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U.S. Recovers Over $2.8 Million in Settlement after Fraudulent Transfer of Assets

Release Date: 08/21/2014
Contact Information: Donna Heron 215-814-5113 / heron.donna@epa.gov

PHILADELPHIA (August 21, 2014) -- The owner of a chain of gas stations located in Delaware and Maryland has paid $2,889,351 to the United States in settlement of a federal lawsuit filed to undo the owner’s fraudulent transfer of assets just prior to agreeing to pay a court-sanctioned $2 million penalty for violating underground fuel tank regulations.

The government’s settlement with Robert M. Duncan, of Dover, Del and several corporate entities under his control, includes the original penalty plus nearly $900,000 in interest, additional penalties, and attorneys’ fees and costs. The Justice Department filed the lawsuit and settlement documents in federal court in Delaware, on behalf of the Environmental Protection Agency.

According to officials from EPA and the Justice Department, this case underscores the government’s commitment to protect both the environment and taxpayers from those who attempt to evade responsibility for environmental violations.

“This case involved serious, well-documented violations of regulations that protect our communities from the threats to public health and the environment posed by underground fuel leaks,” said Shawn M. Garvin, Regional Administrator of EPA’s Mid-Atlantic regional office.
“Allowing Duncan Petroleum to shirk its responsibility would be unfair to countless gas stations and other fuel tank owners who willingly comply with the required safeguards.”

“This case should send a clear message that EPA and the Justice Department takes seriously our duty to enforce environmental laws, and pursue appropriate remedies, including monetary penalties, against violators,” said Charles M. Oberly III, U.S. Attorney for the District of Delaware. “Defendants who fraudulently convey assets to avoid paying penalties should expect to pay a far greater amount, including additional penalties, interest, and attorneys’ fees.”

The settlement announced today ends a decade of administrative and judicial proceedings by EPA and the Justice Department against Mr. Duncan, Duncan Petroleum Inc., and affiliated entities.

In September 2004, EPA filed an administrative complaint against Duncan Petroleum, citing violations of federal regulations designed to detect and prevent leaks of petroleum and other hazardous substances from underground storage tanks (USTs) at five Maryland gas stations.

That complaint was settled in a February 2006 consent agreement which imposed a $65,000 penalty, and required measures to ensure continuing compliance with UST safeguards.
After the company failed to carry out the compliance measures, EPA inspected 13 additional Duncan Petroleum gas stations, documenting UST violations at each facility.

In December 2008, after providing multiple opportunities to settle this matter, the United States filed a civil action against Mr. Duncan and Duncan Petroleum. After two days of jury trial, the claims were resolved in August 2010 by a stipulated order, agreed to by Mr. Duncan, requiring payment of a $2 million penalty by December 15, 2010.

Mr. Duncan failed to pay the agreed penalty, claiming an inability to pay. After analyzing his financial information, the government discovered that six months prior to trial, Mr. Duncan conveyed assets worth about $10 million to several LLCs, trusts, and foundations under his control.

In August 2011, the U.S. filed a new complaint against Mr. Duncan and affiliated parties, seeking to void these asset transfers pursuant to the Federal Debt Collection Procedures Act. On the eve of trial in March 2014, Mr. Duncan stipulated that the United States had sufficient evidence to establish that most of the transfers were fraudulent, and the United States agreed to delay proceedings to permit Mr. Duncan to settle his liability by selling and refinancing assets.

As of August 6, 2014, the United States has received total payments of $2,889,351.41, which includes $2 million penalty imposed in 2010, plus interest, as well as attorneys’ fees and costs exceeding $450,000, and daily stipulated penalties exceeding $300,000.