A pair of biofuel executives just pled guilty to defrauding the U.S. government of more than $60 million in fraudulent biofuel credits. To meet biofuel quotas set out by the federal government, American refiners need to acquire Renewable Identification Numbers (RINs), which they can get either by blending biofuel or by purchasing the credits at market prices. As Reuters reports, the guilty pair apparently collected RINs for fuel that didn’t deserve the bio- prefix:
Fred Witmer, 46, and Gary Jury, 58, co-owners of Indiana biodiesel plant Triton Energy LLC, pleaded guilty in an Indiana court on Wednesday to defrauding the U.S. government’s renewable fuel support program and a tax credit program, the U.S. Department of Justice said on Wednesday.
Witmer and Jury together owe more than $64 million for wire fraud and conspiracy in a scheme to fraudulently produce biofuels credits used to comply with the U.S. Renewable Fuel Standard (RFS) from 2012 to 2015, according to court documents filed in Indiana last month.
The charges filed by the U.S. Justice Department said Witmer knowingly sold processed corn oil for uses that do not qualify under the program, then still collected biofuels credits on the fuel. He and Jury also conspired to obtain a tax credit they were not entitled to, the filings said.
This isn’t a one-off, either—there’s a precedent for this malfeasance. Back in 2012, a Maryland man sold more than $9 million in fraudulent biofuel credits before being caught red-handed by EPA investigators who determined he had no biodiesel plant to speak of, and was instead operating out of his garage.
Perhaps you could write that off as an outlier, but this latest case involves one of the biofuel industry’s big players, and the scale of the fraud—more than $64 million—is much greater. It suggests that the temptation to game the system is capable of reaching inside the industry, and it’s certainly a case of bad optics for a program whose costs are weighing heavily on American refiners and whose prices have been swayed by Wall Street wheeling and dealing.
Let’s not forget, either, that it’s not just the mechanism (RINs) that seem to be broken, but that the mandates they’re meant to help uphold are farcical as well. Our biofuel boondoggle raises global food prices, starving the world’s poor, it gouges American drivers for billions of dollars every year, and perhaps most damning of all, it doesn’t actually help the environment. Talk about hitting a policy sour spot.