SANTA BARBARA (CN) – An environmental company bilked California by submitting phony invoices for cleaning up leaking underground petroleum storage tanks, the state claims in Superior Court.
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California’s Water Resources Control Board sued Hayden Environmental and its owners, Kurt Kane and Julie Lynn Hayden.
Hayden Environmental is a Santa-Barbara based environmental consulting firm founded in 1992. Kurt Hayden, its president, is a geologist.
NBC News affiliate KSBY.com reported in May that the Haydens had been arrested on charges of conspiracy to commit grand theft and defrauding the state.
“The arrest came after agents searched the couple’s multi-million dollar home in Santa Barbara, as well as their vacation home in June Lake, and found records implicating the couple in the crime,” KSBY.com reported.
The state says in its complaint: “Defendant Hayden Environmental Inc. has obtained almost $12 million in payments from the Barry Keene Underground Storage Tank Cleanup Trust Fund, which is administered by the State Water Resources Control Board. A portion of the money received by defendants was based on false and misleading invoices, to which defendants were not entitled.”
It is not clear, from the complaint, how much of the $12 million in invoices the state believes was illegitimate. California claims the defendants submitted “not less than 207 invoices” for work at 20 sites in 2008. It claims that “on more than one occasion” the defendants overbilled the state, in a welter of ways, which are detailed in the complaint.
After finding reason to investigate in 2010, the state says, it now suspects that the defendants overbilled it from 2009 to the present for work at the 20 sites.
“On information and belief, each of the invoices submitted by defendants during that time period were similarly false and misleading,” according to the complaint.
California set up the storage tank cleanup trust fund in 1989 to help owners of underground gas tanks pay for cleaning up leaks.
Tank owners must pay the fund a yearly storage fee of 2 cents per gallon of petroleum stored, according to the state’s complaint. The trust fund uses the money to reimburse owners with leaking tanks, up to $1.5 million to clean up the spill.
The complaint states: “Defendants, as participants in the industry of providing environmental cleanup services, were aware of the laws, regulations, and guidelines published by the fund. They knew that the money they received from claimants came from the fund. They knew that the claimants must verify under penalty of perjury that the amount of money for which they seek repayment is true and correct. They knew that the board would rely on the representation they made in the invoices they submitted to claimants to make disbursements from the fund.
“Defendants submitted invoices to claimants for materials, services, work, or other items allegedly provided by it. Those defendants did not provide the claimants with true, accurate, and correct invoices and documentation for services, work, materials, and equipment provided and used for cleanup activities. They did so with full knowledge that claimants would forward those false and misleading invoices to the board for reimbursement from the fund, and that the board would rely on the misrepresentations made in those invoices to make disbursements from the fund which t hey would not have made in the absence of the false and misleading invoices. They did this, among other reasons, to obtain payments from the fund that they were not entitled to receive.”
The state claims that the alleged fraud worked, in part, because “Plaintiff knew defendant Kurt Hayden was putting his professional geologist mark on reports and submissions, representing that he followed the standards of care applicable to that industry.”
The state seeks punitive damages, equitable relief, and a permanent injunction preventing the Haydens from “making false or misleading submissions to the fund in the future.”