Scott Johnson, Fraud, WA 2017

Pasco, WA – Scott Johnson was sentenced to over eight years in federal prison this week for his role in a multi-million dollar fraud scheme involving fabricated renewable energy credits. The sentencing concludes a case that exposed widespread falsification of production records at Gen-X Energy Group, Inc., a now-defunct renewable energy company formerly operating in Pasco and Moses Lake, Washington.

According to court documents, Johnson, along with co-conspirators, conspired to falsely claim the production of over 72 million renewable energy credits between October 2012 and April 2015. These credits were then illegally sold for a total exceeding $57 million. Further compounding the fraud, the group submitted false claims to the Internal Revenue Service (IRS) requesting $9,517,412.50 in excise credit refunds. Investigators discovered that a significant portion of the renewable fuel claimed to be produced either never existed or was repeatedly re-processed to artificially inflate production numbers.

Investigation and Prosecution

The investigation, a collaborative effort between the Internal Revenue Service-Criminal Investigation (IRS-CI), the Environmental Protection Agency’s Criminal Investigation Division (EPA-CID), and the United States Secret Service, with assistance from the Washington State Patrol, revealed a systematic effort to deceive both buyers of the renewable energy credits and the federal government. The EPA-CID’s involvement stemmed from the environmental regulations governing the production and sale of renewable fuels, which were deliberately circumvented by the scheme.

The prosecution team, led by Assistant United States Attorney Scott T. Jones of the Eastern District of Washington, EPA Regional Criminal Enforcement Counsel Karla G. Perrin, and Trial Attorneys Adam Cullman and Thomas Franzinger from the Department of Justice’s Environmental Crimes Section, presented evidence demonstrating Johnson’s active participation in the conspiracy. Johnson previously pled guilty on November 24, 2015, to both Conspiracy to Defraud the Government and Conspiracy to Commit Wire Fraud.

Sentencing and Restitution

On June 1st, 2017, United States District Judge Salvador Mendoza, Jr. sentenced Johnson to a 97-month term of imprisonment, followed by a three-year term of supervised release. Judge Mendoza also ordered Johnson to pay a substantial amount in restitution: $9,517,412.50 to U.S. taxpayers and an additional $6,175,929.17 to the victims defrauded by the scheme. This substantial restitution order aims to recover a portion of the financial losses incurred by those impacted by the fraudulent activity.

Legal Ramifications

Johnson’s conviction underscores the serious consequences of defrauding government programs and manipulating environmental credit markets. He was found guilty of violating 18 U.S.C. 286 (Conspiracy to Defraud the United States) and 18 U.S.C. 1349 (Wire Fraud Conspiracy), both federal statutes carrying significant penalties. The case serves as a warning to others considering similar schemes that federal authorities are actively investigating and prosecuting environmental and financial crimes.

Key Facts

• Defendant: Scott Johnson
• Location: Pasco, Washington
• Scheme Duration: October 2012 – April 2015
• False Claims: Over 72 million renewable energy credits
• Total Fraud Amount: Over $57 million in credit sales and $9.5 million in false IRS claims
• Sentencing: 97 months imprisonment, 3 years supervised release
• Restitution: $15,693,341.67 total (to taxpayers and victims)
• Violated Statutes: 18 U.S.C. 286, 18 U.S.C. 1349

Source: EPA ECHO Enforcement Case Database

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