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Truckers Supposedly Aware of Biodiesel Scheme, Six Indicted

Truck drivers supposedly knew of an alleged fuel scheme involving fraud in biofuels was going on but may not have said a word.

by Staff
September 19, 2013
Truckers Supposedly Aware of Biodiesel Scheme, Six Indicted

 

3 min to read


Truck drivers supposedly knew of an alleged fuel scheme involving fraud in biofuels was going on but may not have said a word.

The U.S. Attorney’s Office for the Justice Department’s Environment and Natural Resources Division, announced on Wednesday the return of indictments against six individuals and three companies for offenses involving federal renewable fuel programs, allegedly creating losses to victims totaling more than $100 million.

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The 88 counts included in the three charging documents include allegations of conspiracy, wire fraud, false tax claims, false statements under the Clean Air Act, obstruction of justice, money laundering and securities fraud.

Four of the defendants--Craig Ducey, Chad Ducey, Chris Ducey and Brian Carmichael— operated E-Biofuels, a Middletown, Ind. company that that was billed as a producer of biodiesel from “feedstocks” such as animal fat and vegetable oils. The government alleges that these defendants conspired with Joseph Furando and Evelyn Katirina Pattison, two executives with a pair of related New Jersey-based companies that operated under the names Caravan Trading Company and CIMA Green, to swindle customers out of federal tax credits by selling fuel that was 99% biodiesel and 1% petroleum diesel, known as B99, but was disguised at pure biodiesel, known as B100, in an elaborate scheme.

All told, the customers were allegedly defrauded of more than $55 million as a result of these activities and the Internal Revenue Service was exposed to as much as $35 million in false claims, according to prosecutors.

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In some cases, the biodiesel was transported from fuel terminals to the E-Biofuels facility in Middletown where it was unloaded into a holding tank, say prosecutors. A short time later, the biodiesel would be allegedly be reloaded into tanker trucks and delivered to unsuspecting customers along with fraudulent paperwork that misidentified it as B100. On other occasions, the truck drivers supposedly did not unload the fuel when they arrived at Middletown plant. Instead, they simply picked up paperwork falsely stating that the truck contained a load of B100 that originated at the E-Biofuels facility. Prosecutors say the truck drivers referred to this procedure as “flipping a load.”

Finally, in what prosecutors say are “the most egregious instances,” the truck drivers hauled B99, disguised as B100, 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. There is no indication if any truck drivers will be indicted in this alleged scam and whether or not they supplied any information about what was supposedly going on to investigators.

If found guilty, the six individuals charged by indictment face up to twenty years in federal prison on some counts, as well as significant fines. The three companies indicted today also face significant fines and other regulatory action.

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