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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Washington

FOR IMMEDIATE RELEASE
Thursday, June 1, 2017

Pasco Man Sentenced to Over 8 Years for Conspiring to Defraud the Government and to Commit Wire Fraud

Spokane, WA – Joseph H. Harrington, Acting United States Attorney for the Eastern District of Washington, announced that Scott Johnson, age 43, of Pasco, Washington, was sentenced, after having previously pled guilty on November 24, 2015, to Conspiracy to Defraud the Government and Conspiracy to Commit Wire Fraud. United States District Judge Salvador Mendoza, Jr. sentenced Johnson to a 97-month term of imprisonment, to be followed by a three-year term of court supervision after he is released from Federal prison. In addition, Judge Mendoza ordered Johnson to pay $9,517,412.50 in restitution to the United States taxpayers and an additional $6,175,929.17 in restitution to the victims of his fraud.

 

According to information disclosed during the court proceedings, Johnson was a member of a conspiracy involving Gen-X Energy Group, Inc. (Gen-X), a renewable energy company formerly located in Pasco and Moses Lake, Washington. Between October of 2012 and April of 2015, Johnson and his co-conspirators falsely claimed the production of more than 72,000,000 marketable renewable energy credits, which they then sold for more than $57,000,000, and filed false claims with the IRS for $9,517, 412.50 in excise credit refunds. Throughout this period, much of the renewable fuel claimed to be produced at the Gen-X facilities was either not produced or re-processed multiple times.

 

Acting United States Attorney Harrington stated, “The United States Attorney’s Office for the Eastern District of Washington is, and will continue to be, committed to prosecuting aggressively and seeking appropriate punishment for white collar crimes.

 

I commend the tenacious and thorough efforts of the IRS-Criminal Investigation and the Environmental Protection Agency’s Criminal Investigation Division."

 

“American taxpayers and the biofuels industry were defrauded more than $65 million as a result of this massive and elaborate scheme,” said Jeanne M. Proctor, Special Agent in Charge of EPA’s criminal program in Washington State. Proctor went on to state: “EPA is committed to ensuring a level playing field for biofuels companies that play by the rules and pursuing those that blatantly disregard the law.”

 

"This is a classic case of an individual who allowed his own unfettered greed to guide his duplicitous actions," stated Special Agent in Charge Darrell Waldon of IRS Criminal Investigation. Waldon also commented that: "When that greed turns into fraud to the degree perpetrated by Scott Johnson and his co-conspirators, IRS CI stands ready with our law enforcement partners to serve as the guardians of economic equity and social justice."

 

This investigation was conducted by the Internal Revenue Service-Criminal Investigation, the Environmental Protection Agency’s Criminal Investigation Division, and the United States Secret Service, with assistance from the Washington State Patrol.

 

The case was prosecuted by Scott T. Jones, an Assistant United States Attorney for the Eastern District of Washington; Karla G. Perrin, EPA Regional Criminal Enforcement Counsel and Special Assistant United States Attorney for the Eastern District of Washington; and Adam Cullman and Thomas Franzinger, Trial Attorneys, Environmental Crimes Section, United States Department of Justice.

 

Press Release Number: 
15-CR-6042-SMJ
Updated June 6, 2017