Executives at the Indiana-based biofuels producer E-Biofuels have enjoyed lavish lifestyles over the past five years, driving Ferraris, buying Picassos and wearing diamonds. These luxuries weren’t the result of hard work and honest profits, but fraud. Now investors and taxpayers alike are out more than $100 million in what federal prosecutors are calling the largest tax and securities fraud case in the state’s history. The Indianapolis Star reports:
Court documents say E-Biofuels would buy low-grade fuel from elsewhere, ship it to its Middletown plant, switch the labels, mark up the prices and sell the product as premium fuel.E-Biofuels executives and their associates, prosecutors say, then would cash in on tens of millions of dollars in federal tax incentives geared toward producers of premium biofuel….Evans said this fraud case is similar to cases in Texas and Maryland, where two other biofuel company executives also fraudulently collected on tax incentives. The CEO of Lubbock, Texas-based Absolute Fuels was sentenced to 15 years in federal prison this April, while the head of Maryland-based Clean Green Fuel was sentenced to more than 12 years in February.
Of course, this messy situation probably wouldn’t have developed had the US not decided in 2007 to mandate increasingly high biofuel production quotas. The fraud committed by the executives at E-Biofuels was obviously criminal, but the more serious fraud undergirding this whole mess is America’s misguided biofuels policy, which ends up raising food prices (starving the world’s poor) and forcing refiners to snatch up increasingly expensive ethanol credits—and it isn’t even green. It’s a mess of perverse incentives, and E-Biofuels isn’t the first to take advantage.[Withered corn crop image courtesy of Shutterstock]