Jeffrey Wilson, Securities Fraud, Indiana 2017

Indianapolis, IN – A complex, multi-million dollar fraud scheme involving falsified biodiesel production claims and securities violations has concluded with the sentencing of seven individuals, including the principals behind E-biofuels, LLC. The case, investigated by a multi-agency task force, exposed a deliberate effort to defraud purchasers of renewable fuel credits, taxpayers, and investors through fabricated records and misleading statements.

The scheme centered around E-biofuels, LLC, which fraudulently claimed federal tax credits and renewable fuel incentives for biodiesel that was never actually produced. Instead of manufacturing the fuel, the company engaged in what investigators termed “ghost loads” – transferring fuel purchased from other sources through a transload facility to falsely indicate production. This allowed E-biofuels to illegally collect substantial government incentives. The fraud was then concealed through a web of deceptive practices involving Imperial Petroleum, a publicly traded company that acquired E-biofuels.

Jeffrey Wilson, former President and CEO of Imperial Petroleum, was convicted at trial of securities fraud for knowingly misrepresenting the production capacity of E-biofuels to investors, auditors, and the Securities and Exchange Commission (SEC). Wilson drafted and certified false financial reports, concealing the fact that the E-biofuels facility was largely dormant. Craig Ducey, who cooperated with authorities, testified against Wilson and received a reduced sentence. Chad Ducey, co-owner of E-biofuels, was also sentenced for his role in the underlying fraud, including persuading engineers to falsely certify the facility’s production capabilities.

The investigation, which began in 2012 following a whistleblower tip, revealed a five-year pattern of deceit. Federal investigators meticulously reviewed millions of documents and conducted nearly 100 witness interviews to unravel the intricate network of false claims. The scheme involved not only manipulating renewable fuel incentives but also deliberately misleading investors about the profitability of Imperial Petroleum. The total restitution ordered in the case amounts to $56,135,811, to be shared amongst the defendants.

Assistant Attorney General John C. Cruden of the Department of Justice’s Environment and Natural Resources Division emphasized the seriousness of the crime, stating that the defendants “cheated customers, investors and taxpayers” and “set renewable fuel efforts back for the entire nation.” Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance, underscored the importance of protecting the integrity of the Renewable Fuel Standard, a program designed to promote sustainable energy and reduce reliance on foreign oil.

U.S. Attorney Josh Minkler for the Southern District of Indiana warned that “Indiana is not the place to try to fool the investing public,” highlighting the commitment of federal authorities to hold executives accountable for fraudulent behavior. The FBI, IRS Criminal Investigation, and SEC all collaborated on the investigation, demonstrating the importance of interagency cooperation in combating complex financial crimes.

Key Facts

• Defendants: Jeffrey Wilson, Craig Ducey, Chad Ducey, Joseph Furando, Katirina Tracy, Brian Carmichael, and Chris Ducey, as well as the company E-biofuels, LLC.
• Crime: A multi-million dollar fraud scheme involving false biodiesel production claims, renewable fuel credit fraud, tax fraud, wire fraud, and securities fraud.
• Location: Indiana, with fraudulent activity extending to Texas, Illinois, and Pennsylvania.
• Sentencing: Sentences ranged from probation to 120 months imprisonment, with substantial restitution orders totaling $56,135,811.
• Laws Violated: 18 U.S.C. 371 (conspiracy), wire fraud statutes, false statement statutes, Clean Air Act violations, and securities fraud laws.
• Restitution: Wilson was ordered to pay $16 million in restitution in addition to the joint restitution order.

Penalties: Wilson received a 120-month prison sentence. Craig and Chad Ducey received 74 and 84-month sentences, respectively. Furando was sentenced to 20 years. Carmichael received 60 months. The penalties reflect the severity of the crimes and the extensive financial harm caused by the defendants’ actions.

This case serves as a stark reminder of the consequences of defrauding government programs and manipulating financial markets.

Source: EPA ECHO Enforcement Case Database

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