2 men indicted in $37M biodiesel fraud schemes
Source: Amanda Peterka, E&E reporter • Posted: Friday, January 17, 2014
In one scheme, the two men are accused of generating $7 million worth of fake renewable fuel credits for biodiesel that was never produced at their company in Vancouver, British Columbia. In the other, the men are accused of passing subpar biodiesel off as 100 percent biodiesel and then keeping $30 million worth of renewable fuel credits for themselves.
James Jariv, 63, of Las Vegas and Nathan Stoliar, 64, of Australia have been charged with 57 counts of conspiracy, wire fraud, false statements under the Clean Air Act, obstruction of justice and conspiracy to engage in money laundering.
The government today also seized assets in bank accounts used by the two men and several pieces of their personal property in Las Vegas, the Justice Department said.
According to the Justice Department, Jariv and Stoliar began operating City Farm Biofuel in Vancouver around June 2009. The company billed itself as a producer of biodiesel, an advanced biofuel made from soybean oil, animal fats and used cooking grease. Jariv also operated Global E Marketing, a Las Vegas-based company.
Jariv and Stoliar allegedly claimed they produced biodiesel at City Farm and imported it to Global E Marketing. But the Justice Department says the two men actually sold “little to no” biodiesel to Global E Marketing and instead used the setup to generate $7 million worth of fake renewable fuel credits.
The credits are bought and sold on an electronic trading system maintained by U.S. EPA. Refiners used the credits to show compliance with the federal renewable fuel standard, which sets yearly targets for ethanol and advanced biofuel that must be blended into petroleum-based gasoline and diesel.
At about the same time the alleged scheme began until Dec. 31, 2013, the Justice Department says the defendants also used a company called MJ Biofuels to buy more than 23 million gallons of B99, biodiesel that has been blended with small amount of petroleum-based diesel, from U.S. companies.
The Justice Department alleges that the men passed off some of the fuel, which did not have credits yet attached to it, as pure biodiesel produced at City Farm and sold it to U.S. entities at significantly higher prices than they otherwise would have been able to.
Jariv and Stoliar also are accused of exporting the biodiesel to Canada, selling it there and conspiring not to provide renewable fuel credits for the exports. The indictment alleges that the two men failed to provide the U.S. government with $30 million worth of renewable fuel credits in the scheme.
The two men made false records and statements to conceal the fraud, as well as conspired to launder the money netted from the crimes using foreign banks and complex transactions that could not be easily traced, the indictment alleges.
EPA’s Criminal Investigation Division, the FBI, the Secret Service and the Department of Homeland Security collaborated on the investigation.
This is the fifth major biodiesel fraud case to come to light since October 2011. In the most recent, the federal government charged six individuals and three companies with carrying out a tax and securities scheme that cost investors and taxpayers $100 million (E&ENews PM, Sept. 18, 2013).