An engineer pleaded guilty Thursday to tricking the Environmental Protection Agency (EPA) into handing his company $50 million in taxpayer-backed subsidies as part of a massive biofuels scam.
Engineer William Barnes reportedly “rubber-stamped” false reports sent to the EPA in order to get the owners of two biofuel companies lucrative subsidies from taxpayers, according to The Morning Call.
The owners of the two green energy companies, Dave Dunham and Ralph Tommaso, were charged in December for exaggerating the amount of biodiesel and heating oil they produced as part of a racket that extends from Pennsylvania to Washington state and even Canada.
Durham and Tommaso hired Barnes to document the production capacities of their biofuels plants in order to get subsidies from the EPA’s renewable fuel credit program — a subsidy created to encourage the production of biofuels from things like cooking oil.
The EPA program gives credits to companies for every gallon of biofuel they make, which they can then sell to oil refineries that need to comply with the federal ethanol mandate. Barnes used his engineering title to get Durham and Tommaso more credits than they were actually producing.
EPA’s biofuel program has been rocked by major fraud cases in the past. Biofuel fraudsters had $15 million in artwork and other assets sold off by the Department of Justice last year after being charged with selling fraudulent biofuels credits.
The DOJ said “the artwork — bought with money from the sale of fraudulent credits for renewable fuel — was transported in interstate commerce knowing that it was the proceeds of fraud and was utilized in laundering the proceeds of fraud.”
The EPA had to invalidate 33.5 million biofuel credits fraudulently sold in 2013 by an Indiana-based biodiesel company. That case brought the total number of reported fraudulent credits to 170 million.
“This most recent indictment increases the total number of invalid RINs to over 170 million,” Charles Drevna, then-president of the American Fuel & Petrochemical Manufacturers, said in a statement. “We still, however, do not know the full scope of the fraudulent activities within the biodiesel industry except to recognize that it is extensive, pervasive and unfortunately not quantifiable since EPA does not provide details about its ongoing investigations.”
Refiners must purchase biofuel credits in order to comply with federal regulations in lieu of blending biofuels into gasoline. The problem is that refiners are still fined by the EPA even when they unknowingly purchase fraudulent credits.
“EPA unfortunately continues to hold obligated parties responsible for illegal activities perpetrated by biodiesel producers such as E-Biofuels,” Drevna said. “In the absence of an EPA-approved affirmative defense tied to reasonable due diligence standards, the industry remains unfairly exposed to a system that actually penalizes the victim of fraud rather than focusing on the perpetrator of the crime.”
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