Attorney General Lockyer Announces Settlement of Lawsuit Alleging Ripoff of Underground Storage Tank Cleanup Fund

Tuesday, July 8, 2003
Contact: (415) 703-5837, agpressoffice@doj.ca.gov

(SACRAMENTO) – Attorney General Bill Lockyer today announced Santa Rosa-based Environet Consulting and others will pay almost $400,000 to resolve allegations that they bilked the state's Underground Storage Tank Cleanup Fund out of roughly $200,000, under a lawsuit settlement approved by the Sacramento County Superior Court.

"The Legislature established this Fund to protect public health and safety, and to pay for cleanup costs when insurance coverage is not available," Lockyer said. "Citizens and taxpayers can ill afford a ripoff of this vital program, especially as the state suffers unprecedented fiscal woes."

Lockyer brought the action against Environet and other defendants under the California False Claims Act. The Act prohibits fraudulent claims against the state and can subject violators to treble damages and civil penalties. The case marked the first brought under the Act in connection with fraudulent claims on the Fund. The defendants include: Environet; Linda Mackey, the company's principal; Gary Johnson, Environet's chief geologist; and William Staley and Mary Scott, former owners of a Ukiah car dealership.

The suit alleged the defendants defrauded the Fund by claiming reimbursement for cleanup costs caused by a leaking underground waste oil tank when, in fact, the damage was caused by a septic tank system improperly used to dispose of hazardous waste materials. The Fund cannot be tapped to provide reimbursement for cleanup work associated with septic tank systems.

Under the settlement, the defendants will pay $391,282 – twice the amount they wrongfully obtained from the Fund, which is administered by the State Water Resources Control Board. Additionally, the settlement prohibits Mackey and Johnson from making false or misleading statements to state agencies regarding environmental cleanup projects.

The lawsuit originally was brought by a "whistle blower" plaintiff, Lee Howard. Howard, a contractor who worked at the property, filed the lawsuit on behalf of the state after the property owners sued him for failing to obtain reimbursement from the Fund, among other allegations. Under a provision of the False Claims Act designed to reward whistle blowers who help the state recover fraudulently-obtained funds, Howard will receive 22 percent of the settlement proceeds, or $86,082. The state will receive $305,200.

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