The final defendant in a biofuels scam was found guilty in federal court this week in what prosecutors said was “the largest tax and securities fraud scheme in Indiana history.”
Imperial Petroleum Inc. President and CEO Jeffrey Wilson of Evansville was found guilty Wednesday night on multiple criminal charges following an eight-day jury trial. U.S. District Judge Sarah Evans Barker of the Southern District of Indiana presided over the case.
Wilson was convicted of securities fraud, filing false reports with the U.S. Securities and Exchange Commission, falsely certifying reports to the SEC, lying to the company’s outside auditor and lying to federal investigators.
The fraud involved more than $140 million in revenue and $56 million in criminal profits, prosecutors said.
Wilson was one of seven defendants—including two Fishers residents—charged in the case. All of the others already have pleaded guilty.
The SEC began investigating the case in 2012 after E-Biofuels LLC of Middletown, an Imperial Petroleum subsidiary, filed for Chapter 7 liquidation bankruptcy.
Federal prosecutors announced 88 separate charges against the seven co-defendants, plus three corporations, in September 2013.
Prosecutors said E-Biofuels gained profits illegally by claiming to produce biofuel at its Middletown plant, charging a premium for the product and claiming federal tax breaks reserved for biofuel producers.
In reality, prosecutors said, E-Biofuels was purchasing biodiesel from co-conspirators Joseph Furando and Katirina Tracy in New Jersey, through their companies CIMA Green and Caravan Trading Co. E-Biofuels represented to customers that it was producing the biofuel but it was actually just marking up the fuel and reselling it at a profit, prosecutors said.
E-Biofuels also claimed federal tax credits for the fuel, even though the same fuel had already been used to receive tax credits in New Jersey.
“On average, the conspirators added in excess of $1.60 per gallon for doing nothing to the biodiesel other than move it around,” a U.S. Attorney’s Office statement said.
The co-defendants running E-Biofuels included brothers Craig Ducey and Chad Ducey, both of Fishers, and Chris Ducey of North Webster along with Brian Carmichael of Bend, Oregon.
The Ducey brothers and Carmichael launched E-Biofuels in 2007. Prosecutors have said they believe the biofuels scam ran from July 2009 to May 2012, during which time the E-Biofuels plant was rarely in operation.
Imperial Petroleum bought E-Biofuels in May 2010.
In its statement, the U.S. Attorney’s Office said Wilson learned of E-Biofuels’ deceptive practices “soon thereafter, if not before” Imperial Petroleum acquired E-Biofuels.
Prosecutors say Wilson’s crimes began in November 2010, when he filed an Imperial Petroleum annual report with the SEC.
“From then on, Wilson consistently presented false information about E-Biofuels to the public, to investors, to auditors and investigators. He was convicted of counts related to all of these lies,” the U.S. Attorney’s Office statement said.
The Duceys, Furando, Tracy and Carmichael were charged in September 2013 with conspiracy to commit wire fraud, tax fraud, making false statements to the Environmental Protection Agency and other crimes.
Carmichael pleaded guilty in September 2013 and the Ducey brothers pleaded guilty in April 2015. Tracy, who is also known as Evelyn Katirina Pattison, pleaded guilty in July 2014, and Furando pleaded guilty in April 2015.
Furando, who was considered the ringleader of the plot. has been sentenced to 20 years imprisonment. The others have yet to be sentenced.
Indianapolis attorney Thomas Farlow, Wilson’s lead defense counsel, told IBJ on Friday that the court has not yet set Wilson’s sentencing date.
Farlow also said he hasn’t yet discussed with his client whether to pursue an appeal.