It was a cold early spring Saturday morning, and I was following a lead I’d received in a call the day before about a unique piece of evidence on a farm near the Ohio border.

When I got there, I contacted the owner and identified myself as an FBI agent. He walked me to the back of an outbuilding. There, parked in the weeds, was a white cargo van with flat tires. The farmer opened the back door. In the middle of the cargo bay was a circular hole cut in the floor.

So why was I out here on a cold Saturday morning looking at a van with a hole in its floor?

It had all started a year earlier, in the summer of 1998. A joint FBI and Environmental Protection Agency task force working on illegal dumping had received information that an environmental cleanup company was defrauding clients. There were also rumors that the company was deliberately creating spills–then charging to clean them up.

Aaron Smith and Stephen Carbeck had founded Hi-Po with just a pickup truck and a power washer. The company had grown to more than 100 employees and several vacuum trucks worth over $200,000 each. By all accounts Hi-Po was extraordinarily successful, with such clients as the University of Michigan and Chrysler.

But the task force learned that a Hi-Po employee had recently quit, reportedly because he was upset that the company was charging clients for work that hadn’t been done.

That employee, Michael Stagg, had retired from the Washtenaw County drain commissioner’s office prior to working at Hi-Po. EPA agent Greg Horvath, FBI agent Steve Flattery, and I went to Stagg’s home in Ann Arbor. He wasn’t surprised to see us and said he had been thinking about coming to us.

Stagg was very forthcoming, but he had only limited direct knowledge. He had inspected a Hi-Po cleanup project in the Detroit suburb of Riverview. Though he saw that Hi-Po had done only about half the work they had contracted to do, he was told the company had billed the city for the whole job. (Later we learned that a Riverview official was receiving kickbacks.)

Since Stagg had left Hi-Po, he couldn’t get additional evidence. But he thought Greg Cainstraight, who had been recently hired as Hi-Po’s chief financial officer, seemed uncomfortable with some of the things the company was doing and might be cooperative.

Cainstraight had attended West Point, playing football there before transferring to Michigan State to get an accounting degree. We decided to meet Cainstraight cold and try to get a feel for whether he might be willing to work with us.

It was a gamble. If Cainstraight wasn’t cooperative, he might go back and warn Smith and Carbeck of the investigation.

So I knew it was important to establish some rapport. I talked to Cainstraight about playing college football and being a West Point cadet. (I had been an undistinguished football player at Nebraska.) The West Point motto, “duty, honor, country,” was mentioned, and we talked about The Long Gray Line, John Ford’s movie about the military academy.

Cainstraight was cooperative, and he agreed to attempt to record conversations with Smith and Carbeck.

—

Cainstraight told us that Hi-Po’s owners would on occasion come to his office and discuss business matters. It would not be practical to have Cainstraight “wired” all the time. (This was before miniature digital recorders were generally available. We were still using Nagra reel-to-reel tape recorders.) So we decided to wire Cainstraight’s briefcase, which he customarily kept next to his desk. Our tech guys put a recorder in the briefcase, made a small hole for the microphone, and installed an exterior on/off switch.

When I delivered the briefcase to Cainstraight, we agreed to see what transpired without trying to orchestrate anything. Within days Cainstraight called and said he thought he had recorded a good conversation. (He had no way to review the tape as Nagras don’t have playback capability.)

“Good conversation” turned out to be a dramatic understatement. Smith and Carbeck had come to Cainstraight’s office and held forth for two hours with a running narrative of their criminal activity at Hi-Po.

They talked about billing U-M for days of sewer maintenance that never happened. Even when they did work for clients, they substantially overbilled. They alluded to bribing employees at U-M, Chrysler, and Riverview to play along.

But most disturbing were their stories about creating spills. As though he were telling a story about a fraternity prank, Smith described how he and Carbeck took a cargo van out at night with fifty-five-gallon drums of diesel fuel. Smith dumped the fuel through a hole in the floor of the van. They laughed about the time Smith and the empty drums rolled around in the back of the van as Carbeck drove away. They would anonymously report the spills to their clients, and Hi-Po would clean them up.

I suspect that Smith and Carbeck were trying to recruit Cainstraight to be a full-fledged member of their criminal conspiracy–while Cainstraight was recording their entire pitch. I had never heard, or even heard of, a recorded statement that was so incriminating regarding so many criminal acts. It was as though it had been scripted. Smith even said, “My scams are 90 percent foolproof.”

In October 1998, assistant U.S. attorney Kris Dighe used the recorded admissions to obtain a search warrant for the Hi-Po facility on Carpenter Rd. The warrant was executed by the task force and officers from the U-M Department of Public Safety. A huge amount of records were seized, and UMDPS arranged for space where the records could be stored and analyzed. The records corroborated what many witnesses told us and substantiated many of Smith and Carbeck’s recorded admissions.

Smith and Carbeck were charged with numerous violations, including the Racketeer Influenced and Corrupt Organizations Act. RICO was designed to prosecute organized crime groups, and in effect Hi-Po had become one. The defendants were also charged with predicate acts underlying the RICO charge: mail fraud, conspiracy, bribery, money laundering, and dumping hazardous waste.

—

That’s what had brought me to that field in southern Michigan to see a forlorn van with a hole in the floor. The van wasn’t a critical piece of evidence, but it was a symbol of the “foolproof” nature of Smith’s scams.

Smith and Carbeck pleaded guilty to one count each of violating the RICO Act. (I’m sure they were not enthusiastic about the prospect of hearing the recorded admissions played for a trial jury.) They were the first people in the U.S. to be convicted of racketeering in an environmental case. Smith was sentenced to thirty-three months and Carbeck to twenty-seven months, and Smith, Carbeck, and Hi-Po were ordered jointly to pay a total of $504,000 in restitution. Smith was also ordered to forfeit $500,000.

Both were ordered to publish apologies in newspapers.

They at least indicated they were 100 percent sorry.

—

This article was previously published on ticklethewire.com. Greg Stejskal served as an FBI agent for thirty-one years and retired as resident agent in charge of the Ann Arbor office.