Mississippi Queen steamboat asbestos case ends with two guilty pleas — owner, company failed to disclose the deadly material to regulators _lowres

(File photo) The paddle-wheeler Mississippi Queen, seen in better days.

A San Francisco woman and her company pleaded guilty this week to federal charges they failed to tell state environmental regulators about asbestos in the Mississippi Queen steamboat before a now defunct Assumption Parish company began demolition of the grand paddle-wheeler.

Elaine Chiu faces up to two years in prison and several hundred thousand dollars in fines, and her San Francisco company, Cheery Way Inc., faces up to five years’ probation and hefty fines after the pleas were entered Wednesday in U.S. District Court in New Orleans.

Removal of asbestos is heavily regulated, in large part because exposure to asbestos fibers can cause respiratory problems and rare cancers.

The 376-foot Mississippi Queen began plying the Mississippi River system in 1976 and featured one of the largest calliopes in the world. Once owned by the Delta Queen Steamboat Co. until its parent company’s bankruptcy in 2001, the ship was bought by another company but taken out of service in 2007 with intentions to renovate it, according to Steamboats.org.

Instead, the ship was sold for scrap to a California company owned by Chiu for $800,000 in October 2010, federal prosecutors in New Orleans said.

Another Chiu company, Cheery Way, had the job of demolishing the boat so the scrap could be sold to business partners in China.

But that plan resulted in a state Department of Environmental Quality probe in May 2011 after an anonymous tip about possible asbestos-related work on the steamboat happening at Argosy Boat Co. in Pierre Part, a DEQ report says.

Prosecutors say in the factual basis filed with Wednesday’s pleas that Chiu was informed before demolition began in April 2011 that the steamboat may contain asbestos and that she was required to tell DEQ about the asbestos at least 10 days before work began.

Cheery Way also had a company conduct tests and found asbestos in the ship’s walls and ceiling, according to the court documents.

Cheery Way was unable to find a dock owner to take the job over concerns about asbestos or to sell the boat. Cheery Way ended up contracting with Argosy Boat in March 2011 to do the job but did not tell the contractors about the asbestos testing. Chiu told Argosy Boat the steamboat “might” have asbestos, prosecutors said.

Prosecutors said the contractor, who they did not name but DEQ records show was Argosy Boat, had no prior asbestos abatement experience and was not a certified asbestos abatement contractor. Workers started demolition without being required to take safety precautions.

After DEQ began its probe, a Cheery Way employee failed to tell the agency about the company’s prior asbestos tests on the steamboat, prosecutors said.

Dave Reidt, owner of the now shuttered Argosy Boat, said the incident was his company’s first job and cost him everything he had. He claimed prosecutors cleared him of criminal wrongdoing.

Anna Christman, a spokeswoman for the U.S. Attorney’s Office in New Orleans, would not directly comment on Reidt’s claim but noted that only Chiu and Cheery Way were named in the bill of information Dec. 4 bringing charges over the incident.

Sentencing for Chiu and Cheery Way has been set for 2 p.m. May 18 before U.S. District Judge Susie Morgan. Chiu defense attorney Joseph Raspanti declined comment Friday.

Tim Beckstrom, DEQ spokesman, said the Mississippi Queen was sold for scrap. The company Chiu used to buy the steamboat paid $245,248 to remediate the demolition site in Pierre Part, prosecutors said.

Follow David J. Mitchell on Twitter, @NewsieDave.