Principals and Associates of Local Environmental Consulting Firm Plead Guilty to Multi-Million Dollar Fraud Scheme
Springfield, Ill. – U.S. Attorney Jim Lewis, Central District of Illinois, announced today that five defendants have recently entered pleas of guilty related to a scheme that defrauded the Illinois Environmental Protection Agency of millions of dollars. The charges against the men relate to a scheme that, over a period of 12 years, from 2001 to 2013, swindled money from a fund administered by Illinois EPA to clean up sites contaminated by leaking underground storage tanks.
The current owner of Environmental Management of Illinois, Inc. (EMI), Michael R. Keebler, 41, of Worthington Chase, Sherman, Ill., entered pleas of guilty late Friday, Feb. 27, to two counts of conspiracy to commit mail fraud. EMI founders, Eric M. Andrews, 51, of Overton Road, Springfield, Ill., and his brother, Joel T. Andrews, 46, of Emerson Road, New Berlin, Ill., each pled guilty yesterday to one count of conspiracy to commit mail fraud. In a separate but related case, Michael Keebler’s brothers, Duane T. Keebler, 42, of Rain Hollow Drive, Maryland Heights, Mo., and Joseph R. Keebler, 44, of South Illinois Ave, Carbondale, Ill., each entered pleas of guilty on Feb. 20, to one count of conspiracy to commit mail fraud.
“These defendants have now admitted that they cheated the taxpayers of this State out of millions of dollars,” said U.S. Attorney Lewis. “We commend the USEPA and the FBI for their determined investigative efforts, in order to bring these defendants to justice.”
Joel Andrews founded EMI in 1997 and served as president, and Eric Andrews joined in 1999 as vice-president. In April of 2001, professional engineer Michael Keebler joined the firm. In 2006, the firm was sold to Michael Keebler, who has remained as the firm’s principal owner and president. EMI is located at 1154 N. Bradfordton Road, Springfield. The environmental consulting firm worked with property owners to cleanup property contaminated by petroleum leaks, spills, or overfills from underground storage tanks. The firm then sought reimbursement of its costs to remediate the land from a fund administered by a designated section within Illinois EPA.
The U.S. EPA has a cooperative agreement with the State of Illinois to administer the UST (underground storage tanks) program. IEPA and the Illinois Office of the State Fire Marshal share administration of the UST fund which assists tank owners and operators with the cleanup costs of petroleum leaks from USTs. The State Fire Marshal administers the preventative and permitting aspects of the program. If there is a spill or leak, IEPA is responsible for oversight of the cleanup investigation and the corrective action, in order to clear the property for use again. State taxes and fees paid on the purchase of gasoline fund the Leaking UST (LUST) program.
According to plea agreements filed by the parties, Michael Keebler, and Eric and Joel Andrews each admitted that they conspired to defraud the LUST fund by artificially inflating expenses they incurred in remediating property. For example, as principals of EMI, they admitted they reached agreements with their vendors to submit two invoices for certain services: one invoice listed the real costs of the service provided and the payment to be made by EMI, and a second invoice which inflated the amount of work performed and supplies used, the amount charged for the work, or both. The inflated invoice would then be provided to Illinois EPA for reimbursement. Keebler and the Andrews would also pay certain vendors a reduced rate, but misrepresent to the Illinois IEPA that they had paid full price. At other times they would simply create or modify an existing invoice to reflect a higher charge than was actually paid and would submit that to IEPA for reimbursement.
In 2003, Keebler, Joel and Eric Andrews created a second company, known as Environmental Control Systems (ECS), which they represented as a separate entity performing services as a subcontractor for EMI on cleanup sites. In fact, ECS performed no service, but the principals would direct the actual subcontractors to invoice ECS, and ECS would pay the subcontractors for the work. An ECS invoice with a substantial mark-up was then presented to Illinois EPA as EMI’s cost for the project.
For example, in June 2006, EMI had a contract to clean a service station site in Dupo, Ill. Several subcontractors were hired to dig and haul away a certain amount of soil, and to backfill the site with clean soil. These subcontractors were paid approximately $250,000 for their services. Nevertheless, EMI falsely represented to Illinois EPA that ECS had performed these services at a cost of $694,415.00, which was the amount of reimbursement paid by the State. In total, Keebler and Joel and Eric Andrews split more than $13.6 million in profits from the company known as ECS.
In a separate but related case, Michael R. Keebler pled guilty to the second count of conspiracy to commit mail fraud for a similar scheme worked with his brothers, Duane and Joseph Keebler. Both Duane and Joseph Keebler pleaded guilty to starting their own environmental consulting firm, TKO Environmental Solutions, Inc., and inflating invoices through a different company they owned, known as Total Contracting Services, LLC, both registered businesses in Carbondale, Ill. In addition, Duane and Joseph Keebler purchased properties which had either been contaminated or were being contaminated by leaking underground storage tanks. As property owners, the brothers would then purport to contract with one of their own companies or with EMI to coordinate the cleanup. In doing so, Duane and Joseph Keebler would directly, and through Michael Keebler, disguise and inflate invoices from subcontractors and submit the fraudulent and inflated invoices to Illinois EPA for reimbursement from the LUST fund.
Another defendant, Jeremy L. VanScyoc, 38, of the 400 block of Elle Court, Springfield, waived indictment on Mar. 10, 2014, and pled guilty to one count of conspiracy to commit mail fraud. VanScyoc admitted that after he joined EMI he agreed to engage in the fraud scheme by inflating subcontractor invoices.
Each count of conspiracy to commit mail fraud carries a maximum possible penalty of five years in prison; fines of up to $250,000 or twice the amount of loss; as well as restitution to the Illinois EPA and forfeiture of any profits from fraudulent transactions. According to plea agreements filed with the court, Joel and Eric Andrews and Michael Keebler have agreed to forfeit various pieces of property and bank accounts. The court, however, will make the final determination of the total amount of loss to be repaid following a hearing which is set to begin on August 10, 2015. Sentencing dates will be set for Michael Keebler, Joel Andrews and Eric Andrews following that hearing.
Both Duane and Joseph Keebler have agreed to a loss amount in their cases, and will pay restitution in the total amount of $179,438. They are scheduled to be sentenced before U.S. District Judge Sue E. Myerscough on June 22, 2015. Jeremy VanScyoc is scheduled to be sentenced on April 13, 2015.
The case is being prosecuted by Assistant U.S. Attorneys Patrick D. Hansen and John E. Childress. The charges are the result of a two-year investigation by the Federal Bureau of Investigation and the U.S. Environmental Protection Agency, Criminal Investigation Division. The investigation was initiated by a former Illinois State Police Inspector on contract with the Illinois Environmental Protection Agency.