July 7, 2003

PRESS RELEASE

COVENANT OIL EMPLOYEE PLEADS GUILTY TO TAX EVASION CHARGES

Boston, MA – Eileen J. O'Connor, Assistant Attorney General of the Tax Division, United States Attorney Michael J. Sullivan and Joseph A. Galasso, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation, announced today that Richard M. STRAKA pled guilty before U.S. District Judge George A. O'Toole to evading the assessment and payment of motor vehicle fuel excise taxes owed by Covenant Oil Company, Inc. STRAKA, a Covenant Oil Co., Inc. employee, sold diesel fuel mixed with untaxed kerosene to Covenant customers, including an undercover IRS agent.

There is a 24.4 cent per gallon federal excise tax on diesel fuel sold for use in vehicles that travel on the road. Normally, kerosene and heating oil are not subject to the excise tax. If, however, kerosene and heating oil are used in on-road trucks, they are subject to the same tax as diesel fuel. STRAKA was able to sell to untaxed kerosene, in part, because his co-defendant, Covenant Oil Company owner Augustine Pesaturo, purchased kerosene from fuel suppliers without paying the excise tax by falsely certifying that the kerosene and home heating oil would not be sold for use in on-road vehicles. Pesaturo was found guilty June 5, 2003, by a trial jury sitting before U.S. District Judge George A. O'Toole, on one count of conspiracy to defraud the United States, three counts of tax evasion, and one count of filing a false U.S. Corporate Income Tax Return.

Judge O'Toole scheduled STRAKA'S sentencing for September 18, 2003. He faces a maximum sentence of five years in prison, to be followed by up to three years of supervised release, and a $250,000 fine on each tax evasion count.

The case was investigated by Special Agents of the U.S. Internal Revenue Service, Criminal Investigation, assisted by the Environmental Protection Agency's Criminal Investigation Division. The case was prosecuted by William J. Lovett and David J. Ignall, Trial Attorneys with the U.S. Department of Justice's Tax Division.

Press Contact: Samantha Martin, (617) 748-3139