Owner of 2 Chicago-area recycling businesses arrested for multi-million dollar e-waste fraud

CHICAGO — The Indiana owner of two recycling businesses was arrested Monday for allegedly operating a multi-million dollar fraud scheme involving the illegal landfilling or re-selling of potentially hazardous electronic waste (e-waste).

These charges were announced by the following agency heads:  Zachary T. Fardon, U.S. Attorney for the Northern District of Illinois; John K. Gauthier, acting special agent-in-charge of U.S. Environmental Protection Agency’s Criminal Investigation Division in Chicago; James D. Robnett, special agent-in-charge of the Internal Revenue Service’s Criminal Investigation Division in Chicago; James M. Gibbons, special agent in charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Chicago; and Carol Fortine Ochoa, Inspector General of U.S. General Services Administration.

Brian Brundage, 45, of Dyer, Indiana, the former owner of Intercon Solutions Inc., and the current owner of EnviroGreen Processing LLC, caused thousands of tons of e-waste and other potentially hazardous materials to be landfilled, re-sold to customers who then shipped the materials overseas, or stockpiled, according to an indictment returned in U.S. District Court in Chicago.  Brundage fraudulently misrepresented to his customers that the e-waste materials had been disassembled and recycled in an environmentally sound manner, the indictment states.

This indictment was returned earlier this month and unsealed after Brundage's arrest Dec. 19.  The indictment charges Brundage with five counts of income tax evasion, four counts of mail fraud and two counts of wire fraud.  The indictment seeks forfeiture of $10 million in cash.

According to the indictment, several private companies and governmental entities hired Intercon (based in Chicago Heights, Illinois), and EnviroGreen (based in Gary, Indiana), for disassembling, recycling or destroying e-waste and other materials.  The customer agreements stipulated that Intercon and EnviroGreen would handle all materials in an environmentally sound manner, without landfilling or exporting, and without reselling the materials in whole form.  Intercon specifically represented that it engaged in “absolutely no reselling, no remarketing, no landfilling, no incineration, and no exportation,” the indictment states.

Unbeknownst to their customers, for more than a decade Intercon and EnviroGreen knowingly sold the e-waste and other materials, including potentially hazardous glass and batteries, to vendors that Brundage knew would ship these materials overseas.  According to the indictment, some of these materials contained cathode ray tubes (CRTs), which are the glass video display components of certain electronic devices, such as computer and television monitors; CRTs contain potentially hazardous amounts of lead.  The indictment further alleges that Brundage caused multiple tons of CRT glass and other potentially hazardous materials to be destroyed in environmentally unsafe ways and later landfilled, all in direct contravention to Intercon’s public representations regarding its recycling practices.

At one point in 2011, Intercon was publicly accused of shipping potentially hazardous materials to Hong Kong.  In response, Brundage began a fraudulent effort to publicly deny and conceal Intercon’s involvement in these shipments, the indictment states.  Brundage destroyed business records related to these shipments and made efforts to conceal other overseas shipments of large quantities of e-waste, according to the indictment.  The fraud scheme continued for another five years, the indictment states.

The tax charges against Brundage relate to his efforts to evade paying thousands of dollars in income taxes during this scheme, according to the indictment.  Brundage often caused Intercon to pay his own personal expenses, including wages for his nanny and payments to the Horseshoe Casino in Hammond, Indiana.  He later deducted these expenditures as business expenses on Intercon’s corporate tax returns, the indictment states.

The public is reminded that an indictment is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Each count of income tax evasion is punishable by up to five years in prison.  The wire fraud and mail fraud counts each carry a maximum sentence of 20 years.

Assistant U.S. Attorney Sean J.B. Franzblau and Special Assistant U.S. Attorney Crissy Pellegrin, Northern District of Illinois, are prosecuting this case.