Editor's note: A statement released by Richard Papaleo said his company "is now in full compliance with EPA regulations and has resolved its case with the EPA."
LAS VEGAS -- The owner and president of a Las Vegas air duct company on Monday drew two years of probation and a $15,000 fine for making false statements to federal investigators and for manufacturing and selling thousands of gallons of misbranded and diluted pesticide between 2005 and 2010, Nevada's U.S. Attorney Daniel Bogden said.
Richard Papaleo, 75, of Las Vegas pleaded guilty in December to one felony count of making a materially false statement and two misdemeanor counts of misbranding of a pesticide. He was sentenced by U.S. District Judge Miranda Du.
His company, DPL Enterprises, which does business as Air Care Indoor Quality Specialists at 3868 E. Post Road, was ordered to pay $80,000 in fines. The company also was ordered to establish a plan within 30 days to show that it is complying with all environmental and occupational safety regulations.
Company engineer Michael Stanovich, 67, of Henderson also received one year of probation. He pleaded guilty in December to two misdemeanor counts of misbranding of a pesticide.
"The defendants knowingly produced and sold a misbranded pesticide, misleading their customers and potentially endangering the public," Bogden said. "We are committed to the prosecution of this type of federal crime and the significant risk it poses to human health."
According to court records, Air Care makes and sells air duct cleaning equipment, filters and chemical compounds, and also runs an air duct cleaning and repair operation. Air Care sold to its customers a disinfectant pesticide known as Sporicidin. The company allegedly diluted the pesticide with 10 times the amount of water, and sold the fake product with a forged label that claimed it could kill various organisms, including HIV, avian flu, salmonella, staph and MRSA.
Neither the diluted pesticide or label were approved by the U.S. Environmental Proterction Agency as required. Air Care and Papaleo were warned by the maker of Sporicidin as early as 1998 that the company must obtain EPA approval for its label and that misbranding was "illegal." Air Care admitted to selling roughly 6,312 gallons of the misbranded and diluted pesticide between 2005 and 2010.
"When people purchase a product, they expect it to be genuine and that it will do what it's supposed to do," said Jay Green, Special Agent in Charge of EPA's criminal program in Nevada. "Not only did the defendants dilute and repackage a legitimate product, the product in this case was a disinfectant often used in hospitals and posed a significant risk to human health. Anyone who knowingly misuses a pesticide is committing a crime and like any other violator, he or she will be prosecuted."
The government's investigation was initiated after the EPA received complaints from the maker of Sporicidin. The agency made an undercover purchase of the fake Sporicidin sold by Air Care. The EPA's National Enforcement Investigations Center laboratory in Colorado found that the product was diluted with water even though the fake label made by Air Care claimed the pesticide contained the original strength of the active ingredient. When federal agents from the FBI and EPA's Criminal Investigations Division questioned Papaleo about whether his company was selling the diluted chemical, he issued a denial.
The case was investigated by EPA's Criminal Investigation Division with assistance from the FBI. Prosecution was handled by Assistant U.S. Attorney Kathryn Newman and Richard Udell, a senior trial attorney with the Environmental Crimes Section of the Justice Department.