Bloomberg BNA — A Houston man who allegedly sold more than $29 million in fake renewable fuel credits to ConocoPhillips, Tesoro Corp., Citgo and other oil companies was indicted by the Justice Department on 68 charges, including wire fraud, money laundering and mail fraud.
Philip Joseph Rivkin sold about 45 million fake renewable identification numbers representing millions of gallons of non-existent biofuel to oil companies that were required to buy them under federal energy law, according to charging documents filed in the U.S. District Court for the Southern District of Texas June 19.
The charges, which represent a string of cases of alleged scams involving fake fuel credits, comes as an Environmental Protection Agency program designed to ensure their validity has yet to be finalized by the Obama administration.
The Energy Security and Independence Act of 2007 requires oil refiners and importers to blend billions of gallons of ethanol and other biofuels into the motor fuel supply or purchase credits, called renewable identification numbers (RINs).
The EPA, which has said it is the purchaser's responsibility to ensure that renewable credit are valid, has required oil companies and others who have unknowingly purchased fake RINs to pay millions of dollars to settle violations.
According to the indictment, Rivkin operated and controlled several companies in the fuel and biodiesel industries, including Green Diesel LLC, Fuel Streamers Inc. and Petro Constructors LLC, all based in Houston.
Rivkin also was charged with fraudulent tax credit claims based on fictitious biodiesel production, making Clean Air Act false statements and money laundering, according to charging documents.
Carlton Carroll, a spokesman for the American Petroleum Institute, told Bloomberg BNA in an e-mail that RIN fraud “threatens the viability of the entire Renewable Fuel Standard, which is part of the reason Congress must step in to repeal the program. … But until Congress can act, we need EPA to implement the long-delayed RIN system fix immediately.”
Verification Program Still Under Review
The EPA verification program, proposed in January 2013, would establish qualifications for third-party auditors who would determine the validity of the RINs and also would establish audit procedures for renewable fuel production facilities, including minimum frequency, site visits, review of records and reporting requirements.
An EPA official told a Senate panel in December 2013 the rule would be finalized in early 2014, but records show the final rule is still pending at the White House Office of Management and Budget.
Other cases of scams involving fraudulent RINs include a case brought in September 2013 in which three companies and six people were indicted for allegedly orchestrating a $100 million scheme involving the sale of biofuels and fraudulent claims that the fuels were eligible for tax credits.
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