10 August 2012 00:10 [Source: ICIS news]
(adds paragraphs 1, 12-13)
HOUSTON (ICIS)--The chief executive of US-based Absolute Fuels plans to prepare his defence against accusations that he and his company created millions of phony biofuel credits, his lawyer said on Thursday.
The so-called Renewable Identification Numbers (RINs) serve as credits for the production and blending of biofuels, and companies use them to comply with the nation's Renewable Fuel Standard (RFS).
Under US regulations, RINs are created when a company produces a certain quantity of biofuel.
From September 2010 to October 2011, the US alleged that CEO Jeffrey Gunselman and his companies created 48.3m RINs without producing the corresponding amount of biofuel.
In fact, the US alleged that Gunselman did not even have a plant producing biodiesel.
"Instead, his business operation consisted solely of falsely generating RINs and marketing them to brokers and oil companies," the US alleged.
In all, Gunselman allegedly produced 56 invoices for 51 RIN sales, billing his customers $42.9m (€34.7m), the US alleged.
Gunselman and his companies then used about $12m of that money to buy automobiles, houses, credit at a casino, an airplane and a tank, the US alleged.
The US said Gunselman and his companies spent $775,000 for a fuel plant – although the indictment alleged that Gunselman did not have a plant producing biodiesel. Gunselman and his companies also allegedly bought business property and a milling plant.
Under the indictment, Gunselman faces 51 counts of wire fraud, 24 counts of money laundering and 4 counts of making false statements under the Clean Air Act.
The indictment also named Gunselman's companies Absolute Fuels, Absolute Milling, Ellipse Energy, 21 Investments and Ygog Holdings.
Gunselman's lawyer, Dan Cogdell, said, "We are certainly disappointed that Jeff has been indicted. While it is not a shock that the United States Attorney's Office sought an indictment, it is their right to do so."
He added: "Gunselman had, for almost a year been completely cooperating with the authorities and was instrumental in securing tens of millions of dollars for them through that assistance. When time permits, we will analyse the charges against him and begin preparing his defence to the accusations.
The indictment comes as the nation's RIN programme has come under increasing scrutiny following a rash of fraud cases.
Rodney Hailey, the head of Clean Green Fuels, was convicted in June of selling $9.0m worth of RINs without producing a gallon of biodiesel.
Meanwhile, Green Diesel received a violation notice on 30 April 2012. US regulators accused Green Diesel of creating more than 60m invalid RINs without producing the requisite amount of biofuel.
No one from Green Diesel is known to have been arrested, although federal agents raided an office of a sister company, Fuel Streamers. It is not known why agents were at the office.
($1 = €0.81)
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections