Chandra Yarlagadda, Tax Fraud, Michigan 2011

A Bloomfield, Michigan, businessman has been sentenced to 30 months in prison for filing a false income tax return, the latest in a string of high-profile cases targeting tax evasion in the state.

Chandra Yarlagadda, owner and operator of Alpha Bioenergy LLC, a biodiesel fuel company, was sentenced by U.S. District Judge Gershwin A. Drain on May 4, 2023 to 30 months in prison for filing a false income tax return.

According to court documents, Yarlagadda reported income and expenses associated with Alpha on Schedules C attached to his personal income tax returns. He admitted to overstating expenses associated with the purchase of Renewable Identification Numbers (RINs) for the years 2009, 2010, and 2011. The RINs are used to track compliance with the Environmental Protection Agency’s annual Clean Air Act standards.

Yarlagadda claimed RIN expenses totaling more than $14.2 million, when in fact he was only entitled to claim approximately $80,000 in RIN expenses for those years. If he had not claimed these false deductions, he would have owed an additional $2.3 million in federal income taxes.

As part of his plea, Yarlagadda was ordered to serve one year of supervised release and pay restitution to the IRS in the amount of $3,285,303.

Acting Deputy Assistant Attorney General Stuart M. Goldberg and Acting U.S. Attorney Saima S. Mohsin announced the sentencing.

The investigation was conducted by the IRS Criminal Investigation, the U.S. Environmental Protection Agency – Criminal Investigation Division, and U.S. Immigration and Customs Enforcement – Homeland Security Investigations.

Trial Attorneys Melissa S. Siskind and Sarah C. Ranney of the Tax Division prosecuted the case, with substantial assistance provided by Assistant U.S. Attorney Stephen Hiyama of the Eastern District of Michigan.

Additional information about the Tax Division and its enforcement efforts can be found on the division’s website.

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