Environmental/Jan 21, 2015

Fake Underground Storage Tank Insurance Scheme Busted – Insurance Agents Plead Guilty

A fake underground storage tank (UST) insurance scheme run by two Michigan insurance agents was discovered and disrupted by the Environmental Protection Agency (EPA) and Federal Bureau of Investigation (FBI). Allen Chadderdon and Dean Tucker were selling fake insurance certificates to owners and operators of underground storage tank systems which were otherwise uninsurable (due to the age of the tanks, other uninsurable conditions, or excessively high costs). Under existing federal and state laws, owners and operators of UST systems that contain petroleum products or other hazardous substances must maintain a method of financial assurance to be utilized in the event of a release. The fake insurance certificates were utilized to demonstrate financial responsibility to inspectors and other regulatory authorities. This scheme persisted for approximately two years (2011 – 2013). Both Mr. Chadderdon and Mr. Tucker pled guilty in federal court and faced a maximum sentence of 20 years in prison. Mr. Chadderdon was sentenced on December 3, 2014, receiving one day credited as time served, one year supervised release, and a $20,000 fine. Mr. Tucker is scheduled for sentencing on March 5, 2015.

Underground storage tank owners and operators should be aware of a bill recently signed into law by Governor Snyder on December 30, 2014 (Senate Bill 791, designated as Public Act 416 of 2014), which provides a way for refined petroleum UST owners to meet financial responsibility requirements by creating the Underground Storage Tank Cleanup Fund. The primary objectives of this fund are to pay for corrective actions for releases from covered USTs and to assist UST owners and operators in meeting their financial responsibility requirements. To get more information on this important program, read our blog: https://ggtmlaw.com/michigan-legislature-passes-bill-revive-refined-petroleum-ust-cleanupinsurance-program/.

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