Virginia Businessman Sentenced to Jail, Fined $1 Million for Asbestos Fraud

A Virginia businessman has been sentenced to 5 months in jail for conspiring to defraud OSHA and other federal agencies by buying false training certificates for his employees and allowing them to remove asbestos and other hazardous waste from public buildings, according to the Justice Department.

In addition to his jail sentence, Nicanor Lotuaco was fined $1 million and ordered to serve 5 months of home detention and 3 years of supervised release after he gets out of jail.

Lotuaco and three other co-defendants Norfolk, Va.-based ACS Environmental Inc. (ACS); Portsmouth, Va.-based Air Power Enterprises; and James Schaubach, president of ACS and vice president of Air Power pleaded guilty in June 2005 to buying false training certificates for their employees and then using the unlicensed employees to remove asbestos, lead and hazardous waste from public buildings.

The defendants also admitted to submitting false documents to the Small Business Administration (SBA) regarding their eligibility to participate in the SBA's program for minority-owned businesses and fraudulently obtaining contracts at federal facilities under the program.

ACS, Air Power Enterprises and Schaubach are expected to be sentenced within the next few weeks.

"Not only did the defendants defraud the federal government, but they endangered the health and safety of their employees and the public by falsely certifying that the workers had the appropriate credentials to work on asbestos and lead abatement projects," said Sue Ellen Woolridge, assistant attorney general for the Justice Department's Environment and Natural Resources Division.

All four defendants admitted to buying false certificates from F&M Environmental Technologies Inc. The Virginia-based company pleaded guilty in February 2001 to selling hundreds of false training certificates in Virginia, Maryland and the District of Columbia.

From 1999 through 2004, Air Power received $37 million in federal contracts under SBA's 8(a) set-aside program for minority-owned firms, according to the Department of Justice. Both ACS and Air Power admitted to conspiring to make false statements to SBA regarding the ownership of Air Power so they could participate in the 8(a) program.

Under federal and state law, individuals who intend to work on asbestos and lead abatement projects are required to undergo an extensive training course instructing them how to properly and safely remove asbestos and hazardous waste without contaminating either themselves, co-workers or members of the public.

Neither or ACS and Air Power had a comment about the charges.

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