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Counter Proliferation Investigation Unit
11/23/2009

Miami businessman pleads guilty to illegal smuggling of ozone depleting substance

MIAMI - A Miami businessman and his corporation pleaded guilty Friday in federal District Court in Miami to charges related to their illegal smuggling into the United States of restricted ozone-depleting substances contrary to the Clean Air Act following an investigation by U.S. Immigration and Customs Enforcement (ICE) and the Environmental Protection Agency (EPA).

James Garrido, 44, of Miami, and Kroy Corporation, a Florida corporation with its principal place of business in Miami, each pleaded guilty before U.S. District Court Judge Patricia A. Seitz to a three-count Information, charging them with knowingly importing approximately 418,654 kilograms of illegal hydrochlorofluorocarbon - 22 (HCFC-22), in violation of the provisions of the Clean Air Act.

Garrido faces a sentence of 20 years in prison, three years of supervised release, and a fine of $250,000 on each count. The statutory maximum fine for Kroy Corporation is $500,000 per count and it may be placed on probation for up to five years per count. In addition, the defendants could be ordered to forfeit the illegal proceeds of their conduct. Sentencing has been scheduled for Feb. 11, 2010, before Judge Seitz.

"The unlawful importation of goods pose a triple threat to the national security, public safety and economic well-being of the United States," said Anthony V. Mangione, special agent in charge of ICE's Office of Investigations in Miami. "This case demonstrates ICE's partnership and aggressive approach with the U.S. attorney's office and EPA to protect the American public from inferior and unsafe products that illegally enter the United States and combat those who exploit our commerce system and compromise the safety of our citizens."

The Federal Clean Air Act regulates air pollutants, including ozone-depleting substances such as HCFC-22. HCFC-22 is a widely used refrigerant for residential heat pump and air-conditioning systems. The Clean Air Act and its implementing regulations established a schedule to phase out the production and importation of ozone depleting substances beginning in 2002, with a complete ban starting in 2030. To meet its obligations under international treaty to reduce its consumption of the ozone-depleting substances, the United States issued baseline allowances for the production and importation of HCFC-22 to individuals and companies. In order to legally import HCFC-22, one must hold an unexpended consumption allowance.

According to court records, Kroy, a corporation formed in February 2007, was in the business of importing merchandise, including refrigerant. James Garrido is Kroy's president. Between March 2007 and April 2009, Kroy and Garrido engaged in the illegal smuggling of large quantities of HCFC-22 into the United States for subsequent resale. The defendants would routinely declare imported merchandise as either legal R-134A refrigerant or as "United States Goods Returned." In truth, except for a small quantity of legal refrigerant strategically placed in front of the contraband, the shipments contained HCFC-22 and were accompanied by false documentation. At no time did Kroy or Garrido hold unexpended consumption allowances that would have allowed them to legally import the HCFC-22.

From 2007 to April 2009, Kroy and Garrido illegally imported approximately 418,654 kilograms of restricted HCFC-22 in 11 separate shipments, with a total fair market value of more than $3.9 million.

Acting U. S. Attorney Jeffrey H. Sloman stated, "The ozone layer provides crucial protection to all life on earth, and it must be preserved. The defendants jeopardized the global effort to restore and protect the ozone for their own financial benefit. Such conduct is short-sighted and inexcusable."

EPA Special Agent in Charge Maureen O'Mara said, "HCFCs deplete the stratospheric ozone layer, which protects people from such harmful effects of ultraviolet radiation as skin cancer. These guilty pleas send a strong message that those who place the public at risk in order to make illegal profits will be vigorously prosecuted."

The case was prosecuted by Special Assistant U.S. Attorney Jodi A. Mazer.