Ind. man convicted of securities fraud in biodiesel scheme

Source: Amanda Reilly, E&E reporter • Posted: Tuesday, July 26, 2016

A jury found an Indiana man guilty of securities fraud and other crimes connected to a massive biodiesel fraud scheme.

Jeffrey Wilson of Evansville was convicted last week after an eight-day trial in U.S. District Court for the Southern District of Indiana for his role in the scheme involving more than $140 million in revenue and $56 million in criminal profit, according to the Department of Justice.

“Wilson’s conviction represents the end of the line for a group of fraudsters in Indiana, New Jersey and Oregon who bent and twisted programs designed to increase America’s energy independence to line their own pockets,” U.S. Attorney Josh Minkler said in a statement yesterday.

State officials have called it Indiana’s largest tax and securities fraud (E&ENews PM, Sept. 18, 2013).

Two of the alleged fraudsters, Joseph Furando and Katirina Tracy of New Jersey, purchased biodiesel through New Jersey companies CIMA Green and Caravan Trading. Biodiesel is a renewable fuel made from soybean oil, animal fats or used cooking grease.

DOJ said the pair then sold the biodiesel, which had already been used to claim tax credits and generate federal renewable fuel credits, to Brian Carmichael of Oregon and brothers Craig Ducey, Chad Ducey and Chris Ducey of Indiana.

Carmichael and the Duceys pretended to manufacture the biodiesel themselves, DOJ said, to claim more tax credits and more renewable fuel credits, which are known as renewable identification numbers, or RINs.

Wilson, CEO of Indiana-based Imperial Petroleum, entered the scheme in 2010, DOJ said. That year, Imperial Petroleum purchased E-Biofuels LLC, one of the companies that received biodiesel from CIMA Green and Caravan.

Wilson, according to DOJ, learned of the scheme either before or shortly after the purchase but filed reports containing false information with the Securities and Exchange Commission. A due diligence team that was inspecting E-Biofuels uncovered the fraud.

Along with securities fraud, Wilson on Wednesday was convicted of filing false reports, falsely certifying reports with the SEC, and lying to an outside auditor and federal investigators. DOJ said Wilson’s actions resulted in a $20 million loss to investors.

“Wilson, as the CEO of a publicly-traded company, was obligated to tell the truth the moment he knew about fraud,” Minkler said. “Instead he presented any cover up story he could to keep things going and drive up share price, while giving himself extra stock and writing himself checks from the Imperial’s coffers.”

The other defendants have pleaded guilty. Carmichael, Chris Ducey and Furando are all currently serving sentences.