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N.J.LABORATORY SENTENCED FOR MISLEADING INVESTIGATORS

WASHINGTON - A New Jersey testing laboratory was sentenced today to an aggregate fine of $1 million dollars and to three years of probation for its part in a conspiracy to mislead investigators about a scheme to falsify chemical analyses involving hundreds of millions of gallons of reformulated gasoline, the Justice Department announced.

The testing laboratory, Caleb Brett U.S.A., Inc., pleaded guilty in September 2000 to one count of conspiracy to make false statements to the Environmental Protection Agency and the U.S. Postal Inspection Service, based on the conduct of certain managers. The managers were involved in covering up a scheme in which testing data at the lab was changed on samples of reformulated gasoline (RFG) to make it appear that the gasoline complied with EPA standards for the cleaner burning RFG. The result, according to the EPA, was that an estimated 200 million to 300 million gallons of gasoline distributed in the New York, New Jersey and Connecticut area from 1995 through early 1997 were certified to meet RFG pollution standards when in fact they did not.

The sentence was handed down in federal court in Newark by U.S. District Judge Harold A. Ackerman. The case is part of the government's broad investigation into a long-running scheme to falsify laboratory reports on multi-million-gallon batches of petroleum products, including RFG.

In January, a federal grand jury in Newark handed down an 11-count indictment in connection with the conspiracy to falsify lab results on hundreds of millions of gallons of reformulated gasoline, charging Richard Kaminski, the former president of Caleb Brett, U.S.A.; Inc.; Blending, Marketing and Services, Inc., a Houston-based gasoline blending company; and Blending's president, Waldo Schroeder, and its operations manager, Mark Schroeder. According to the indictment, the result of the scheme was that the defendants were enriched, the customers of Caleb Brett and BMS were defrauded, and the fuel was distributed into commerce without meeting standards for RFG.

Additionally, in September 1999 and September 2000, a total six supervisors from Caleb Brett's Linden, N.J. facility pleaded guilty to their involvement in either the coverup or the underlying falsification scheme.

Caleb Brett is an independent testing laboratory for the petroleum industry. It samples petroleum products and provides quantitative and qualitative analyses to meet commercial and regulatory specifications. Its customers include petroleum suppliers and blenders. Caleb Brett is a wholly owned subsidiary of Intertek Testing Services, Ltd., a foreign holding company.

The Caleb Brett investigation was launched in February 1997, when Caleb Brett advised the EPA of improper activities at its Linden facility. The company sought consideration under the EPA's Voluntary Disclosure Program, which gives companies the opportunity to report environmental abuses. In return, companies can avoid civil penalties and receive a recommendation by the EPA to the Justice Department against criminal prosecution. However, the EPA declined to give Caleb Brett consideration under the program because the company did not meet the program's criteria.

But even after Caleb Brett made its voluntary disclosure to the EPA, certain managers within the company took steps to cover up the full nature and scope of the petroleum sample data falsification, including making false and misleading statements to special agents from the EPA and the United States Postal Inspection Service.

Because Caleb Brett disclosed the conduct of its employees to the Government, it was not prosecuted for the underlying falsification scheme. It was, however, prosecuted criminally by the Department of Justice because of the concealment activities that occurred after the disclosure.

The investigation was carried out by Special Agents of the EPA Criminal Investigation Division, under the direction of Special Agent in Charge William Lometti of Region II in New York; and U.S. Postal Inspectors in Newark, under the direction of Postal Inspector in Charge Kevin J. Burke. The government was also assisted in the prosecution by New York State's Department of Environmental Conservation. The United States is represented by Assistant Chief Andrew D. Goldsmith and Trial Attorney Stacey H. Mitchell of the Environmental Crimes Section of the U.S. Department of Justice.

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