A federal grand jury returned an indictment yesterday charging a Hawaii man with violating the Atomic Energy Act (AEA), making false statements to the Nuclear Regulatory Commission (NRC), obstruction of NRC proceedings and bank fraud.
According to court documents, Mark Kazee, 57, of Hawaii, worked in the materials and equipment testing industry for over 30 years, serving both as an inspector and as a supervisor of inspectors who used industrial radiography. Industrial radiography is the process of using a radiation source and a specialized camera to examine materials below the surface to check for flaws. On or about December 2016, Defendant Kazee was hired by a testing company to be its Regional Manager in Hawaii. Later, Kazee made a surreptitious plan to take over his employer’s business, by, among other things, misappropriating his employer’s equipment and personnel. As alleged in the indictment, he set up two other companies, APINDE and Hawaii Testing & Technology (HTT), as part of the takeover attempt. In doing so, he violated the AEA, submitted false statements to the NRC and fraudulently obtained a significant line of credit from a Hawaii bank.
In the fall of 2018, Kazee, working through others, set up two new businesses (APINDE and HTT) to do non-destructive testing in West Virginia and other states where the NRC maintains jurisdiction, including Hawaii. To do the work, Kazee needed a new radiographic camera, which involved obtaining a “materials” license for APINDE from the NRC. He did not have a trained Radiation Safety Officer (RSO), which all materials licensees are required to have. Nevertheless, he prepared an application that falsely claimed he had a qualified RSO, among other things. In response to NRC questions about the application, he submitted more false information about training and qualifications. The NRC issued the license, based on the false representations. After receiving the license, Kazee ordered and signed for a camera containing radioactive material. The NRC opened an investigation after concerns were raised to the agency about the information contained in the license application.
In January 2019, while still in the employ of his original company, Kazee misappropriated one of its radiographic cameras, which contained iridium-192 and depleted uranium radioactive source material. He had HTT employees use the camera for industrial radiography, without recording the transfer of the radioactive sources, as required by law. Around the same time, Kazee applied to the Bank of Hawaii on behalf of HTT for a revolving line of credit and provided bank loan officers false information including about HTT assets.
“Radiography is a marvelous technology, and when it is used with proper safeguards, it increases safety and improves lives,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “The Justice Department will vigorously prosecute those like Kazee who would circumvent those safeguards and treat worker safety as an afterthought as part of a criminal scheme.”
“No one should disregard our laws designed to protect people from dangerous radiation, and certainly not for the purpose of advancing fraudulent business enterprises,” said Acting U.S. Attorney Judith A. Philips for the District of Hawaii. “We will continue our vigilance in enforcing radiation safety laws.”
“Individuals who use radioactive material for commercial purposes must have the appropriate credentials and training to protect the user and the public,” said Administrator David C. Lew of NRC Region I. “The NRC does not tolerate willful violations of its safety requirements and demands that licensees and their employees act with integrity and communicate with candor.”
Kazee is charged with making false statements to the NRC, obstruction of the NRC’s proceedings, violating the Atomic Energy Act, and bank fraud. The defendant will be scheduled for his initial court appearance before a U.S. Magistrate Judge of the U.S. District Court for the District of Hawaii. If convicted, he faces up to 42 years in prison. The federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
This case was investigated by the NRC’s Office of Investigations. Senior Trial Attorney Kris Dighe of the Justice Department’s Environmental Crimes Section is prosecuting the case jointly with Assistant U.S. Attorney Gregg Paris Yates of the District of Hawaii.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.