A 60-year-old Hawaii man pleaded guilty Monday to
violating the Atomic Energy Act by transferring equipment containing regulated radioactive material from a licensed former employer
to another, unlicensed company during a takeover attempt without making a record of the transfer or declaring his ownership stake in the company that got the gear.
Mark Kazee was originally indicted for violating the Atomic Energy Act, making false statements to the Nuclear Regulatory Commission, obstruction of NRC proceedings and bank fraud.
He faces up to two years in federal prison, a year of supervised release and a fine of up to $250,000 when he is sentenced Jan. 13 by Senior U.S. District Judge J. Michael Seabright.
He remains free on an
unsecured bond.
Radioactive materials used for work are overseen by the Nuclear Regulatory Commission, which was
created as an independent agency by Congress in 1974.
The NRC regulates
commercial nuclear power plants and other uses of
nuclear materials, such
as in nuclear medicine, through licensing, inspection and enforcement of its requirements.
“Kazee knew what had
to be done to comply with the regulations that protect the public from potential harms arising from the use of radioactive materials,
but consciously chose not to follow them,” said U.S.
Attorney Clare E. Connors
in a statement. “His failures appropriately have criminal consequences and we will continue to pursue such to protect the community.”
Kazee worked in the materials and equipment testing industry for over 30 years, serving as both an inspector and a supervisor of inspectors who used industrial
radiography, according to a plea agreement he entered into with the U.S. Department of Justice that was filed Monday.
Industrial radiography is the process of using a radiation source and a specialized camera to examine materials below the surface to check for flaws. The process can emit X-rays, gamma rays and neutrons.
The equipment used
in industrial radiography contains “one or more radioactive elements that are regulated” by the NRC and requires a license to possess and use.
Kazee worked for an NRC-regulated company, based in California, referred to in court documents as “company A,” which held the proper licensing to
do industrial radiography, starting in 2016 as its
regional manager in Hawaii.
Kazee’s employer had contracts to conduct testing with various companies in Hawaii, including petroleum refineries.
On Sep. 17, 2018, Kazee and “individual C” incorporated a company that did the same work as Kazee’s
licensed employer but did not have any of the required permits and licenses.
To do the work, Kazee needed a new radiographic camera, which involved obtaining a “materials” license from the NRC. He did not have a trained Radiation Safety Officer, which all
materials licensees are
required to have. Kazee “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,” according to the Justice
Department.
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.
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 an impressive 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 legal requirements for transfer of radioactive materials and treat radiation safety and
security as an afterthought.”
Kazee made a “surreptitious plan to take over his employer’s business, by, among other things, misappropriating his employer’s equipment and personnel,” according to the U.S. attorney’s office.
Kazee set up two other companies, APINDE in West Virginia and Hawaii Testing &Technology, as part of the takeover attempt.
On Jan. 9, 2019, after
Kazee’s employer’s contract with a Kapolei oil refinery expired, Kazee’s unlicensed company entered into a contract to do “testing and examination services” for the refinery.
The equipment Kazee’s company was using “contained Iridium-192 and depleted uranium radioactive source material.”
Although Kazee “knew
he was required to create and maintain a record for his employer for any transfer of the radiography equipment” to any other company or person who was not his employer, he did not.
“It is crucial that those who use radioactive material for commercial purposes follow the rules to protect the user and the public,” said Director Thomas Ashley of the NRC’s Office of Investigations. “The NRC does not tolerate willful violations
of its requirements and demands that licensees and their employees act with
integrity and abide by requirements put in place to ensure they’re used safely.”
The NRC’s Office of Investigations pursued the case.
Assistant U.S. Attorney Gregg Paris Yates for the District of Hawaii and Senior Trial Attorney Krishna S. Dighe of the Environment and Natural Resources
Division’s Environmental Crimes Section are prosecuting the case.
