CHICAGO (Legal Newsline) - A federal appellate court has affirmed a lower court's 10-year prison sentence for a sprinkler contractor who allegedly removed asbestos without the proper training or licensing, dumping the contaminated material in dumpsters and abandoned farmhouses.
The U.S. Court of Appeals for the Seventh Circuit concluded on Jan. 8 that the Central District of Illinois called defendant Duane O'Malley's "bluff" by offering him an opportunity to plead guilty rather than move forward with a trial.
Chief Judge Diana P. Wood and judges Joel M. Flaum and John D. Tinder presided over the appeal. Tinder delivered the decision.
"Duane 'Butch' O'Malley was convicted of removing, transporting and dumping asbestos-containing insulation," Tinder wrote. "A jury was convinced beyond a reasonable doubt that O'Malley knew the insulation contained asbestos."
O'Malley requested the court to examine factual circumstances of his alleged violations as well as the conduct by the district court in his appeal.
He claims the government did not prove the appropriate mens rea for his Clean Air Act violations, arguing that the government was required to prove that he knew that the material in the building was a regulated type of asbestos, as not all forms are maintained by the Environment Protection Agency.
Mens rea is a person's awareness of his or her criminal actions, or mental understanding of guilt.
He also claims the district court acted inappropriately in the plea negotiations, which the appeals court disagreed with.
"We find that the jury was correctly instructed on, and the government proved, the correct mens rea for the violations in question. We also conclude that the district court did not improperly participate in plea negotiations," the decision says.
According to the criminal lawsuit filed by the United States government against O'Malley, real estate developer Michael Pinski purchased a building in Kankakee, Ill., that was found to have 2,200 linear feet of asbestos-containing insulation wrapped around pipes.
Then in 2009, Pinski hired Origin Fire Protection, a company run by O'Malley, to convert the wet sprinkler system into a dry system in the building. O'Malley noticed the insulation-covered pipes and offered to remove the insulation for an additional price.
A reluctant Pinski warned O'Malley that some of the insulation-wrapped pipes contained asbestos, the opinion stated.
However, O'Malley, insisting on being paid $12,000 in cash, promised to remove the insulation and dispose of it properly while saving Pinski money.
He provided Pinski with no written contract for the insulation work and later told an employee that he requested that so "there wouldn't [be] a paper trail," the opinion says.
No one in the company was properly trained in asbestos removal, and many employees informed O'Malley that he needed a license to remove asbestos insulation, the opinion says.
"Almost everyone in the cast of characters recognized the asbestos for what it was," Tinder wrote.
O'Malley settled on hiring Jeff Franc, along with three employees with no proper training, to strip the dry asbestos insulation off the pipes using a circular saw and other equipment provided by O'Malley. The employees also weren't given water or anything to wet the asbestos in order to prevent dust.
"Predictably, the circular saw produced large amounts of asbestos dust that filled the room. The workers were equipped only with a few paint suits, simple dust masks, and useless respirators with missing filters," the opinion stated. "The workers donned the dust masks initially, but they quickly became clogged and the workers were unable to breathe through them. Franc's crew stopped working after a day or two because they inhaled a large amount of dust, and they claimed the dust made them sick."
Discarded asbestos insulation was packed into roughly 100 large, plastic garbage bags and were thrown into a dump truck.
Employee Steven Giles was directed to take the bags to Angel Abatement, an asbestos abatement center. However, since O'Malley didn't notify the federal EPA or the Illinois EPA about the asbestos removal, Angel Abatement refused to accept the asbestos waste.
So O'Malley instructed Franc to take some bags to an abandoned farmhouse near O'Malley's property. He asked employee Virgil Leitz to take the rest of the bags to a dumpster near a local Hobby Lobby store. Employee James Mikrut took the remaining debris to a field in Hopkins Park, Ill., where they dropped them off at the end of a road near a vacant house.
Then in September 2009, Illinois EPA Director Joseph Kotas inspected the field where the bags were dumped, finding open and torn bags spilling out on the bare ground.
EPA Superfund contractors spent more than $47,000 on properly removing and disposing of the bags as well as cleaning up the contaminated soil in Hopkins Park.
Fearing a federal investigation, O'Malley instructed Mikrut to deny removing the insulation and claim he only did alarm work at the building if he were questioned by Kotas. However, when he was interviewed, he revealed the truth and agreed to make recorded calls to O'Malley, revealing O'Malley coaching him to mislead federal agents.
"O'Malley also came up with the clever scheme to pin the illegal asbestos removal on Franc," Tinder wrote. "When confronted by the agents, O'Malley admitted in a verbal and written statement that he had failed to stop the illegal asbestos removal even after he suspected the material was asbestos."
When the removed insulation was tested, they found it to contain asbestos ranging in concentration from four percent to 48 percent asbestos.
In June 2010, O'Malley was indicted by a grand jury with five counts of knowingly violating the criminal provisions of the Clean Air Act. Pinski and Mikrut pleaded guilty, but O'Malley demanded a jury trial.
During a pretrial hearing, the court clarified that the United States was required to prove general intent, specifically that O'Malley knew the building had asbestos-containing material. The court also required an "ostrich instruction," which is deliberate ignorance and proves that knowledge and deliberate avoidance of knowledge are the same.
Ultimately, the jury returned guilty verdicts for all five counts. He was sentenced to 120 months in prison, three years of supervised release, a $15,000 fine and $47,085.70 of restitution to the EPA.
O'Malley moved for a new trial, which was denied.
In O'Malley's appeal, he first sought review of the evidence brought by the government proving that he knew the building contained one of the six asbestos types regulated by federal law.
However, Tinder wrote that O'Malley is actually challenging the district court's jury instructions on the mens rea elements of the Clean Air Act.
The jury was instructed that the government must prove that O'Malley knew the asbestos-containing material was present in the building. They were also told that "regulated asbestos-containing material" was anything containing more than one percent concentration of asbestos that can be reduced to powder or dust.
However, the appellate court determined that the fact that O'Malley knowingly worked with asbestos-containing material met the mens rea requirement "as asbestos is certainly a dangerous material of a type where 'the probability of regulation is so great that anyone who is aware that he is in possession of it... must be presumed to be aware of the regulation.'"
The court further ruled that O'Malley's claim would have been dismissed regardless because he failed to challenge the district court's jury instructions prior to filing his appellate brief.
"Because O'Malley failed to object to the jury instructions in question in the district court, we need not even reach the plain error review to which the district would nonetheless lead to the conclusion that the district court's instructions on scienter were proper," Tinder stated.
O'Malley also sought review of his case, claiming the lower court improperly participated in plea negotiations when it "offered to extend the acceptance of responsibility deadline and grant the reduction of acceptance if O'Malley entered a guilty plea."
According to the opinion, the United States added Lietz to the witness list prior to the trial, but O'Malley moved to exclude Lietz's testimony by arguing that the deadline had already passed. At the pre-trial hearing, the court told O'Malley that his acceptance of responsibility deadline could be extended if "Lietz's disclosure had caused the defendant to want to plead guilty." O'Malley declined.
The appellate court ruled that a deadline for disclosing witnesses was never officially set and was unclear. The United States filed its original list on Sept. 7, 2011, but added Lietz on Sept. 16, 2011, after learning his last name in witness preparation. Lietz had actually been a person of interest in the investigation, but was only known by his first name. So, learning his full name allowed the government to find and interview him.
Then on Sept. 21, 2011, the district court heard arguments from both sides regarding Lietz's inclusion. O'Malley said he made his decision to go to trial based on the witness list.
The district court was skeptical, stating, "So, really, Mr. O'Malley's decision as to whether he wanted to change his plea came before the filing of the witness list and the final pretrial; but if somehow this is the witness that's the tipping point, the witness that if it had - if we knew he was going to testify, we would have accepted responsibility long ago and we never thought he was going to testify I'd extend the acceptance of responsibility right now. I'd take an open plea right now, if that's what the defendant wishes to do, and give him acceptance instead of, in effect, sanctioning the government by striking the witness."
Tinder stated that it was clear to them that O'Malley first raised the issue of the acceptance of responsibility deadline.
"The court was merely responding to the alleged prejudice - O'Malley's ability to choose whether to go to trial - and attempting to cure it," Tinder wrote.
He continued to argue that the district court indicated that O'Malley believed his chances at trial were doomed by Lietz's testimony. Therefore, O'Malley was given the opportunity to enter a guilty plea rather than face a trial. Essentially, the judge was "calling O'Malley's bluff."
"While we would not present the district court's statement as a model of clarity, we believe it is clear that the judge had no animus against the defendant or an improper motive in stating that were O'Malley's concerns real, the judge would be willing to address them," Tinder wrote. "The statement was far from an actual, impermissible intervention in plea negotiations."
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