United States v. Hagerman

301 F. App'x 552
Court of Appeals for the Seventh Circuit·Decided December 5, 2008·No. Nos. 07-3874, 07-3875·Published·Cited by 1 cases

Opinion

ORDER

A federal jury convicted Wabash Environmental Technologies (WET) and its president, Derrik Hagerman, on ten counts of making materially false statements in reports WET was obligated to file under the Clean Water Act. See 33 U.S.C. § 1319(c)(4). Hagerman was sentenced to a total of 60 months’ imprisonment and, along with WET, was ordered to pay $237,680 in restitution to the EPA to clean up the environmental mess they caused. WET and Hagerman now challenge an evidentiary ruling and a jury instruction and argue that the prosecution and the district court constructively amended the indictment. Hagerman further argues that his overall prison sentence is unreasonably long. We affirm.

WET operated a facility in Terre Haute, Indiana, that accepted industrial liquid waste, treated it, and discharged it into the [554]*554Wabash River. The Indiana Department of Environmental Management issued WET a National Pollutant Discharge Elimination System permit, which allowed WET to release the treated wastewater into the river but limited the type and amount of pollutants the wastewater could contain. The permit required WET to periodically test samples of the expelled wastewater to ensure that the pollutants did not exceed permitted levels. It also required WET to provide the state with monthly reports — Monthly Monitoring Reports (MMRs) and Discharge Monitoring Reports (DMRs) — disclosing, among other things, the results of all tests and whether any tests had shown pollutant levels higher than the permit allowed. The permit mandated that WET use testing procedures approved by the EPA. Hagerman was responsible for completing the reports and certifying, as the permit directed, that the information he provided was “true, accurate and complete.”

Hagerman and WET were indicted on 10 counts of violating the Clean Water Act by falsely certifying on MMRs and DMRs that the reported test results showing that the facility was in compliance with its permit limits were true and accurate. Each count corresponds to a separate report filed in 2004. For each count, the indictment identifies the allegedly false test results that Hagerman recorded on the report. All told, the indictment alleges that Hagerman and WET certified 32 reported test results, taken from January through October 2004, knowing that they were not true and accurate.

At trial, Lahn Neill and Barry Morrison, WET’s lab technicians who were responsible for testing samples of the discharged wastewater for pollutants, testified about the procedures they used for analyzing the samples and recording the results in lab notebooks and on “bench sheets.” Neill testified that after she and Morrison completed the bench sheets, she gave them to Hagerman. Copies of the bench sheets were entered into evidence and showed that, on the dates charged in the indictment, the levels of pollutants in WET’s discharge wastewater exceeded permit levels. Hagerman, however, reported far lower levels on the company’s MMRs and DMRs.

Neill also testified that in January 2004 she became worried that WET was not accurately reporting the levels of pollutants she found. She was also concerned that her records would go missing, so she began taking her lab notebooks and copies of her bench sheets home each evening and making an additional backup of her data on electronic spreadsheets. These spreadsheets were admitted into evidence, over the defendants’ objection.

Throughout 2004 Neill’s tests showed alarmingly high levels of pollutants. When she would receive a particularly high result, she would bring the result to Hagerman, who accused her of performing her tests incorrectly. He told her that her “numbers” were too high and that he could not report them. He also told her that he had additional “information” that was not reflected in the testing results and so he ran her results through a “calculation” and concluded that the pollutant levels were within permit limits.

According to Neill, in October 2004 Hagerman confronted her at her home and demanded that she give him all of her documentation and erase her electronic files. The next day Neill gave Hagerman a box of documents but retained copies. She did not delete her computer files. Later that week, Hagerman mentioned to Neill that there had been a fire in a dumpster behind the facility. Neill later turned over all of her documentation to the government.

[555]*555Morrison testified that in early 2004 he became concerned that the levels of pollutants he was seeing in his lab results were higher than WET’s permit limits. In March he created several charts showing the levels of pollutants relative to the permit levels and gave copies of these charts to Hagerman. He received no response. In September 2004 he gave Hagerman a similar chart. The next month, one of his test results was so high that he wanted Hagerman to see it immediately. Because Hagerman had left for the day, Morrison taped a note containing the result to Hagerman’s office door. He again received no response.

Morrison testified that the machine used to test for the presence of one pollutant— phenol — was not working from June until September 2004. During that time, Morrison, who was responsible for phenol testing, did not perform these tests and left blank the space on the bench sheets reserved for recording the phenol test results. WET replaced the machine in September 2004, but Morrison had trouble learning how to use the new machine to perform the EPA-approved test; thus, throughout the fall of 2004 Morrison used the machine to run a different test, which was not approved by the EPA, to “get quick results.” He testified that Hagerman knew he was using a method that was not approved by the EPA.

An EPA agent testified that agency officials searched Hagerman’s office pursuant to a search warrant. Agents found bench sheets for 2004, but the numbers on these bench sheets did not match the numbers on the copies of the bench sheets Neill had provided to the government; they did, however, correspond to the results reported on the MMRs and DMRs. Agents also found copies of four electronic spreadsheets that were similar to those Neill kept to record her test results. They differed only in that Neill’s version of the spreadsheets appeared to contain additional information.

Hagerman testified in his own defense. He acknowledged that he was responsible for completing the MMRs and DMRs and for certifying the accuracy of the test results he reported. He said that Neill and Morrison did not provide him with bench sheets and instead gave him their data on scraps of paper and post-it notes. Hagerman testified that he transferred this information onto bench sheets and threw out the scraps of paper. He said that Neill never reported test results showing any pollutants above WET’s permit limits and denied reviewing the spreadsheets she created. He also testified that, when he received test results from Morrison showing elevated levels of pollutants, he would ask Morrison to explain how he performed the test. He would adjust the result to account for errors that he perceived in the testing process and for his knowledge about the kinds of waste WET’s customers sent to the facility. He further testified that the lab notebooks, bench sheets, and spreadsheets showing test results inconsistent with those he reported on the MMRs and DMRs were fabricated by Neill and Morrison in an effort to frame him.

The jury found Hagerman and WET guilty on all 10 counts of submitting false MMRs and DMRs.

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United States v. Hagerman, 301 F. App'x 552 (7th Cir. 2008).

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