Warren Steel Holdings to Pay $1.1M in Civil Fines

WARREN, Ohio — A five-year court battle between the state of Ohio and Warren Steel Holdings LLC over its shuttered steel complex is likely drawing to a close.

A consent order and permanent injunction approved by Trumbull County Common Pleas Judge Andrew Logan stipulates that the company must pay more than $1.1 million in civil penalties and clean the former steel mill site of contaminants, according to court documents filed Aug. 20.

Both parties have agreed to the terms of the order, documents show.

Yet as the state’s case against Warren Steel Holdings winds down, the vacant mill has commanded the attention of federal prosecutors who allege the company was part of an elaborate international money-laundering scheme orchestrated by one of Eastern Europe’s most powerful oligarchs.

Warren Steel, located in both Warren and Champion townships, was formed in 2001 to purchase the bankrupt assets of CSC Ltd., formerly the Copperweld Steel Co. It opened in 2009, but shut its doors in 2016 and left behind what local officials say is a legacy of environmental problems

That same year, the state of Ohio sued the company over environmental issues and eventually won a $1.1 million judgment in 2020. But the penalty was never paid and was contested. 

The case was set to go to trial Aug. 11, but did not go forward because the parties had agreed to a settlement. The morning of the trial, a suspicious fire broke out on the plant’s grounds, damaging a vacant office building there. State fire marshals say the blaze was deliberately set.

Under the settlement, Warren Steel is to pay a total of $1,122,852.57 in civil penalties within 30 days of the order, documents say. Of that amount, $472,852 would be paid to the state’s Environmental Protection Remediation Fund, while $150,000.57 is to be paid to Ohio’s Water Pollution Control Administration Fund. 

The balance of the penalty – $500,000 – is to be paid to an interest-bearing Supplemental Environmental Project fund, administered by the Eastgate Regional Council of Governments. 

The ruling stipulates that those funds are to be used “solely for the purpose of improving public health and wellness in and around the Warren, Ohio, community.”

The court settlement is not an admission of “facts or liability,” documents say.

According to court papers, Warren Steel has prepared closure plans at the site where hazardous waste has been stored or disposed. Among these are a melt shop water treatment area, wastewater plant acid tanks, an electric arc furnace dust bag house and a contaminated waste pile, the order says.

Exhibits filed with the court and the Ohio Environmental Protection Agency show that the cleanup is estimated to cost $878,918. The majority of these costs – $844,135 – would be used to remediate the dust bag house, according to documents.

The cleanup must also be approved by the OEPA.

As the state’s case winds down, Warren Steel is entangled in what federal authorities say was an international scheme to steal billions of dollars and hide some of it in the United States.

Warren Steel Holdings was established by a partnership that included one of Eastern Europe’s most powerful oligarchs, Igor Kolomoisky, whom U.S. authorities have accused of masterminding an intricate plot to steal $5.5 billion from a Ukrainian bank he co-owned and then launder the cash through a maze of shell companies from Cyprus to the Caribbean.  

More than $600 million of that money eventually ended up in the United States and was used to scoop up real estate and industrial assets across the American Midwest, including Warren Steel and real estate in downtown Cleveland.

The mill experienced a host of problems after it opened, including an explosion at its arc furnace in 2011 that sent workers to the hospital.

Inspections by the Occupational Safety and Health Administration between 2011 and 2014 uncovered at least 17 health and safety violations at the plant and issued a total of $43,482 in fines.

The federal government alleges that Kolomoisky and his related entities funneled more than $622 million in fraudulently obtained loans into U.S. interests. Court documents show about $9 million went into Warren Steel.

Meantime, Warren Steel used the plant in 2014 as collateral to obtain $110.7 million in mortgage loans – $15 million of which was issued by Optima Acquisitions LLC, a firm controlled in part by Kolomoisky, according to the Trumbull County recorders office. Warren Steel shut down temporarily, restarted operations briefly by the end of that year, but announced in 2015 it would shut its doors in January 2016. 

A year ago, federal agents raided the Cleveland and Miami offices of Optima Management Group, a collection of companies owned in part by Kolomoisky.

In March, the U.S. State Department banned Kolomoisky and his immediate family from entering the United States, citing the oligarch’s role in “significant corruption.”  

Copyright 2021 The Business Journal, Youngstown, Ohio.