For a Repentant Company, a Novel Punishment Is Considered

The state energy and environmental agency often splits civil enforcement actions -- part fine, part remediation project of a significant value. But for a financial crime in federal court, this, all agreed, was a novel concept.

By Josh Kovner
The Hartford Courant

There was lawyer Robert Casale, rising up and down on the balls of his feet, making a case for Cherry Hill Construction of North Branford, a repeat environmental violator that this time was facing a large criminal fine for diverting money from its employee pension fund from 2010 to 2013.

Senior U.S. District Judge Janet Bond Arterton had asked Casale at Tuesday's sentencing hearing why she shouldn't impose the fine called for in the sentencing guidelines -- something in the range of $1.2 million to $2.4 million. Robert Sachs, scion of the 45-year-old asbestos removal, demolition, excavation, and construction company founded by his father, Ivan Sachs, stood next to Casale, his fingers flexing nervously.

Casale explained the convergence of events -- an unforgiving economy; an executive, Robert Santillo, later sentenced to 18 months in prison for tax evasion, brought in by the Sachs family and scheming to funnel extra money his way; bad judgment on the part of the Sachses to steer nearly $700,000 away from the 401(k) accounts of 150 employees to keep the company running; the saving grace that the money didn't go into the family's pockets; the punishment of already losing $1 million or more in contracts after the company pleaded guilty earlier this year; Robert Sachs' cooperation and genuine remorse; and, finally, the company's success in making the pension fund whole again last year.

Arterton was listening. Prosecutor Douglas Morabito was listening. Arterton said she tended to agree that the guideline range was high, and that the fine amount suggested in the plea bargain between Cherry Hill and the federal government -- $500,000 to $1 million -- seemed more just. Morabito said that the government didn't oppose dipping below the guidelines.

But Casale wasn't done. He had the advantage in this forum of not having to deal with the company's environmental and worker-safety baggage -- tens of thousands of dollars in fines over the years for asbestos-removal violations and unsafe conditions at job sites. The slate includes $117,000 in federal safety fines from 2010 to 2012 and $47,500 in civil fines from the state Department of Public Health in 2011 and 2012.

The town of North Branford has issued orders for Cherry Hill, working as Munger Brook Associates LLC, to stop construction on a proposed housing project for the elderly on Fowler Road while problems with insufficient erosion and sediment controls at the 90-acre site are worked through. There were also concerns about improper fill at the site, although soil tests have shown no contamination, said Carey Duques, North Branford's town planner.

The state Department of Energy and Environmental Protection visited the Fowler Road site in January, found what amounted to an unauthorized mining operation and, on March 3, issued the company a notice of violation for failing to obtain a stormwater permit or prepare a pollution-prevention plan and other safeguards, records show. The company has since applied for the permit, DEEP spokesman Dennis Schain said Wednesday.

But Casale was right when he said that criminally, the company had an "unblemished record." And Casale had had an epiphany. Why not, instead of a large fine, have the company renovate parks in New Haven for free?

The parks "are a wreck, your honor," said Casale, introducing the idea to the judge. Casale, based in Guilford, has for decades been a go-to lawyer for accused drug violators, white-collar offenders, and those facing the death penalty in federal court.

Robert Sachs picked up the theme: "I see it a little differently, your honor," he said, suggesting that the company could renovate or build housing for a nonprofit group such as Wounded Warriors, which serves veterans injured in combat zones.

Arterton said that she was interested. Morabito said that he was, too.

The state energy and environmental agency often splits civil enforcement actions -- part fine, part remediation project of a significant value. But for a financial crime in federal court, this, all agreed, was a novel concept. "The idea just sort of hit me," Casale said later.

"It's an interesting idea," said Arterton, who mentioned Sachs' remorse, the restored pension fund, and the fact that Cherry Hill was a family-owned company as reasons to consider an alternative resolution. She continued the sentencing hearing for three weeks, to May 5, to give the defense, the prosecution and the federal probation office time to fashion a proposal and identify a worthy beneficiary. She said that a fine was still on the table, but that a project could be substituted for at least some of it.

After the hearing, Casale told federal probation officer Meghan Nagy that he would be looking for her help. She said that Habitat for Humanity could be a recipient to consider and that one option might be to form a committee of community people who could recommend a project.

(c)2015 The Hartford Courant (Hartford, Conn.)

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