The owner of a company that bought and sold renewable fuel and fuel credits was sentenced to serve 63 months in prison to be followed by a three year term of supervised release and $26,244,437.06 in restitution for his role in a conspiracy that generated over $47 million in fraudulent EPA renewable fuels credits and over $12 million in fraudulent tax credits connected to the purported production of renewable fuel.
The sentencing of defendant Gregory Schnabel was imposed by The Honorable Judge James L. Graham for the U.S. District Court for the Southern District of Ohio and was announced by Acting Assistant Attorney General Jeffrey H. Wood for the Justice Department’s Environment and Natural Resources Division; U.S. Attorney Benjamin C. Glassman for the Southern District of Ohio; Special Agent in Charge Ryan L. Korner of the Internal Revenue Service (IRS) Criminal Investigation; Acting Special Agent in Charge John K. Gauthier, of the Environmental Protection Agency (EPA), criminal enforcement program in Ohio; and Special Agent in Charge Grant Mendenhall of the Federal Bureau of Investigation’s Indianapolis Division.
“Today’s sentencing shows that the Department of Justice will continue to vigorously prosecute those who seek to defraud the federal government and the public through unlawful renewable fuel credit schemes,” said Acting Assistant Attorney General Wood. “This sentencing serves as a powerful deterrent to those who would consider participating in similar schemes in the future. We applaud the work of the DOJ, EPA, and IRS law enforcement team that obtained justice in this case.”
“The outcome of this case is a great achievement,” said Assistant Administrator Susan Bodine of EPA’s Office of Enforcement and Compliance Assurance. “The defendant participated in a complex scheme to defraud his clients and the United States Government. Through the great work of investigators from EPA and its law enforcement partners, that criminal activity is over and those involved have been prosecuted.”
“Vigorously prosecuting cases like this one not only protect the public fisc, but are also crucial to safeguarding the integrity of national programs that benefit the environment,” said U.S. Attorney Glassman. “We will continue to investigate and prosecute those who defraud government programs, including environmental programs.”
“Today’s sentencing reinforces the message that there are serious consequences for those who manipulate the system for their own financial gain and defraud taxpayers and the United States government in doing so,” said FBI Indianapolis Special Agent in Charge Grant Mendenhall. “The FBI will continue to work with our law enforcement partners to uncover fraudulent schemes such as this.”
“This investigation uncovered a complicated fraudulent fuel tax credit scheme that generated millions of dollars through a tangled web of financial lies,” said Ryan L. Korner, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “We hope that today’s sentencing deters others who might be tempted to engage in similar illegal activity, which not only defrauded the U.S. Government and the American taxpayers, but also created an unfair competitive advantage over businesses that play by the rules. Investigations of this magnitude would not be successful without the collaborative efforts of the prosecutors and agents who investigated this case.”
According to information disclosed during the court proceedings, Schnabel, owner of GRC Fuels of Oneonta, New York, engaged in a scheme with other co-conspirators to fraudulently claim EPA renewable fuels credits (also known as “RIN” credits) and tax credits on fuel that did not qualify for the credits, on fuel that had already been used to generate credits, and on fuel that was exported or otherwise used contrary to EPA and IRS regulations.
Schnabel bought and sold fuel and RINs from several individuals who have already pleaded guilty for their roles in the scheme, including:
- Fred Witmer and Gary Jury, formerly of Triton Energy, who pleaded guilty in the Northern District of Indiana to conspiracy, fraud, and false statements and were sentenced to 57 months’ and 30 months’ incarceration, respectively;
- Malek Jalal, formerly of Unity Fuels, who pleaded guilty in the Southern District of Ohio to conspiracy and obstruction of justice and was sentenced to 60 months’ incarceration; and
- Dean Daniels, William Bradley, Ricky Smith, and Brenda Daniels, of New Energy Fuels and Chieftain Biofuels, who pleaded guilty in the Southern District of Ohio to conspiracy and were sentenced to terms of incarceration ranging from 12 months to 63 months.
This case was prosecuted by Assistant U.S. Attorney J. Michael Marous for the Southern District of Ohio, and Trial Attorney Adam Cullman and Senior Trial Attorney Jeremy Korzenik of the Environment and Natural Resources Division. The prosecution is the result of an investigation by the IRS, EPA-CID, and the FBI.
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Author: August 27, 2018