Biofuels tax scam leads to guilty plea

Source: Michael Doyle, E&E News reporter • Posted: Friday, October 5, 2018

A former executive with a Pennsylvania-based biofuels company faces up to five years in federal prison and a $250,000 fine after pleading guilty to one count of conspiring to defraud the IRS.

David Tielle, the onetime director of business development at a company called Keystone Biofuels Inc., admitted to the felony charge yesterday in U.S. District Court in Harrisburg, Pa., according to the Justice Department.

Keystone identified itself as a producer and seller of biodiesel, a type of renewable fuel made from animal fats and vegetable oils. The Justice Department said that between 2009 and 2012, Tielle participated in a conspiracy to fraudulently claim tax refunds based on the Biodiesel Mixture Excise Tax Credit.

“Fraud committed against the United States government, making all of us victims, is always disappointing,” U.S. Attorney for the Middle District of Pennsylvania David Freed said in a statement. “It is particularly so when the fraud is connected to a program with the laudable aim of encouraging renewable fuel production.”

The credit was designed for people or businesses that mix biodiesel with petroleum and use or sell the mixture as a fuel. The credit amounted to $1 for every gallon of biodiesel used to produce a mixture of biodiesel and diesel fuel that was then used or sold as a fuel (Greenwire, July 8, 2013).

According to the Justice Department, Tielle caused inflated fuel amounts to be reported to the IRS in order to claim tax refunds on fuel Keystone was not producing. To account for the inflated fuel amounts, Tielle created false records and engaged in sham financial transactions intended to mirror the false records.

Tielle is a 1991 graduate of Wilkes University and a trained accountant, according to his LinkedIn page.

Tielle also caused Keystone to fraudulently claim tax refunds on fuel that did not meet the quality standards needed to qualify for the credit and on fuel Keystone had not mixed with petroleum, the Justice Department said.

The total loss attributed to Tielle’s conduct is about $4.1 million.

“A strong enforcement program is essential to maintaining the integrity of the renewable fuel program,” EPA Special Agent in Charge Jennifer Lynn said in a statement. “Yesterday’s guilty plea should send a clear message that EPA and our law enforcement partners are committed to vigorously pursuing these criminal cases.”

Two other Keystone Biofuels executives, and the company, are scheduled to go to trial in November, according to a spokesperson for the U.S. attorney’s office.