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Wednesday, April 15, 2015

New Jersey Companies and Owner Plead Guilty to Biodiesel Fuel Fraud Scheme

Joseph Furando, 49, of Montvale, New Jersey, together with two companies he operated in New Jersey, pleaded guilty today for their parts in an Indiana-centered scheme to defraud biodiesel buyers and U.S. taxpayers by fraudulently selling biodiesel incentives, announced Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division and U.S. Attorney Josh J. Minker for the Southern District of Indiana.

From 2007 through 2012, e‑biofuels owned a biodiesel manufacturing plant in Middletown, Indiana.  Biodiesel is a fuel that can be used in diesel engines and that is made from renewable resources, including soybean oil and waste grease from restaurants.  Under the Energy Independence and Security Act, properly manufactured biodiesel was be eligible for a dollar per gallon tax credit as well as a another valuable credit, called a RIN, that petroleum refiners and importers could use to demonstrate compliance with federal renewable fuel obligations.

“Incentives for the production of biodiesel help promote energy independence, drive innovation in the fuel and agriculture sectors and have positive impacts on our environment,” said Assistant Attorney General Cruden.  “Furando engaged in extensive criminal activity to gain advantage, all at the expense of the biofuels program and its benefits to our nation, and for that he has been vigorously prosecuted and convicted.” 

“This plea represents a step along the way to closing the book on one of the largest fraud schemes in Indiana history,” U.S. Attorney Minker.  “All told, this case involves nearly a dozen defendants and daunting investigative work.  The intense, high-quality work of all of the law enforcement agents and prosecutors involved should make those who seek personal profit at taxpayer’s expense think twice before attempting such schemes.”

Furando has admitted that sometime in late 2009, he and his companies, defendants Caravan Trading Company and CIMA Green, began supplying e‑biofuels with biodiesel that had already been used to claim tax credits and RINs.  Because these incentives had already been claimed, Furando could purchase the biodiesel at low prices, sometimes for more than two dollars per gallon less than biodiesel that was still eligible for the credits.  Furando knew that once he supplied product, e‑biofuels and his individual co-defendants would illegally re-certify it and sell it at the much higher market price for incentivized biodiesel, known as B100 with RINs.  Within the circle of those he trusted, Furando referred to this program of fraud as “Alchemy.”

Furando, his companies, and his Indiana co-defendants realized huge per gallon profits through this scheme, sometimes in excess of $12,000 per truckload.  Furando realized his profits through the prices he charged e‑biofuels.  Over the course of approximately two years, the defendants fraudulently sold more than 35 million gallons of fuel for a total cost of over $145.5 million.  The defendants realized more than $55 million in gross profits, at the expense of their customers and U.S. taxpayers. 

Today, Furando pleaded guilty to all of the charges against him, which included conspiracy, wire fraud, lying to investigators during a search of his offices and engaging in prohibited financial transactions, money laundering.  He faces up to twenty years of imprisonment on some of the charges, as well as large fines and the requirement that he provide full restitution to the victims of this crime, which include U.S. taxpayers, truck stop companies, fuel traders and others.  Furando has also agreed to forfeit biodiesel-powered motorcycles, sports cars, real estate, jewelry, watches and other luxury goods that he purchased with the proceeds of this fraud.

“The Renewable Fuel Standard was created to reduce the nation’s dependence on foreign oil and achieve important greenhouse gas reductions,” said Assistant Administrator Cynthia Giles of EPA for Enforcement and Compliance Assurance.  “This criminal activity undercuts these benefits and puts businesses that follow the law at an unfair disadvantage.  Today’s guilty plea upholds program integrity and protects companies that play by the rules.”

Today’s plea completes the part of this case involving New Jersey defendants.  Four Indiana defendants remain, who face trial in the Southern District of Indiana on May 11, 2015.

The case is being prosecuted by Senior Litigation Counsel Steven D. DeBrota of the U.S. Attorney’s Office, Assistant Chief Thomas T. Ballantine of the Environmental Crimes Section in the Department of Justice’s Environment and Natural Resources Division and Special Assistant U.S. Attorney Jake Schmidt of the U.S. Attorney’s Office and Senior Attorney for the Securities and Exchange Commission.

The collaborative investigation that brought this case to fruition is the result of work by EPA’s Criminal Investigation Division, IRS- Criminal Investigation, the FBI and the Securities and Exchange Commission, with assistance during the investigation by the U.S. Secret Service and the U.S. Department of Agriculture.

Other defendants are scheduled for trial pursuant to the indictment in this case.  An indictment is only a charge and is not evidence of guilt. All defendants are presumed innocent and are entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

Securities, Commodities, & Investment Fraud
Press Release Number: 
Updated May 18, 2016