Two biodiesel bosses sentenced in ‘largest tax fraud’ in Indiana history
Two ex-biofuel bosses in Indiana, US, have been sentenced to prison for their roles in what federal authorities say was a multi-million dollar fraud scheme involving biodiesel.
Jeffrey Wilson, Imperial Petroleum’s ex-CEO, and Craig Ducey, a co-owner of E-biofuels, were sentenced to serve prison terms of 120 months and 74 months, respectively, for their roles in fraud schemes involving biodiesel tax credits, renewable fuel credits and shares of Imperial Petroleum.
Wilson was convicted of fraud, falsely certifying reports, lying to a public company’s outside auditor, and making false statements to investigators.
In addition to the prison sentence, Wilson must also pay $16 (€14.8m) million in restitution.
Chad Ducey, brother of Craig Ducey, was sentenced to an 84-month prison term for his role in the same schemes.
Four other co-conspirators, including one more Ducey, were sentenced at prior hearings.
All the defendants were involved in fraud involving federal incentives to produce renewable fuels, specifically biodiesel, US Department of Justice (DOJ) documents show.
“Biodiesel has the potential to make the nation’s transportation sector more sustainable, while decreasing our dependence on foreign energy sources, but only if done right,” said assistant attorney general John C. Cruden.
“The defendants’ fraud in these cases not only cheated customers, investors and taxpayers, it set renewable fuel efforts back for the entire nation. At a time when Americans should have been working together to have clean, sustainable and safe energy, the defendants chose to line their own pockets,” he added.
Special agent in charge W. Jay Abbott of the Indianapolis Office of the Federal Bureau of Investigation (FBI) called the Wilson-Ducey scheme the largest tax and securities fraud scheme in Indiana history.
“The complexity and magnitude of this scheme required extensive forensic accounting and computer forensic work,” said Abbott.
The securities fraud began when Wilson learned that E-biofuels – a business Imperial Petroleum was buying – was faking paperwork to claim incentives for biodiesel it had not manufactured, thus claiming millions in federal tax rebates and other incentives that had no basis in reality.
Knowing that it was much more profitable for e-biofuels to fraudulently claim government incentives on biodiesel that had been made by somebody else, Wilson directed the E-biofuels managers to move more and more gallons of such fuel rather than incur the cost associated with legitimate biodiesel production.
Despite their knowledge that the E-biofuels facility was dormant, Wilson and Craig Ducey told investors, auditors, and SEC that it made millions of gallons a month from raw materials like chicken fat.
This defrauded biodiesel buyers, who the DOJ says were duped into taking bad tax credits and renewable fuel credits, and also defrauded investors.