According to a Justice Department press release, the Justice Department’s Environment and Natural Resources Division and the U.S. Attorney’s Office for the Southern District of Indiana, six individuals and three companies have been indicted on 88 charges involving a federal renewable fuel program, including allegations of conspiracy, wire fraud, falsifying taxes, false statements under the Clean Air Act and more.
“This morning, federal agents brought into custody individuals who allegedly operated the largest tax and securities fraud scheme in Indiana history,” said U.S. Attorney for the Southern District of Indiana Joseph H. Hogsett. “This case represents a collaborative effort on the part of law enforcement to hold fully accountable those who seek personal profit at the taxpayer’s expense.”
Craig, Chad and Chris Ducey and Brad Carmichael operated E Biofuel, a Middleton, Indiana company. According to the Justice Department, the Duceys and Carmichael conspired with Joseph Furando and Evelyn Katrina Patterson, executives for New Jersey-based companies that sold biodiesel, “purchase RIN-stripped B99 from third parties, pretend that E-Biofuels had produced that fuel at its Middletown facility and fraudulently resell that fuel to customers as B100 with RINs and an available tax credit. While the E-Biofuels facility was capable of producing B100, at times during the conspiracy it was producing no fuel of its own, but instead was simply acting as a pass-through facility for fuel purchased elsewhere,” the press release stated.
In total, the customers were allegedly defrauded of more than $55 million.
Those indicted allegedly delivered the fraudulently mislabeled fuel to the victims in one of three ways: the biodiesel was transported from fuel terminals to the E-Biofuels facility in Middletown where it was then put into a tank. From there, the biodiesel was then reloaded onto another tanker and delivered to unsuspecting customers along with fraudulent paperwork, or the truck drivers did not unload the fuel when they arrived a the E-Biodfuels facility. Instead, they picked up paperwork that stated the truck contained a load of B100 with RINs.
“Finally, in the most egregious instances, the truck drivers hauled RIN-stripped B99 from fuel terminals directly to customers. Because these loads never went to the E-Biofuels facility they were known as “ghost loads” or “phantom loads.” In those cases, the defendants faxed or e-mailed the false paperwork to the truck drivers along their routes between the fuel terminals and the customer locations,” the press release states.
If convicted of the charges, the six defendants face up to 20 years in federal prison and hefty fines.
To read more about the allegations, follow this link to the Department of Justice.