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Thursday, August 6, 2020

Biofuel Fraudster Sentenced to Seven Years in Prison for Scamming Multiple Federal Agencies and Customers

The owner of a biofuel company was sentenced to seven years in prison followed by a three-year term of supervised release and ordered to pay $10,207,000 in restitution for defrauding multiple federal agencies and customers.

Following a four-week trial before U.S. District Judge Jeffrey L. Schmehl, a federal jury in the Eastern District of Pennsylvania convicted David Dunham, owner of Smarter Fuel LLC in Wind Gap, Pennsylvania and co-owner of Greenworks Holdings LLC of Allentown, Pennsylvania, of conspiracy to commit wire fraud and defraud the United States; wire fraud; filing false tax documents and obstruction of justice. 

The conviction arose from Dunham’s planning and executing a scheme to defraud the Environmental Protection Agency (EPA), the IRS, the U.S. Department of Agriculture (USDA), and his customers, to obtain renewable fuel credits in his “green energy” business.  

“This sentence sends a clear message that the Department of Justice will not tolerate fraud and will not hesitate to prosecute those who seek to undermine support for true American-made renewable fuel,” said Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Environment and Natural Resources Division.  “Mr. Dunham’s crimes were longstanding and elaborate, but this did not stop the Department from ensuring that such crimes are punished and justice is done.”

“David Dunham is a thief, dressed up in ‘green energy’ clothing,” said U.S. Attorney William M. McSwain for the Eastern District of Pennsylvania.  “He thought he could con not just one, but several federal agencies. Eventually, his lies caught up to him and now his reward is a long stint in federal prison.”

“David Dunham used false and fraudulent pretenses to steal millions of dollars from the Government,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “His loss of liberty today is the price he must pay for scamming the Government and stealing from hard working American taxpayers.”

To carry out his green energy scam, from 2010 to 2015 Dunham fraudulently applied for, received, and sold EPA “credits” for producing biofuels that he, in fact, did not produce and, in many instances, had never possessed in the first place.  Dunham also sought and received millions of dollars from the IRS and the USDA based on the same falsehoods.  All told, based on the repeated falsehoods he told the federal agencies, Dunham obtained nearly $50 million in fraudulent revenue.  In carrying out this massive fraud, Dunham used his businesses, Smarter Fuel, which he owned, and Greenworks Holdings, which he operated with his co-defendant, Ralph Tomasso, who previously pleaded guilty to conspiracy to defraud federal programs.

The evidence at trial also showed that Dunham engaged in multiple cover-ups designed to hide his crimes from authorities.  These included altering his accounting records the day before an IRS audit in 2010, and providing a USDA auditor with dozens of falsified records, which Dunham had ordered an employee to produce, during a 2012 audit.

The case was investigated by the EPA’s Criminal Investigation Division, the IRS Criminal Investigation, and the USDA’s Office of Inspector General.  The case is being prosecuted by Assistant U.S. Attorney Mary E. Crawley and Trial Attorney Adam Cullman of the Environment and Natural Resources Division.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

Financial Fraud
Securities, Commodities, & Investment Fraud
Press Release Number: 
Updated August 6, 2020