D&L employee pleads guilty

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An employee of a Youngstown company whose owner repeatedly ordered him to illegally dump oilfield waste down a storm sewer that fed into the Mahoning River pleaded guilty Thursday to criminal charges.

Michael Guesman, 34, of Cortland, pleaded guilty Thursday in U.S. District Court in Cleveland to unpermitted discharge under the federal Clean Water Act by dumping oilfield waste into the river 24 times between Dec. 12, 2012 and Jan. 31.

He will be sentenced Nov. 15 by U.S. District Judge Donald Nugent.

The agreement says Guesman agreed to cooperate with prosecutors against D&L Energy and Hardrock owner Ben Lupo and those companies, who are also facing federal illegal dumping charges.

If Guesman cooperates, he could face as few as eight months in federal prison, according to the document and federal sentencing guidelines. Prosecutors also said Guesman could get home confinement, which would allow him to leave for work, or probation. If he fails to cooperate, he would likely face between 27 and 33 months imprisonment.

“Ultimately that could mean Mr. Guesman would testify against Mr. Lupo and Hardrock if the case went to trial,” said Special Assistant U.S. Attorney Brad Beeson, the lead prosecutor on the case, said.

Guesman, an employee of Hardrock Excavating was regularly ordered by Lupo to dump chemically-laced brine used in hydraulic fracturing, which pumps the solution into the ground to release natural gas and oil, according to records.

Lupo, 62, of Poland, is still facing federal charges for violating the Clean Water Act, as is D&L Energy and Hardrock Excavating. Lupo could face up to three years in prison and the companies could face steep fines as penalties if convicted.

A field report by the Ohio Environmental Protection Agency says Lupo told investigators he ordered brine dumps into the storm sewer  on a “regular basis” and later said it he ordered the dumps at least six times between September and February.

Ohio Department of Natural Resources inspectors caught Guesman on Jan. 31 dumping oilfield waste into the storm sewer after an anonymous tip led them to the Salt Springs Road complex that houses several of Lupo’s oil and gas industry-related companies.

He said the brine was “light water” that came from cleaning out frac tanks that stored a variety of fracking fluids.

Lupo said he tried to dispose the water in the Koontz well in Leavittsburg and the Peribeck well in New Lyme but the tanks were full, so he ordered they be dumped into storm drain that flowed into the Mahoning River, the report says.

EPA inspectors found oil and other chemicals in the Mahoning River, about one mile away, after the dump.

The state revoked all D&L and Hardrock licenses and D&L has filed for bankruptcy. The company is still fighting to have their licenses reinstated through a lawsuit in Franklin County Common Pleas Court in Columbus.

The state’s Oil and Gas Commission noted the license revocations “basically removed D&L Energy, Inc. from the brine disposal business” in order to protect the state’s water supplies.

Lupo has since stepped down as D&L’s president but retained an 81 percent ownership in the companies, according to records.

Lupo at the time told investigators he ordered the oilfield waste dump that eventually made its way into the Mahoning River. Investigators believe he also ordered at least 20 similar dumps down a storm sewer that fed in to a Mahoning River tributary.

D&L is also known for owning an injection well that was found to cause 11 earthquakes in late 2011 and early 2012 in the Youngstown area. Those injection wells were shut down by the state. The company was cited for more than 50 violations in Ohio since the 1980s, but ODNR granted Lupo a permit for a new injection well on Jan. 7, according to records obtained by WKBN.COM.

The company has filed for Chapter 11 bankruptcy. Filings say D&L owns assets totaling more than $50 million and expects to make more than $2 million this year. Lupo resigned his position as president of the company the day after he was indicted, but kept an 81 percent ownership in the company filings say. His wife, Holly Serensky Lupo, owns four percent and Susan Faith, of Girard, owns the remaining 15 percent.

Bankruptcy filings also say officials may have improperly diverted funds from D&L to other companies the group owns and operates.

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