Feds Bust Biodiesel RIN Frauder

John Davis

scalesofjustice1Federal charges against a company accused of biodiesel Renewable Identification Number (RIN) looks to stop fraud of the green fuel’s federal program. Biodiesel Magazine reports the government is charging an Indiana biodiesel firm with 88 counts of conspiracy, wire fraud, false tax claims, false statements under the Clean Air Act, obstruction of justice, money laundering and securities fraud, for an investment scheme of more than $100 million.

The [U.S. Securities and Exchange Commission] alleges that when Imperial Petroleum purchased Middletown, Ind.-based e-Biofuels LLC as a subsidiary in 2010, e-Biofuels’ owners falsely represented that they were producing biodiesel from soybean oil and chicken fat. e-Biofuels received significant government incentives based on its biodiesel production representations. But e-Biofuels actually used middlemen to buy finished biodiesel and portrayed those purchases in fake invoices as the raw “feedstock” needed to produce biodiesel. e-Biofuels later sold the purchased biodiesel for as high as double the price it paid for it.

The government alleges that Craig Ducey, Chad Ducey, Chris Ducey and Brian Carmichael operated e-Biofuels and conspired with Joseph Furando and Evelyn Katirina Pattison (aka Katirina Tracy)—two executives with a pair of related New Jersey-based companies that operated under the names Caravan Trading Co. and Cima Green—to 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.

The SEC’s complaint filed in federal court in Indianapolis charges Imperial Petroleum and [its CEO Jeffrey] Wilson as well as Craig and Chad Ducey and Carmichael, who now lives in Bend, Ore. The complaint also charges Caravan Trading LLC, Cima Green LLC, and Cima Energy Group and their operators Furando and Pattison (Tracy) for acting as the middlemen in the scheme. They allegedly provided false and misleading documents to deceive government regulators and attract investors to Imperial.

“This investigation has been underway for at least two years, and we commend the EPA and other federal authorities for moving it closer to resolution,” said Ben Evans, director of public affairs and federal communications for the National Biodiesel Board. “In two other known cases of similar fraud from this period, the perpetrators are now serving significant time behind bars. If these charges are true, we hope to see similar justice in this case.”

Those indicted could be looking at up to 20 years in federal prison if convicted.

Biodiesel, NBB, RINS