4 Fla. residents headed to prison for fraud scheme

Source: Amanda Peterka, E&E reporter • Posted: Thursday, September 3, 2015

A federal judge yesterday sentenced four Florida residents to prison time ranging from a year to more than five years for their participation in a biodiesel fraud scheme.

Dean Daniels, 52, received a prison sentence of 63 months; William Bradley, 58, received a 51-month sentence; Richard Smith, 57, received a 41-month sentence; and Brenda Daniels, 45, received 366 days in prison. All four pleaded guilty.

According to the Justice Department, the four generated fake biodiesel credits under the federal renewable fuel standard. Refiners use credits to show compliance with the program.

Senior U.S. District Court Judge James Graham handed down the sentences yesterday. Federal agencies billed it as the successful end of their investigation into the scheme.

“Congress enacted incentives for the production of biofuels to make the United States stronger and more energy independent and to move our energy economy into the 21st century,” Assistant Attorney General John Cruden said in a statement. “The fraud perpetrated by the defendants threatens these important public policies.”

Biodiesel is an advanced biofuel made from soybean oil, used cooking grease and animal fats. All four defendants were employed by Texas-based New Energy Fuels LLC, which claimed to produce biodiesel. Federal officials said they subsequently moved to Logan, Ohio, to operate a similar scheme.

According to the Justice Department, the four individuals produced low-grade fuel that was not actually biodiesel and then told EPA the fuel was biodiesel and claimed RFS credits for it. The Justice Department said the four sold more than $15 million worth of fake credits.

They also claimed tax credits for the biodiesel, netting an additional $7 million, the Justice Department said.

The federal government says New Energy Fuels also dumped hazardous waste off site at night in various locations around Houston. Daniels pleaded guilty for his role in the discarding of the waste.