Legislation & Legal

Glass Machinery Suppliers Accused of Stealing from Customers, Embezzlement

The owners of Arlington Glass Manipulators in Queensbury, N.Y., are accused of charging more than 40 customers for glass installation equipment that was never delivered. Robert Mirel, 71, and Deborah Burnett, 65, allegedly stole $1.2 million from customers across the country.

They were arrested on April 17, 2018. At press time, both remained in custody. Mirel was held on a $500,000 cash bail or $1 million bond and Burnett was held on a $100,000 cash bail or $300,000 bond. Each defendant faces five to 15 years in state prison if convicted of all 29 counts, which include money laundering, grand larceny, scheme to defraud, tax fraud and labor crimes, according to a release from New York Attorney General Eric Schneiderman.

Starting in 2012, the duo allegedly requested a 50-percent down payment from customers who never received a finished glass manipulator, which is used to install heavy glass. Mirel and Burnett terminated most of their employees by April 2013, but continued to take orders for the machines through at least 2016, according to the release. They would require customers to pay their balance prior to shipment of the manipulators, but never fulfilled the order.

According to the indictment, Mirel and Burnett allegedly also took manipulators back from customers for repairs, then either repaired them and resold them to other customers or used the machine’s parts for other products without notifying the original owner.

Schneiderman’s office accuses Mirel and Burnett of using shell and shelf companies to launder the money through at least eight bank accounts. The defendants also allegedly “created a prospectus showing an estimated cash flow of more than $11 million, in an attempt to sell Arlington and attract investors to provide funding necessary to continue perpetrating their scheme.”

The prospectus forecasted that the company would sell 200 manipulators a year. The indictment alleges the numbers were grossly inflated, as the company never manufactured more than ten machines per year.

“As we allege, the defendants orchestrated a brazen scam to trick unsuspecting businesses, consumers, and even their own employees—resulting in millions of stolen dollars,” said Schneiderman in a statement. “Companies are obligated to provide consumers with the goods and services they pay for and workers with fair pay—and my office will continue to hold those who try to shirk these legal responsibilities to account.”

California’s AB 262 Discussed at Annual Conference

California legislation AB 62 was a major topic at the Flat Glass Manufacturing Division’s meeting during the National Glass Association/Glass Association of North America 2018 Annual Conference in Napa, Calif., in April.

The legislation requires state agencies to consider in its sourcing the Global Warming Potential (GWP) of “eligible materials”—including glass. By January 1, 2019 the California Department of General Services (DGS) must establish a maximum acceptable GWP for each category of eligible materials. The DGS must set the maximum acceptable GWP at the industry average of facility specific GWP emissions for each material category. The DGS can set the industry average by consulting environmental product declarations (EPD), life cycle assessments (LCA) or EPDs that have had critical review.

The challenge for the glass industry is that currently only two float glass manufacturers have EPDs, meaning an industry-wide EPD for flat glass currently doesn’t exist. According to the legislation, without an industry-wide EPD, California will calculate the industry average GWP with the data from the two flat glass manufacturers.

Scott Fong, DGS associate procurement engineer, was in attendance and explained that this legislation affects public works contracts, and the agencies are setting the GWP limits based on information available today.

“We can only come up with a number based on available data,” he said, adding that means there is a risk of it not reflecting the industry well. But Fong stressed that glass suppliers have to be aware of the limit, because if they’re over it they‘ll most likely not be able to participate in the job.

Both of the flat glass EPDs currently available only address clear, flat glass- which is not typically the type of glass used in most building projects.

Fong said he understands that most of the glass used in these building projects is processed (fabricated) glass, and that‘s something they’re trying to work with the agencies on.

Insurers Don’t Have to Pay Windows Settlement

On May 1, 2018, a Pennsylvania federal court ruled that nine insurance companies won’t have to pay settlements for faulty aluminum fenestration products on behalf of Sapa Extrusions following a 2013 lawsuit involving Marvin Windows and Doors.

Judge Malachy E. Mannion of the U.S. District Court of the Middle District of Pennsylvania ruled that the allegations covered do not amount to an “occurrence,” a standard that the court said has been defined in legal precedent as “an accident, including continuous or repeated exposure to . . . conditions.” Because of that, the insurance companies Sapa used aren’t obligated to pay out settlement funds.

CASE BACKGROUND

According to court documents, be-tween 2000 and 2010, Sapa sold Marvin approximately 28 million aluminum extrusions, which constituted about 87 percent of all extrusions the window maker purchased in those years. Marvin produced about 8.5 million aluminum-clad doors and windows during that time.

Within a few years, some customers started complaining that paint on the aluminum was bubbling and cracking, particularly on products installed in coastal areas. Marvin tried to repair the windows, then was forced to replace many of them. That led to the company suing Sapa in 2010 to recover repair/replacement costs for approximately 25,000 aluminum-clad units.

In August 2013, the U.S. District Court for the District of Minnesota ruled in Marvin’s favor. Following that, Sapa and Marvin entered into a confidential settlement agreement.

IS IT AN “OCCURRENCE”

Sapa’s lawsuits against its insurance companies over paying out the settlement began in November 2013 before wrapping up in Mannion’s court. In his ruling, the judge wrote that “the question for analysis thus becomes whether any of Marvin’s claims … qualified as covered ‘occurrences’ such that they triggered the Defendant Insurers’ duty to defend Sapa.”

Among other items, Sapa argued that it wasn’t liable for replacements Marvin attempted that damaged homeowners’ surrounding drywall and wall fixtures. Mannion rejected that argument, noting that “the allegedly faulty extrusions originated from Sapa’s contractual breach and not by virtue of some accident or surprise defect.”

“It was plainly natural and foreseeable to expect that cracking and peeling window extrusions may need replacing and, as a result, may damage the surrounding drywall and wall fixtures during the replacement process,” he wrote. “Since the failed window extrusions were initially caused by Sapa’s faulty workmanship, the mere fact that additional damages subsequently flowed from the costly and disruptive repair process does not suddenly transform this non-occurrence into an occurrence.”

Because of that and other reasons, the court ruled that Sapa’s insurers aren’t obligated to pay.

“As the Defendant Insurers had no duty to defend Sapa in the Underlying Action, they consequently have no duty to indemnify Sapa,” Mannion wrote in his ruling.

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