By LP Hastings
By Michael Goldstein
By R. Scott Moxley
By Gustavo Arellano
By Gustavo Arellano
By Matt Coker
By Nick Schou
By Bethania Palma Markus
Photo by Johan VogelSo you're up for a multimillion-dollar government contract, but you've got this problem: in less than a decade, you've racked up multiple fraud and bribery convictions. Your reputation among government investigators and prosecutors is beyond damage control.
Are you in trouble?
Not if you own Environmental Chemical Corp. (ECC), a Burlingame, California-based company working since 1995 on the cleanup of the old Tustin Marine Corps Air Station. Tustin environmental-cleanup newsletters put out by the Marine Corps indicate ECC has done a range of work—including treating soil and monitoring a toxic plume at the base's old gas station.
An official with the Navy's Southwest Division, which has jurisdiction over the base cleanup, promised to provide the Weekly with an accounting of ECC's payments but didn't respond by press time. An ECC official at the Tustin base refused to talk with the Weekly, saying it was inappropriate to comment on work it does in Tustin because the company is "only a subcontractor."
ECC is part of a mini-corporate empire set up 20 years ago by Pritam Sabharwal in Lexington, Kentucky. Newspaper accounts chronicle a rich and colorful history of run-ins with federal environmental regulators.
In 1980, Sabharwal formed his first company, Environmental Health Research and Testing (EHRT). Taking advantage of federal Small Business Administration (SBA) set-asides for minorities just starting out, Sabharwal was able to secure more than $31 million in government contracts before 1990.
Everything seemed fine until 1993, when Sabharwal tried to give an $18,000 bribe to a federal Environmental Protection Agency official in exchange for information on his competitors' bids for a local contract. Sabharwal later entered into a plea agreement to pay a $1 million fine, and EHRT was barred from federal contracts.
But Sabharwal himself wasn't out yet. Since the mid-1980s, he had been incorporating new companies on a regular basis and appointing family members to run them. In 1985, he formed ECC and turned it over to his son Paul. In 1989, he spun off Sab International Technology Enterprises (SITE) and tapped his son Shawn to run it.
Sabharwal later secured SBA minority start-up grants for both ECC and SITE, even though the money from all the firms went into the same accounts, making them essentially one company.
Federal auditors suspected something was amiss as early as 1993, but seven years passed before a federal grand jury indicted Sabharwal and five family members on May 30, 2000, on 12 counts of fraud, racketeering, bribery and conspiracy. The main charge: defrauding the federal government out of $150 million in SBA start-up funds.
Pritam Sabharwal reacted by fleeing to his native India, while the rest of his family pleaded innocent of all charges, most of which were eventually thrown out. On March 9, 2001, the Sabharwal patriarch returned to the U.S. and pleaded guilty to hiding company records and lying about his billing practices to EPA auditors from 1993 to 1995. He agreed to pay a $2 million fine, serve six months in jail and pay the $1 million fine from 1993 that he had simply ignored. His final sentencing will be Aug. 3.
At the time of Sabharwal's 2000 indictment, his companies were enjoying $55 million in government contracts across the nation, including his cleanup work at Tustin. Amazingly, Department of Defense contract records reviewed by the Weekly indicate ECC was still getting lucrative contracts even after the 12-count indictment was handed down in May 2000.
• March 21, 2001: The Army Corps awarded ECC a $75 million, 5-year contract to provide long-term monitoring at various hazardous-waste sites in the Northwest U.S.
• April 27, 2001: The U.S. Air Force gave ECC a piece of a $750 million contract for "environmental remediation" at various Air Force installations over the next five years.
This government practice of ignoring fraud indictments and convictions isn't limited to ECC. In a July 24, 2000, story, the Associated Press reported the results of its own investigation, showing that 737 of 1,020 companies prosecuted for fraud remained eligible for contracts. The story mentions ECC by name, saying "a simple name change" had allowed Sabharwal to continue raking in federal dough.Deeply disturbed? Moderately pissed off? Speak up at the Tustin Restoration Advisory Board (RAB) meeting. Call (949) 532-0790 for the date, time and place of next month's meeting.
Find everything you're looking for in your city
Find the best happy hour deals in your city
Get today's exclusive deals at savings of anywhere from 50-90%
Check out the hottest list of places and things to do around your city