According to court records and statements, in 2005, Clery formed and served as president of Lateral Investments LLC, a corporation he established in Florida for the purpose of importing merchandise, including refrigerant gas he intended to sell illegally. Between June and August 2007, Clery engaged in the illegal importation of approximately 278,256 kilograms or 20,460 cylinders of restricted HCFC-¬22 from China, with a market value of $1,438,270, and at no time did Clery or Lateral Investments hold the consumption allowances required to legally import HCFC-22.

The U.S. Environmental Protection Agency (EPA) established a schedule to phase out the production and importation of ozone-depleting substances, with a complete phaseout starting in 2030. To meet its obligations under the Montreal Protocol, EPA issued baseline consumption allowances for the production and importation of HCFC-22 to individuals and companies. To legally import HCFC-22 for consumption, one must hold and expend one consumption allowance for each kilogram of HCFC-22 imported into the United States.