Richland Couple Rakes in Nearly $600K in Renewable Energy Scam

RICHLAND, WA – A husband and wife team from Richland, Washington, are facing the consequences for a brazen scheme to defraud federal renewable energy programs. Hector M. Garza, Jr., age 48, his wife Tammy L. Garza, age 37, and their companies, HTG Trucking, LLC, and Freedom Fuel, Inc., all pled guilty to fraud and false statement charges, according to Joseph H. Harrington, United States Attorney for the Eastern District of Washington.

The Garzas weren’t working with sunshine and windmills; they were working a scam involving Gen-X Energy Group, Inc., a now-defunct renewable energy company based in Pasco and Moses Lake. Between January 2013 and April 2013, the couple falsely claimed production of renewable energy credits, raking in over $296,000 from the sales. They then attempted to pocket another $284,546 in bogus excise credit refunds from the IRS. The operation was built on lies – much of the fuel they claimed to produce either never existed or was endlessly re-processed to inflate the numbers.

The scheme relied heavily on the Garzas’ trucking companies. HTG Trucking and Freedom Fuel were used to “round” the same fuel back and forth between Gen-X’s Moses Lake facility and the Garzas’ Othello businesses. Each “round trip” generated fraudulent renewable energy and tax credits. It was a simple, cynical loop designed to bilk the system. Hector Garza pled guilty to conspiracy to defraud the United States, while Tammy Garza admitted to aiding and abetting false statements related to the fraudulent credits.

This isn’t an isolated case. Other players in the Gen-X fraud have already faced justice. In June 2017, former Gen-X CEO Scott Johnson received a 97-month prison sentence. More recently, in June 2018, Jin Chul “Jacob” Cha of Tustin, California, was sentenced to 51 months. The Garzas are the latest dominoes to fall in this tangled web of deceit.

“Defrauding the public by scamming renewable energy incentive programs will not be tolerated,” stated Harrington. Carrie Nordyke, Acting Assistant Special Agent in Charge of IRS Criminal Investigation, added bluntly, “The United States tax system is not a slush fund for fraudsters.” The IRS and the Environmental Protection Agency’s Criminal Investigation Division worked together to expose this scheme.

United States District Judge Salvador Mendoza, Jr. accepted the guilty pleas. Hector Garza faces a maximum of 10 years in prison for the conspiracy charge, while Tammy Garza could see up to 2 years behind bars for the false statement charge. Each corporation is looking at a maximum fine of $500,000, or double the loss to the victim, whichever is greater. Sentencing is scheduled for October 17, 2019, at 9:00 a.m. in Richland, Washington. Dan Fruchter and Karla G. Perrin prosecuted the case.