Previous posts, e.g., here and here, discussed fraudulent biofuels credits schemes in which companies falsely claim to produce biofuels and sell fake credits on the Renewable Identification Numbers (RINs) market.
A RIN is a numeric code generated by a renewable fuel producer or importer that represents a gallon of renewable fuel, and certain “obligated parties” in the fuel industry and related businesses can acquire RINs as a way to comply with the U.S. Environmental Protection Agency’s (EPA) Renewable Fuel Standard Program.
There have been a number of such schemes exposed over the last few years, and some of the individuals perpetrating them prosecuted and punished.
Two such individuals were recently sentenced to long prison terms (121 months and 135 months) for their roles in a multi-state scheme sell fraudulent biofuel credits and fraudulently claim tax credits.
The story, the general parameters of which are sadly familiar to us by now, is that the two men operated shell companies purporting to purchase renewable fuel produced by a co-conspirator companies, on which credits had already been claimed and were not eligible for additional credits. By a series of false transactions, they transformed the fuel back into feedstock for fuel production and sold it back to the co-conspirator companies, allowing credits to be claimed again.
One of the federal prosecutors who prosecuted the case called the sentence “just punishment” for crimes that “defrauded and undermined a federal program intended to further the energy independence of our nation.”
An Environmental Protection Agencey (EPA) official involved said the agency is “committed to eliminating fraud in the renewable fuels market” and “will continue to hold criminals accountable.”
Indeed, the EPA has promulgated additional regulations to ensure oversight of RIN generation and improve the RIN market and has teamed up with the Commodities Futures Trading Commission in an attempt to improve regulation and enforcement of RINs and renewable fuels markets.
The Justice Department press release can be found here.