27 April – LAWFUEL – The Law News Network – A woman who traded air pollution credits among Southern California businesses admitted in federal court today that she defrauded a New York investment firm.
Anne Masters Sholtz, 40, of Bradbury, pleaded guilty this afternoon to one count of wire fraud, a charge that carries a potential penalty of five years in federal prison. By pleading guilty, Sholtz admitted her involvement in a scheme in which she used forged documents and her knowledge of trading pollution credits to defraud AG Clean Air, a New York-based company that trades in energy credits.
In 1993, the South Coast Air Quality Management District, the state air pollution control agency that regulates 28,000 pollution-emitting businesses in the Los Angeles metropolitan area, established the Regional Clean Air Incentive Market, or RECLAIM. In 1998, the United States Environmental Protection Agency approved the RECLAIM program, under which each pollution-emitting facility is issued an annual allocation that limits the amount of nitrogen oxides and sulfur oxides that can be emitted. If a facility improves its pollution-control equipment, it may sell part of its pollution-producing allocation via RECLAIM Trading Credits, or RTCs.
Sholtz owned a company called Sholtz & Associates, which later merged with another company and became EonXchange. Through these companies, Sholtz operated a Pasadena-based Internet site called Automated Credit Exchange (ACE), which was a forum for companies to trade and sell RTCs. ACE was closed in August 2002 when it went into bankruptcy.
According to court documents, Sholtz approached an officer of AG Clean Air in the fall of 1999, telling him that Mobil Corporation needed to purchase a large quantity of RTCs for use at a refinery in Southern California. Over the next two years, AG Clean Air purchased $12.5 million worth of RTCs based on Sholtz’s representations that Mobil would purchase the RTCs for $17.5 million.
Sholtz paid AG Clean Air for some of the RTCs it had purchased, but when AG Clean Air demanded the remaining money, Sholtz claimed that Mobil was having trouble paying for the RTCs. As part of the scheme, Sholtz sent a series of faxes and e-mails to AG Clean Air that purported to document ongoing negotiations between ACE and Mobil. For example, on May 8, 2001, Sholtz sent a fax to AG Clean Air that was purportedly a purchase and sale agreement from ExxonMobil Corporation showing that it had agreed to purchase $22 million worth of RTCs from Sholtz’s company. In fact, there was no such agreement and the signature of the ExxonMobil executive vice president had been forged.
The indictment alleges that the scheme caused AG Clean Air to suffer more than $2.5 million in losses, and the government plans to argue that was the actual loss when Sholtz is sentenced on July 11 by United States District Judge Audrey B. Collins.
The case against Sholtz is part of an ongoing investigation being conducted by the United States Environmental Protection Agency, Criminal Investigation Division, and the South Coast Air Quality Management District.
CONTACT: Assistant United States Attorney Dorothy C. Kim
Assistant United States Attorney Joseph O. Johns
Mobile: (805) 857-8685
Release No. 05-063