty on substances which deplete the ozone layer.

As a result of the treaty, the number of ODC consumption allowances for CFC-12 have been progressively decreased and were ultimately phased out on January 1, 1996. Under EPA laws and regulations, importers were allowed to import CFC-12 only if they had sufficient unexpended consumption allowances to cover the quantity they were seeking to import.

The defendants allegedly submitted false bills of lading to the Environmental Protection Agency (EPA) to assert that the imported freon had been re-exported when in fact it was sold domestically by the defendants or their agents. Wood also was charged with violating money laundering statutes and with tax evasion; McNally with perjury; and Salazar with making false statements to a government agency.

"Miami continues to be a hub for a thriving black market in these chemicals," said U.S. Attorney William Keefer. "These prosecutions continue to enforce international agreements and federal law that address the global problem of ozone depleting chemicals."

Assistant Attorney General for the Tax Division, Loretta Argrett, said, "The United States and its citizens are doubly victimized by perpetrators of these types of crimes--once when they create a black market in chemicals which destroy our environment and again when they steal from the public treasury."

Assistant Attorney General for the Environment Division, Lois J. Schiffer, said, "This case is an important step in the Department's nationwide effort to stop the illegal importation of CFCs that are destroying the earth's ozone layer."

Today's indictment stems from "Operation Cool Breeze," a Miami-based investigative task force comprised of agents from the U.S. Customs Service, EPA, IRS, and lawyers from the Department of Justice. "Operation Cool Breeze" has led to a nationwide effort led by the Department of Justice to stop CFC smuggling. The "National CFC Enforcement Initiative" involves numerous federal prosecutors' offices, EPA, Customs, IRS, FBI and international law enforcement.

If convicted on all charges, defendants each face potential sentences of over 625 years each and maximum individual fines exceeding $30 million dollars.

The earth's ozone layer helps protect it from ultraviolet radiation emitted by the sun. Excessive ultraviolet radiation is linked to skin tumors, cataracts, and other health and environmental problems.

Assistant U.S. Attorney Thomas Watts-FitzGerald of the Miami U.S. Attorney's office and Tax Division Trial Attorney Arthur S. Lowry are prosecuting the case.

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