California Scorches Enviro Cleanup Firm

OROVILLE, Calif. (CN) - An environmental company defrauded California by submitting phony invoices for cleaning up leaky underground storage tanks and doing geological work without a license, the state claims in court.

The State Water Resources Control Board sued Hanover Environmental Services and its owners, William and Carrie Bono, in Butte County Superior Court.

The state seeks an injunction and damages for intentional misrepresentation, negligent misrepresentation, and practicing geology without a license.

Hanover Environmental is a Chico-based general contracting firm founded in 1976. It says on its website that it expanded its services to include environmental cleanup of hazardous substances in the mid-1990s, and has since become "a diverse and multi-disciplinary environmental assessment, analysis and remediation consulting firm."

Hanover claims to specialize in "soil and groundwater contamination caused by leaking underground storage tanks throughout the state" for clients seeking reimbursement under California's Barry Keene Underground Storage Tank Cleanup Trust Fund, according to the complaint.

Attorney General Kamala Harris claims Hanover told the state it spent "millions of dollars for environmental services, equipment, laboratory fees, administrative fees, and other miscellaneous charges" to decontaminate underground tanks. It also said it had all the proper licenses to do the cleanup work.

But a recent audit revealed that a lot of the work was unnecessary, the Water Board says in its 18-page complaint filed on May 30.

The state claims Hanover "submitted invoices and received reimbursements for work based on fraudulent testing and falsified documentation. In addition, defendants invoiced the Cleanup Fund and received reimbursements for substandard work, unnecessary work, and other overcharges. Furthermore, the State Water Board learned that defendants are not and have never been properly licensed under the laws of the state of California to receive reimbursement from the Cleanup Fund."

California created the Cleanup Fund in 1989 to help owners of underground petroleum tanks pay for cleanup costs.

Tank owners must pay a yearly storage fee of 1.4 cents per gallon of petroleum stored, according to the complaint. The trust fund uses the money to reimburse owners who comply with its regulations to clean up spills from leaky tanks, up to $1.5 million per occurrence.

The state says it began investigating Hanover for fraud in June 2011 after a staff member in the Water Board's Fraud Waste and Abuse Prevention Unit tried to contact the company's licensed geologist and learned that he had not worked at Hanover "for several months."

After conducting a series of audits, the state says, it "discovered numerous instances of misrepresentation ... and has discovered that although Hanover provides primarily geological services, none of Hanover's officers hold a professional license in geology as required by California law."

Since neither William nor Carrie Bono has such a license, Hanover is not eligible for reimbursement from the Cleanup Fund, the complaint states.

Its substandard and unnecessary work at several properties also precludes Hanover from reimbursement eligibility, the complaint adds.

Among other things, the state claims that Hanover failed to properly abandon oil wells for the Vanella Oil Company, and used several ineffective remediation strategies at the Frost Oil site, including modifications to the system that were "deemed a public nuisance and shut down by the Butte County Air Quality Management District."

Hanover also improperly analyzed groundwater for the presence of hexavalent chromium, a toxic chemical that can endanger the public health, the complaint states. It waited for more than 24 hours between collecting samples and having them analyzed, and did not properly collect and handle the samples before sending them in for analysis, rendering the test results invalid, the state claims.

The state says Hanover submitted "incomplete, misleading, inconsistent, falsified and forged field notes or chain of custody documentation for work" at several sites, compromising the integrity of the samples collected and work performed at those sites.

Hanover did unnecessary work at 22 sites, such as collecting more samples than needed, "excessive systems evaluations that provided litter or no benefit ... [and] excessive cleanup and restoration activities," the complaint states.

It also inflated its employees' hourly wages far above the rates they should have been billed; billed for equipment that was not necessary or not used; and padded labor hours by invoicing several employees for a one-person job and listing tasks "that should take 15 to 60 minutes ... as 2 hours," the complaint states.

The state says the fraud worked because it had no reason to believe that Hanover was not eligible for reimbursement, and reasonably believed that the firm was "familiar with Cleanup Fund procedures, laws, and guidance, and the standards applicable in the environmental industry."

The state seeks punitive damages, reimbursement to the Cleanup Fund, and an injunction preventing Hanover from offering geological services until its gets the proper licenses.

Emails for comment to Hanover were returned as undeliverable.

Calls to William Bono went to voicemail and were not returned by the end of business hours Monday.

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