Document bVnO8Rm65VOZyVqMwmaR5qgZ

P'/, 7 NATIONAL (Ho all to tuljom By virtue of the authoi under the seal ofthe Nai a true and correct copy administration romp, (greeting: Archivist of the United States, I certify on his behalf, ecords Administration, that the attached reproduction(s) is his custody. vo L`1611:,!,;, fi`"PT -----------USlRK-'Mc:'- irPiRT STATES OF AMERICANS$a 7S 6 7 VS, x X CRIMINAL ACTION X X NO. 87-27-T 8X COMPANY X 9X X 10 11 12 (. 13 CHANGE OF PLEA AND DISPOSITION 14 APPEARANCES; 15 Tobin N. Harvey, Esquire, Assistant United States Attorney, John W. McCormack Building, 16 Post Office & Courthouse, Boston, MA 02109, on behalf of the Government. 17 Robert R. Popeo, Esquire, and Michael S. Gardener 18 Esquire, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, One Financial Center, Boston, MA 02111, 19 on behalf of the Defendant. 20 Courtroom No. 2 Post Office & Courthouse 21 Boston, Massachusetts 02109 May 31, 1988 22 Barbara Sakurai - Court Reporter 23 1221 Post Office & Courthouse Boston, Massachusetts 0.2109 24 Method of Reporting: Stenotype/Notereading 25 --...V- 1 UNITED STATES DISTRICT COURT FILED 2 DISTRICT OFjIMBSPNIElSEjr'Fgr !HCLEF'S ICE 3 & i f ffR0'D-J- 4 VS BISTfit;; COUriT - --------------------- - - 5 M/ffiSACjfUr-.r^TS UNITED STATES OF AMERICANSSaC^ vi -ITS 6 7 VS, 8 W. R. GRACE & COMPANY 9 x x CRIMINAL ACTION x x NO. 87-27-T x X X X 10 11 12 CHANGE' OF PLEA AND DISPOSITION 13 14 APPEARANCES; 15 Tobin N, Harvey, Esquiref Assistant United States Attorney, John W. McCormack. Building, 16 Post Office & Courthousef Bostonf MA 02109, on behalf of the Government. 17 Robert R. Popeo, Esquire, and Michael S. Gardener, 18 Esquire, Mi.ntz, Levin, Cohn, Ferris, Gloysky & Popeo, One Financial Center, Boston, MA 02111, 19 on behalf of the Defendant, 20 Courtroom No. 2 Post Office & Courthouse 21 Boston f Massachusetts.. 02109 May 31, 1988 22 Barbara Sakurai - Court Reporter 23 1221. Ppst Office & Courthouse Boston, Massachusetts 0.2109 24 25 2 1 THE CLERK: Criminal No. 87-27-T, United 2 States of America vs. W. R. Grace & Company. 3 THE COURT: Do we really need a side bar 4 conference? 5 MR. POPEO: It would be helpfulf your Honor. CONFERENCE AT THE, BENCH AS FOLLOWS.; 6 7 MR, POPEO; The defendant is going to submit an 8 Alford plea pf guiltyf with the hope that the Court will accept the Alford plea. 9 THE CQURT: The news I got was this was going 10 to be a guilty plea. We started off with a guilty plea, 11 Wha.t I am going to ask him is if he pleads guilty. Nowf 12 he"is going to say what? 13 MR, POPEO; If you ask him if he is. going to 14 plead, he would say he is submitting an Alford. The 15 present agreement specifically palled for an Alfopd plea 16 Of guilty-. The government agrees, to stand moot on the. 17 issue and not oppose it. 18 THE COURT: So precisely- what auestion am I 19 going to ask him and what is. he going to answep? Tell me 20 that. Then. we. will decide, 21 MR, POPEO: We have a specific specifica,tionr 22 which is. 6~b to Count lf which your Clerk has , your Honor, 23 and that is he did make -- the company did make -- a false 24 statement with, respect to the reporting of acetone, which 25 is a chemical which was the subject here. 1 THE COURT: I want to ask him whether he 2 intentionally did it and just ask how he pleads. He has 3 to plead guilty. That is all. 4 MR. POPEO: I will actually put in, so there 5 will be no question about it, the factual basis so that 6 there will be a broader statement. 7 THE COURT: So long as there is a factual 8 basis and he says- he is guilty. 9 MR. POPEO: There will be a factual basis in 10 the broadest form, including a reference to the Government's 11 pretrial memo. The Government's concern is under McNally, 12 if this got overturned -t the Bank of New England got 13 overturned -- that would be set aside. We are not seeking 14 that at all. 15 16 aside. THE COURT: I am not going to set anything 17 MR. POPEO: No. No. No. I just want you 18 to know that we will give you a complete, factual basis' 19 under the rule; however, your Honor, we have made a plea 20 agreement wherein we will submit an Alford plea, which, is 21 at the discretion of the Court, and the Government would 22 stand moot. 23 MR. HARVEY: I will take it from the top, 24 your Honor. Count 1 includes an allegation that the company 25 4 1 knowingly and willfully made and used a false document 2 known to contain a false statement. The defendant has selected a specific component false statement. So they 3 4 will plead to Count 1 and specify that component. THE COURT: I understand that. All right. 5 MR, HARVEY:. My brother is going to suggest 6 that the Court take an Alford guilty plea to that. The 7 Government will take no position on that, except to advise 8 the Court the Government's perception of the requirement 9 for a basis in fact. 10 THE COURT: I read the thing (indicating). It 11 constitutes a crime. So I am satisifed with it. There is 12 a factual Basis, 13 MR, HARYEY: To. finish, out the string here',' ' 14 your Honor, if the Court exercises its discretion the 15 Government will dismiss- Count 2, in that event, and the 16 defendant has agreed that the imposition hy you of the 17 maximum penalty on Count 1 is. the appropriate disposition. 18 My brother has waived the Presentence -Report- and 19 that with the Court, as well as filing a new attorney-in- ^ 20 fact document, 21 THE COURT; All right. 22 MR, POPEO: One other thing is. that the judg 23 ment, therefore., would be as- to Count 1, Specification 6-b, 24 That has- debarment implications and other implicationaf and 25 5 1 that is why that is- very specific as to Count 1, specifica 2 tion 6-b. 3 MR. HARVEY: I have the indictment. 4 THE COURT: I have it. All right. I will ask, "How do you plead to 5 6-b?" 6 MR. POPEO: Yes. "How do you plead to 6-b?" 7 THE COURT: All right. 8 END OF CONFERENCE AT THE BENCH 9 THE, COURT: As, I understand it, there is going 10 to be a plea, to Count 1, Paragraph 6-b. 11 MR, POPEO; Correct, your Honor. 12 Just for the record, also, your Honor, there 13 is: a power of attorney, which designates Mr, Kevin T, 14 O'Reilly' as attorney-of-fact for the Grace Company to enter 15 the plea. 16 THE. COURT: Is that right? 17 MR. O'REILLY; Yes, your Honor, 18 THE. COURT; You are Mrt O'Reilly? 19 MR. O'REILLY: Yes, your Honor, 20 THE COURT: All right. 21 Mr. O'Reilly, I have before me a, charge, as 22 /i follows;: "On or about February 5, 1982, at-Woburn, Canjhpidge., 23 ] and Boston, In the District of Massachusetts, And elsewhere, 24 defendant W, R, Grace & Company did, in a matter within the 25 6 jurisdiction of the United States Environmental Protection 1 agency, knowingly and willfully make and use a false writing 2 and document, knowing the same to contain material false 3 statements and entries; in that defendant W. R. Grace & 4 Company did, on or about said date prepare/' and this 5 is now Subparagraph b, which states, "Grace's February 5, 6 1982, letter indicates that only one 5-gallon pail of 7 acetone was purchased for the Woburn plant and that that 8 purchase occurred in 1978." 9 I am taking that as being the charge. 10 Do you understand that is the charge? 11 MR. O'REILLY: Yes, I do. 12 THE COURT: Do you understand that, on behalf 13 of the corporation, you have a right not to plead guilty 14 to this charge? 15 MR. O'REILLY: Yes, your Honor. 16 THE COURT: Now I have to be satisfied of two 17 things: First, that you understand the charge. 18 Do you understand it? 19 MR. O'REILLY: Yes, your Honor. 20 THE COURT: Do you understand that the penalty 21 that would be imposed in this case, the maximum fine that 22 is available to the Court, if you do plead guilty on behalf 23 of the corporation, is $10,000? 24 Do you understand that? 25 I 1 MR. O'REILLY: Yes, your Honor. 1- THE COURT: I also want to make sure that as 2 you contemplate entering this plea that you are doing so 3 on behalf of the corporation voluntarily -- in other words, 4 that there is no one pressuring you, no one forcing you to 5 enter this plea. Is it a voluntary act on your part? 6 MR. O'REILLY: Yes, it is, your Honor. 7 THE COURT: Do you also understand that the 8 parties have agreed that the defendant has agreed through 9 your counsel, Mr. Popeo, that there will be no Presentence 10 Report in this case and that disposition will take place 11 immediately? Is that fight? 12 MR. POPEO: Yes, your Honor. 13 MR. O'REILLY: Yes, your Honor. 14 THE COURT: And, having in mind that I have 15 read the charge to you, and I am satisfied that you do 16 understand the nature of the accusation and that you under 17 stand the consequences of the guilty plea and that you 18 are contemplating this action on behalf of the Grace 19 Company voluntarily, I will now ask you how do you plead 20 to 6-b? 21 MR. O'REILLY: We submit an Alford plea of 22 guilty to Specification 6-b of Count 1, 23 THE COURT: All right. Do you have a basis 24 in fact you want to add to the record? 25 HWJyj 8 MR. HARVEY: Yes, your Honor. 1 Without belaboring the matter, I will 2 incorporate by reference the information contained in the 3 pretrial information memorandum, which was submitted to 4 the Court sometime ago, and which the Court is familiar 5 with.. 6 In the course of the investigation that EPA 7 undertook, your Honor, following the closing 8 THE. COURT: You may sit down, if you like, 9 Mr. O'Reilly. 10 MR,..-HARVEY: -- following the closing of 11 the municipal drinking water wells in Woburn, and par-12 I ti'cularly- in November, 1981, test wells were, dug in the 13 aquifer under the aegis of EPA, the aquifer being the sort 14 of water to feed the closed drinking water wells, one of 15 the chemicals identified when the samples- of the test 16 wells was. analysed was acetone. Acetone is a hazardous 17 waste regulated by the Resource Conservation and Recovery 18 Act, which, is. the. same statute pursuant to which the EPA 19 January 5, 1982, letter inquiry to the company was 20 generated, 21 EPA's. letter expressly a,sked if acetone had 22 ever been generated, used or otherwise kept in the plant 23 site by Grace or any- of its divisions. The company's 24 February 5, 1982, letter to EPA stated the following, your 25 9 Honor: Under the heading "Acetone" the letter reads: "One 1I 5<-gallon pail was purchased in 1978 r used for wiping parts 2 prior to glui'ng/laminating. " The letter further provides, 3 "Approximately two gallons of acetone remains of the 5-gallor 4 pail purchased in 1978." Bearing in mind, again, the 5 letter was written in 1982. 6 If the matter proceeded to trial, the 7 Government's evidence would have proved, in summary, that 8 acetone was also used at the plant, at least throughout 9 the early 1960s and mid 1970s. It was purchased in 10 containers, of varying volume and its use was. not restricted 11 to wiping parts prior to glui'ng/laminating. 12 The Government would also indicate and the 13 proof would be that acetone was purchased after 1978. 14 Specifically, your Honor, the. Government would prove those 15 matters in three different ways: There would be testimony 16 i from at least five employees of the company, there would 17 be documentary evidence in the form of internal memoranda, 18 and similar documents, generated in the plant; and the 19 Government has obtained by a grand jury subpoena certain 20 i fragmentary purchase records of the plant, and those records, 21 would indicate the acquisition of acetone. 22 Those records are also corroborated by busi 23 ness. records of the suppliers, 24 / Very briefly, your Honor, examples of the 25 specific documents the Government would introduce: A May 20, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 1974, memorandum to the General Foreman of the plant from the then General Manager, which includes the subject, "Safety." It attaches a list of flammables used in the plant, and it indicates acetone in two different locations in the plant, one a 5-gallon container and one a 1-pint container. In addition, the Government would introduce a July 29, 1980, memorandum from the General Foreman of the plant to the Environmental Control Officer at Cryovac Division Headquarters. The subject is, "Hazardous Wastes EPA Regulations." The memorandum indicates that a list of chemicals it contains is typical of, and I quote, "our norma,l inventory level and yearly purchases." It indicates a gallon container of acetone and designates its hazardous waste number within the EPA statutes. I mentioned, your Honor, we would introduce purchase records. The only purchase records we were able to obtain from'.the^company are from the period May, 1973, to June of 1976. Those records themselves indi cate 65 gallons purchased by the company in eight separate orders and contained in 15 separate containers. Finally, your Honor, with respect to the uses of acetone at the plant, the Government's evidence specifi cally would be that in the 1960s acetone was used to clean paint spray guns, and in the mid '70s used to wipe off parts on a so-called "Ozone Project," and in approximately I f f i i i !sw:;. 11 1 ?78 acetone was used to clean circuit boards before `I gluing, and in approximately '80 it was used for cementing 2 plexiglass, and used in the later time period I am address 3 4 ing in general throughout the plant for the cleaning of plastic and fiberglass parts. 5 In summary, your Honor, that would be the 6 crux of the Government's evidence, again incorporating 7 the Government's pretrial memorandum. 8 THE: COURT: I am satisfied, as I say, that 9 i the defendantf through Mr. 0'Reilly( understands the nature 10 Of the accusation against the company, that the defendant 11 has pleaded guilty voluntarily-( that the defendant has 12 done so understanding the likely penalty to be imposed and 13 that there is- a basis- in fact for the charge and for the 14 plea. The plea is accepted. 15 So we have the disposition now. 16 MR, POPEO: May I submit some evidence, for 17 the record on the basis of the Alford plea? 18 THE COURT: By way of disposition? 19 MR, POPEO: Yes. 20 THE COURT; On the question of disposition? 21 MR, POPEO; Yes, your Honor. 22 THE COURT: I will hear you on disposition. 23 I. take it the Government's recommendation is the $10,000 24 fine? 25 12 MR. HARVEY: Maximum fine of $10,000, your 1 Honor. 2 THE COURT: All right. You want to be heard? 3 "MR. POPEO: Yes-, your Honor, 4 First, your Honor, I would state for the 5 record we concede there is an adequate factual basis 6 for the acceptance of the plea;.however, the reason the. 7 Alford plea has been tendered i's- that the specific item in 8 question, acetone, was the subject of the inquiry on 9 January 15, 1982, by the Government, and it called for 10 22 years of records. 11 At the time the inquiry' was made the employees 12 i had a two-week period, which extended to February 5th, 13 within which, to respond to the Government's' inquiry, which 14 was not only' on this Basis, But a whole, subject matter of 15 inquiry. 16 At the time also', your Honor there was no 17 regulation of the EPA which, gave any- guidance as to yrhat 18 the nature of the response should be. Indeed, the only' 19 regulation of the EPA relevant to the subject matter 20 permitted reliance on best memory,' and the letter specifi 21 cally stated that the employees were relying on their best 22 memory in furnishing this material.. 23 When, in fact, at a later time when an extensive 24 investigation was in progress by the company, they learned 25 13 of the underreporting, they so informed the Government. 1 So, your Honor, the employees, none of whom 2 have been indicted, have all asserted that they were of 3 an innocent state of mind. The company can only act 4 through those employees. Nevertheless, your Honor, what is 5 clear is that the response was- inaccurate, and that our 6 records, if searched with the type of diligence that took 7 place later, would have disclosed that innacuracy; however, 8 your Honor, no member of management was aware of the 9 inaccuracy. It is against company policy and contrary to 10 policy to file any- report that would have contained such 11 an inaccurate statement. 12 As a result, your Honor, the company believes 13 that it had an innocent state of mind in the employees 14 who are the only- persons through whom the company' could 15 act. That is- shown by the other events-, as follows, 16 your Honors Many- of these employees were Woburn resident?, 17 and drank town water, They- drank, the water at the plant. 18 They grew vegetables in the very location where this sub 19 stance was allegedly- disposed of. They used it for. recrea 20 tional purposes. Indeed, no one suspected in the least 21 that they had committed any act that would have been 22 hazardous; and, indeed, this substance did not show up in 23 Wells G and H, which are the wells that are the matter of 24 the EPA inquiry. 25 fOHM 740 PCN6A0 CO.. tATONMC. M.i. 07002 14 1 As a result, your Honor, we strongly contend 2 that the company i.n submitting a guilty plea is, in fact, 3 innocent, and they; dp maintain their innocence. They 4 Recognize that there is a factual basis, for which a fact 5 finder could find the contrary, and that is in the record, 6 and it was provided by the defendant itself; and, in that 7 sense, your Honor, and pn the, question of dispositionf we 8 submit those facts. 9 THU. COURT: 11 right. 10 MR, HARVEY: If I'may just very' brieflyf your 11 Honor, State for the record thcjt the extension granted hy 12 EPA was to February 15, 198 2. The company filed its. answer 13 ten days before that, and the only other thing is. that the 14 company neyep amended its response as to the chemical 15 acetone. 16 THE COURT; All right. I understand the pos 17 ture, There i's a basis in fact for the plea,. 18 What I am going to do now is impose the maxi 19 mum sentence of $10., 000. 20 MR. HARVEY; Thank you, vpup Hpnor, 21 MR, PQPEO: Thank, you, your Honor, 22 (.Whereupon court was adjourned- i 23 certificate If Barbara Sakurai, Official Court Reporter, U'. S. District Court, do hereby certify that the foregoing is a true and accurate transcript taken down by me in the aforementioned matter and transcribed under my direction.