CINCINNATI, OH – Gregory Schnabel, the owner of GRC Fuels, was sentenced to 63 months in federal prison last August for his central role in a multi-million dollar scheme to defraud the Environmental Protection Agency (EPA) and the Internal Revenue Service (IRS). The case, investigated by a joint task force comprised of the IRS, EPA-Criminal Investigation Division (CID), and the Federal Bureau of Investigation (FBI), revealed a sophisticated operation that generated over $47 million in fraudulent Renewable Fuel Credits (RINs) and over $12 million in bogus tax credits.
Schnabel, operating out of Oneonta, New York, allegedly conspired with multiple co-conspirators to falsely claim credits for renewable fuels that either didn’t qualify, had already been credited, or were improperly exported. The scheme involved the buying and selling of both the fuel itself and the associated RINs – unique identifiers used to track renewable fuel production and compliance with EPA regulations. The fraudulent claims allowed the conspirators to illegally profit from government incentives designed to promote renewable energy.
The investigation uncovered a network of individuals and companies involved in the fraudulent activity. Several co-conspirators have already faced justice, including Fred Witmer and Gary Jury, formerly of Triton Energy, who received prison sentences of 57 and 30 months respectively after pleading guilty to conspiracy, fraud, and false statements in the Northern District of Indiana. Malek Jalal, formerly of Unity Fuels, was sentenced to 60 months in the Southern District of Ohio for conspiracy and obstruction of justice. Additionally, Dean Daniels, William Bradley, Ricky Smith, and Brenda Daniels, associated with New Energy Fuels and Chieftain Biofuels, all pleaded guilty to conspiracy and received sentences ranging from 12 to 63 months.
Legal Ramifications
Schnabel was convicted of violating Title 18 U.S. Criminal Code, specifically 42 U.S.C. 7413(c)(4), which prohibits knowingly making false statements to the EPA regarding compliance with clean air regulations. In addition to the 63-month prison sentence, Schnabel was ordered to pay $26,244,437.06 in restitution to cover the financial losses incurred by the government and potentially other parties affected by the fraud. He will also serve a three-year term of supervised release upon completion of his prison sentence.
GrimyTimes Investigation
Sources close to the investigation indicate that the scheme exploited loopholes in the Renewable Fuel Standard (RFS) program, a federal law designed to increase the use of renewable fuels. The complexity of the RFS and the difficulty in verifying fuel production and RIN validity created opportunities for unscrupulous actors like Schnabel to manipulate the system for personal gain. The EPA has been under increased scrutiny in recent years regarding the oversight of the RFS program and the prevention of fraudulent activity.
Key Facts
- Defendant: Gregory Schnabel
- Company: GRC Fuels
- State: Ohio (Southern District)
- Year: 2018
- Fraudulent Credits: Over $47 million in RINs
- Fraudulent Tax Credits: Over $12 million
- Prison Sentence: 63 months
- Restitution: $26,244,437.06
- Violated Statutes: Title 18 U.S. Criminal Code, 42 U.S.C. 7413(c)(4)
The Schnabel case serves as a stark reminder of the financial and environmental consequences of fuel fraud. Authorities are continuing to investigate other potential actors involved in similar schemes, aiming to protect the integrity of the renewable fuel market and ensure compliance with environmental regulations.
Source: EPA ECHO Enforcement Case Database
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