Six individuals were indicted last week in Indiana for defrauding investors, consumers and the Internal Revenue Service out of more than $100 million by claiming to make biofuel from chicken fat and vegetable oils.
They allegedly sold more than 35 million gallons of fuel they claimed was 100% biodiesel (B100).
The fuel was actually B99 — worth less and not entitled to the dollar per gallon tax incentive under the Environmental Protection Agency’s Renewable Fuel Standard Program.
The program is intended to reduce greenhouse gases and promote energy independence.
Three brothers from Indiana — Craig Ducey, 42, Chad Ducey, 38, Chris Ducey 46 — are connected with E Biofuels of Middletown, Indiana. They have pleaded not guilty.
Two other defendants from New Jersey — Joseph Furando, 47, and Evelyn Katirina Pattison, 27 — have also pleaded not guilty.
A sixth defendant charged by the Justice Department was Jeff Wilson, president and CEO of Imperial Petroleum, a public company based in Indiana. He faces two counts of securities fraud.
Wilson allegedly bought E-Biofuels in 2010 through his company despite knowing about the alleged fraud, which he hid from investors and auditors. He has also pleaded not guilty.
Together the six defendants are charged with 88 counts of securities fraud, wire fraud, filing false tax claims, money laundering and conspiracy.
If found guilty, they face up to 20 years in federal prison.
A final defendant, Brian Carmichael, 36, also from Indiana, is pleading guilty to a single count of conspiracy, according to the U.S. Attorney’s office. Under a plea deal, he faces up to five years in federal prison.
The U.S. Attorney for the Southern District Indiana, Joseph Hogsett, called the case the “largest tax and securities fraud scheme in Indiana history.”
Customers who bought the allegedly bogus B100 were cheated out of more than $55 million, the Justice Department said. And the Internal Revenue Service was exposed to as much as $35 million in false claims.