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Southern California Environmental Company Owner Serves Jail Time for Fraud

After a 2-year investigation by the Fraud, Waste, and Abuse Prevention (FWA) unit, Kurt Kane Hayden, 54, of Hayden Environmental, Inc. pleaded guilty in Santa Barbara Superior Court to one felony count of filing a false claim in the form of fraudulent bills submitted to the State Water Resources Control Board’s Underground Storage Tank (UST) Cleanup Fund (Cleanup Fund).

Photo: Kurt Hayden, Courtesy of Santa Barbara County Sheriff's Office Jail Booking Photo 2013

Hayden Environmental is a Santa-Barbara based environmental consulting firm founded in 1992. Kurt Hayden, its president, is a California licensed geologist. In May 2013 the Haydens were arrested on charges of conspiracy to commit grand theft and defrauding the state.

The case was prosecuted by the Office of the Attorney General on behalf of the People of the State of California.

As part of the plea agreement, Hayden will repay the Cleanup Fund $1.6 million and serve 180 days in the county jail. Hayden will also serve 3 years probation, during which he will surrender his professional licenses and discontinue environmental remediation work. This plea agreement resolves the criminal and civil allegations against the Haydens and Hayden Environmental, Inc. Charges against co-owner, and wife, Julie Hayden, were dismissed.

The lawsuit alleged that Hayden Environmental Inc. obtained almost $12 million in payments from the Barry Keene Underground Storage Tank Cleanup Trust Fund, which is administered by the State Water Resources Control Board. A portion of the money received by defendants was based on false and misleading invoices, to which defendants were not entitled. Defendants, as participants in the industry of providing environmental cleanup services, were aware of the laws, regulations, and guidelines published by the fund.

The lawsuit further alleged that the defendants did not provide the claimants with true, accurate, and correct invoices and documentation for services, work, materials, and equipment provided and used for cleanup activities. They did so with full knowledge that claimants would forward those false and misleading invoices to the board for reimbursement from the fund, and that the fund would rely on the misrepresentations made in those invoices to make disbursements from the fund which they would not have made in the absence of the false and misleading invoices.
California set up the storage tank cleanup trust fund in 1989 to help owners of underground gas tanks pay for cleaning up leaks.

A copy of the criminal plea is on the State Water Board’s website.