Imperial Petroleum Chief Charged With Fraud Over Biofuels

Imperial Petroleum Inc. (IPMN) Chief Executive Officer Jeffrey Wilson was charged with failing to disclose to investors that the company and a predecessor falsely represented they were producing renewable fuel from raw agricultural products.

Imperial Petroleum bought the predecessor, Middletown, Indiana-based E-Biofuels, in 2010. The former owners of E-Biofuels, Craig and Chad Ducey, were separately charged with fraud. Both indictments were filed yesterday by federal prosecutors and unsealed today in Indianapolis.

The U.S. claims that E-Biofuels misrepresented its products to gain government incentives for renewable fuel and Wilson continued the practice after the purchase, misleading investors. The U.S. Justice Department said today that six individuals and three companies were indicted on counts including conspiracy, wire fraud, false tax claims, obstruction of justice, money laundering and securities fraud.

“Congress enacted incentives for the production of biofuels to make the United States stronger and more energy dependent,” said Robert G. Dreher, acting assistant attorney general for the Justice Department’s Environmental and Natural Resources Division. “Fraud by parties claiming such incentives threatens these important public policies,” he said in a statement today.

The U.S. Securities and Exchange Commission, in a lawsuit filed today, accused Imperial Petroleum, Wilson and the Duceys of securities fraud.

‘Lied to Investors’

“Imperial Petroleum and its executives outright lied to investors about how their company turned a profit,” Robert Burson, associate director of the SEC’s Chicago regional office, said today in a statement. “When their illegal scheme collapsed, investors paid the price.”

Imperial’s stock price fell to less than 10 cents a share after it was revealed that the company wasn’t producing biodiesel fuel from raw materials, resulting in a market loss of about $60 million, the SEC said.

Wilson entered a plea of not guilty in court today, his attorney, Thomas Farlow, said in a phone interview.

“We deny the government’s allegations and we expect to be exonerated,” Farlow said.

The criminal cases are U.S. v. Wilson, 13-cr-00190, and U.S. v. Ducey, 13-cr-00189, U.S. District Court, Southern District of Indiana (Indianapolis). The civil case is U.S. Securities and Exchange Commission v. Imperial Petroleum Inc., 13-cv-01489, U.S. District Court, Southern District of Indiana (Indianapolis).

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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