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Real Estate Developer Sentenced to 9 Years in Prison for Violating Clean Water Act; Daughter, Engineer Get 7 Years
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March 22, 2010
ConstructionWebLinks.com
Robert J. Lucas owned two companies, Bill Hill Acres, Inc. and Consolidated Investments, Inc. Through them, he acquired a large parcel of land in Jackson County, Mississippi, about 8 miles from the Gulf of Mexico. He subdivided the property and sold mobile home lots under long-term installment plans. Lucas’s daughter, Robbie Lucas Wrigley, advertised the lots, showed them to prospective buyers and leased them.
Because the property was not connected to a central municipal waste system, county ordinances required Lucas to certify and install individual septic systems on each lot. The septic systems had to be approved by the Mississippi Department of Health (MDH) or by a registered independent engineer.
Lucas initially had MDH approve the septic systems, but MDH withdrew many of its initial approvals when it found that the lots were situated on water-saturated soils. Lucas then hired a registered private engineer, M.E. Thompson, Jr., to approve and certify the septic systems.
The Army Corps of Engineers, Environmental Protection Agency and Mississippi Department of Environmental Quality became concerned that Big Hill Acres, Inc., Consolidated Investments, Inc., Lucas, Wrigley and Thompson were selling lots and installing septic systems on wetlands while representing to buyers that the lots were dry. The agencies issued cease and desist orders and met with Big Hill Acres’ lawyer to try to designate areas where development could proceed. The agencies’ efforts were not successful.
After the septic systems on the lots failed and caused discharges of sewage, the United States charged the businesses and individuals with 41 counts of violating the Clean Water Act, mail fraud, and conspiracy to commit mail fraud and to violate the Clean Water Act.
A jury found the defendants guilty on all counts. The U.S. District Court for the Southern District of Mississippi sentenced Lucas to nine years in prison and three years of probation. It sentenced Wrigley and Thomas to seven years three months in prison and three years of probation. It fined BHA $4.8 million and Consolidated $500,000. Restitution of $1,407,400 was assessed against all defendants.
The defendants appealed. The U.S. Court of Appeals for the 5th Circuit affirmed the convictions and sentences. United States v. Lucas, 516 F.3d 316 (5th Cir. 2008). The U.S. Supreme Court denied certiorari. Case No. 07-1512 (Oct. 6, 2008).
The Court of Appeals began its analysis by addressing jurisdictional questions as to whether the wetlands at issue were subject to the Clean Water Act. First, the appeals court considered whether the jury instructions made clear that Clean Water Act jurisdiction required a finding that the wetlands were “waters of the United States.” Wetlands are considered waters of the United States if they are adjacent to a navigable body of open water, and wetlands are considered adjacent to a navigable body of water if there is a significant nexus between the wetlands in question and a navigable-in-fact waterway. The defendants argued that the trial court’s jury instructions allowed the jury to find them guilty even if no significant nexus was found to exist. The appeals court reviewed the trial court’s instructions and rejected this argument, finding that the instructions sufficiently addressed the “significant nexus” requirement.
Second, the appeals court reviewed the jury’s finding that the property at issue was in fact subject to the Clean Water Act. The court discussed the standards for establishing federal jurisdiction over wetlands and found that the standards were met. Prosecution experts had presented testimony as well as surface and aerial photographs showing the presence of tributaries to navigable waters connected to the property at issue and a continuous band of wetlands, streams and creeks that led from the property at issue to navigable waters.
Third, the appeals court considered the defendants’ claim that the Clean Water Act, as applied to the regulation of wetlands, was unconstitutionally vague. The appeals court rejected the claim, noting that multiple government agencies had warned the defendants they were violating the Clean Water Act and state law by installing septic systems and dredging in federal waters. The appeals court also concluded that, even absent warnings from the federal government, the prevalence of wet land on the site at issue should have alerted the defendants to the possibility that the wetlands were subject to the Clean Water Act. Finally, the appeals court observed that deeds conveying the land to Lucas and his companies stated that the land was subject to “[w]etlands, environmental, hazardous or solid waste and floodplain laws, rules and regulations.”
The appeals court wrote: “The [U.S.] Government presented evidence of Defendants’ continued and knowing violations of the law, despite several agencies’ orders to stop.”
After resolving the jurisdictional questions, the appeals court next addressed the defendants’ challenges to the sufficiency of the indictment and the jury instructions regarding permitting requirements. The appeals court agreed with the trial court’s findings that the septic systems qualified as “point sources” under Clean Water Act regulations, thereby making the Clean Water Act’s permitting requirements applicable, and that the defendants were subject to liability for “causing” discharge. Even though the defendants had not created the waste collected in the septic systems, they were the cause of the systems’ operation and the systems’ unlawful discharge and, therefore, at a minimum had aided and abetted in operation of the systems and the resulting discharges.
Finally, the appeals court reviewed the mail fraud and conspiracy convictions and found that sufficient evidence existed to support both. The mail fraud convictions were supported by evidence that the defendants advertised the mobile home lots as “high and dry” despite warnings from government agencies to the contrary; that residents encountered sewage problems on their lots; and that the defendants used the mail to accomplish their sales and to obtain payments. The appeals court rejected defendants’ argument that they were shielded from fraud liability by their disclaimer of the warranty of habitability in selling lots.
Similarly, the conspiracy convictions were supported by evidence showing an agreement between the defendants to violate the law, overt acts in furtherance of the conspiracy, and specific intent to further an unlawful objective of the conspiracy. The defendants had attended meetings about the septic system designs, Thompson had ignored government agency warnings that the septic systems were being illegally installed, and Wrigley told a state agency to stop interfering with the engineer’s certifications. From these facts, the court concluded that the jury could have determined beyond a reasonable doubt that the defendants conspired to profit from sale of lots that were not habitable and conspired to violate the Clean Water Act.
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