United States v. Imperial Petroleum, Inc. explained

United States vs. Imperial Petroleum is a federal criminal case in which Imperial Petroleum and others are accused of passing off RIN-stripped B99 as pure biodiesel.

Number Of Judges:1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION v. IMPERIAL PETROLEUM, INC. et al
Court:United States District Court for the Southern District of Indiana
Date Decided:2018-09-14
Full Name:UNITED STATES SECURITIES AND EXCHANGE COMMISSION, UNITED STATES OF AMERICA v. IMPERIAL PETROLEUM, INC.,CARAVAN TRADING,BRIAN CARMICHAEL,CIMA ENERGY GROUP, CIMA GREEN, CHAD DUCEY, CRAIG DUCEY, JOSEPH FURANDO, EVELYN KATIRINA PATTISON,JEFFREY WILSON
Citations:1:13-cv-1489-WTL-MJD (S.D. Ind. May. 18, 2018)
Judge:William T. Lawrence
Decision By:William T. Lawrence
Transcripts:https://www.govinfo.gov/app/details/USCOURTS-insd-1_13-cv-01489
Prior Actions:SEC's motion for default judgment against Imperial is GRANTED IN PART (September 14, 2018)

Premise

On September 19, 2013, Jeffrey T. Wilson,[1] Craig Ducey, Chad Ducey, Brian Carmichael, Joseph Furando, Evelyn Pattison, Caravan Trading LLC, Cima Green LLC, CIMA Energy Group and Imperial Petroleum[2] were indicted in what Joe Hogsett referred to as "the largest instance of tax and securities fraud in state history" (in Indiana). E-Biofuels of Middletown, Indiana is also under investigation for the case. Per the Energy Independence and Security Act of 2007, a tax subsidy was offered to the very first person or organization to mix pure biodiesel (B100) with petroleum diesel. The individuals are accused of fraudulently selling over 130 Megaliters of RIN-stripped B99 to clients who paid an artificially augmented dollar amount while believing that they were acquiring B100 with RINs and a tax subsidy. Current estimates of the damages to buyers exceeds $100 million USD, much of which is alleged to be spent on automobiles, art and travel.[3] Wilson and (Craig) Ducey were set to appear in federal court in March 2014.[4]

History

Robert Dreher of the United States Department of Justice along with Hogsett reported indictments against six people and three companies with respect to renewable fuel program related legal issues. One other individual was charged, and has agreed to plead guilty and to work with the government.[5]

Case

Craig Ducey, Chad Ducey, Chris Ducey and Brian Carmichael were in charge of E Biofuels, a manufacturer of biodiesel made using "feedstocks" such as vegetable oil and animal fat. It is alleged that the Ducey's and Carmichael worked with Joe Furando and Evelyn Katirina Pattison who both led a pair of companies called Caravan Trading Company and CIMA Green to buy RIN-stripped B99 and give the impression that E-Biofuels manufactured the fuel in order to falsely resell it as B100 with RINs coupled with a tax subsidy (acting only as a pass-through establishment).[5]

Ducey and Wilson were sentenced to 74 months and 120 months in jail.[6]

Allegations

The allegations made are as follows:

  1. In certain instances, the biodiesel was moved from fuel terminals to the E-Biofuels establishment. The biodiesel was then placed in tankers and delivered unbeknownst to clients coupled with false documents labeling it as B100 with RINs manufactured by E-Biofuels.
  2. In other cases, the drivers did not deposit the fuel in Middletown, but instead collected false documents that claimed that the truck contained B100 with RINs that originated in Middletown.
  3. In the most dire cases, drivers delivered RIN-stripped B99 from fuel terminals directly to clients. Known as "ghost loads" or "phantom loads", the shipments never saw the E-Biofuels facility. The accused are claimed to have electronically sent fraudulent documents to drivers en route between the fuel terminals and the client establishments.[3] [7] [8] [9] [10] [11] [12] [13]

See also

Notes and References

  1. Web site: Jeffrey Wilson . https://web.archive.org/web/20130921053953/http://www.forbes.com/profile/jeffrey-wilson/ . dead . September 21, 2013 . Forbes . 2012-04-18 . 2013-09-19.
  2. Web site: Imperial Petroleum, Inc., et al. (Release No. LR-22800; September 18, 2013) . Sec.gov . 2013-09-20.
  3. Web site: InsideINdianaBusiness.com Report . Hoosier Companies Indicted in $100 Million Scheme - Newsroom - Inside INdiana Business with Gerry Dick . Insideindianabusiness.com . 2010-11-09 . 2013-09-19 . https://web.archive.org/web/20130921053300/http://www.insideindianabusiness.com/newsitem.asp?ID=61433 . 2013-09-21 . dead .
  4. Web site: Biofuels scam allegations against company widen to fraud . Fuel Fix . 2014-01-13 . 2014-06-24.
  5. Web site: Three Indiana brothers plead guilty to $145 million biodiesel fraud. 3 May 2015. Petro Global News. 11 May 2015.
  6. Web site: Three Sentenced for Role in Defrauding Biodiesel Purchasers and Shareholders. 2 December 2016.
  7. News: Cronin . Margaret . Imperial Petroleum Chief Charged With Fraud Over Biofuels . Bloomberg.com . Bloomberg . 2013-09-16 . 2013-09-20.
  8. Web site: Orr . Susan . Feds file fraud charges against president of Evansville-based Imperial Petroleum Inc. ยป Evansville Courier & Press . Courierpress.com . 2013-09-20.
  9. News: Gillam . Carey . U.S. charges 6 people, 3 firms with $100 million biofuels fraud . Reuters . 18 September 2013. 2013-09-20.
  10. Web site: Cronin . Margaret . Imperial Petroleum Official Charged With Fraud Over Biofuels (1) . https://web.archive.org/web/20130921054034/http://www.businessweek.com/news/2013-09-18/imperial-petroleum-executive-charged-with-fraud-over-biofuels . dead . September 21, 2013 . Businessweek . 2013-09-20.
  11. Web site: United States Securities And Exchange Commission V. Imperial Petroleum, Inc. Et Al :: Justia Dockets & Filings . Dockets.justia.com . 2013-09-20.
  12. Web site: US indicts 7 individuals and 3 companies in alleged $100M biodiesel RINs fraud in Indiana . Green Car Congress . 2013-09-20.
  13. Web site: Dan Human . Biofuel fraud case shines light on Imperial CEO | 2013-09-19 | Indianapolis Business Journal . IBJ.com . 2013-09-20.

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