Two men just defrauded the Renewable Fuel Standard credit system for $37 million

posted at 5:31 pm on January 18, 2014 by Erika Johnsen

Why is it, whenever the federal government — in all of their august and well-meaning wisdom — creates a program that either hands out money and/or attempts to manipulate the free market by injecting it with artificial incentives, it always seems to be so rife with waste, fraud, and, abuse? From agriculture and energy subsidies to food stamps to Medicare and Medicaid, the feds lose hundreds of billions of taxpayer dollars every year via the nefarious deeds of people who scam the system.  It couldn’t be that Big Government is both a vehicle for costly, bureaucratic inefficiency as well as an enabler of opportunities for said waste, fraud, and abuse, could it?

As if we needed yet another reason that the entire thing should be scrapped, the Renewable Fuel Standard that Jazz and I frequently deplore is no exception to that notorious rule. The RFS requires that the nation’s refiners blend a particular volume of biofuel into the gasoline supply, or else purchase credits known as renewable identification numbers (RINs) — and the FBI just indicted two individuals this past week for their alleged gigantic fraud scheme.

WASHINGTON—Two men have been indicted by a federal grand jury in Las Vegas for offenses involving the federal renewable fuel program that allegedly netted them more than $37 million, announced the Justice Department’s Environment and Natural Resources Division, Criminal Division, and the U.S. Attorney’s Office for the District of Nevada. The 57-count indictment against James Jariv, 63, of Las Vegas, and Nathan Stoliar, 64, of Australia, includes allegations of conspiracy, wire fraud, false statements under the Clean Air Act, obstruction of justice, and conspiracy to engage in money laundering. …

The indictment alleges that beginning around June 2009, the two defendants, James Jariv and Nathan Stoliar, operated and controlled a company, City Farm Biofuel in Vancouver, British Columbia, Canada, that held itself out as a producer of biodiesel from “feedstocks” such as animal fat and vegetable oils. Jariv also operated and controlled a company based in Las Vegas, Nevada, called Global E Marketing. The government alleges that these defendants claimed to produce biodiesel at the City Farm facility, claimed to import and sell biodiesel to Global E Marketing, and then generated and sold RINs based upon this claimed production, sale, and importation. In reality, little to no biodiesel produced at City Farm was ever imported and sold to Global E Marketing as claimed. The indictment alleges that the defendants’ scheme allowed them to generate approximately $7 million in RINs that were fraudulent, which were then sold to companies that needed to obtain them.

The indictment also alleges that, beginning around the same time period and continuing through December 31, 2013, the defendants, using their company MJ Biodfuels, bought more than 23 million gallons of RIN-less biodiesel that had been blended with small amounts of petroleum diesel, known as B99, from companies in the United States. The defendants sold some of this biodiesel to purchasers in the United States, claiming it was pure biodiesel, known as B100, produced at the City Farm facility and imported into the United States. By claiming this biodiesel was B100 and not RIN-less B99, the defendants were able to claim the fuel was eligible to be used to generate credits and incentives and were able to sell the fuel for significantly more than they otherwise would have been able. The defendants also exported the RIN-less B99 they bought in the United States to Canada. The defendants then sold the biodiesel in Canada and conspired not to acquire and provide RINs for these exports to the United States as they were required to do, but instead to keep the money they received from the sales for themselves. The indictment alleges that, in doing so, the defendants failed to give to the United States RINs worth in excess of $30 million, keeping this money for themselves instead.

And this is in no way an isolated incident; the DOJ was clamping down on a similar scam just last month:

The U.S. Environmental Protection Agency said it has invalidated 33.5 million renewable-fuel credits sold by an Indiana company for biofuel it didn’t produce, the fourth time the agency has alleged fraud in the program.

The filing today follows fraud charges filed against the former owners of the Indiana-based E-Biofuels LLC in September. The U.S. Justice Department accused them of falsely claiming its products qualified under government incentives for renewable fuels. …

The market in credits for the cleaner fuel seized up last year after federal prosecutors accused Clean Green Fuels LLC of selling 32 million fraudulent certificates. A second company, Absolute Fuels LLC, was issued a notice of violation in February for selling 48 million bogus certificates.

So… can we get rid of this unworkable, top-down, not-clean, not-green, fraud-riddled disaster yet?


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

See there are opportunities in an Obama Economy!

Mr. Joe on January 18, 2014 at 5:34 PM

So… can we get rid of this unworkable, top-down, not-clean, not-green, fraud-riddled disaster yet?

Sorry that would mean that government would have to get smaller, and we can’t have that.
/s

Defenestratus on January 18, 2014 at 5:35 PM

WHAT?!?!? The green energy industry and global warming, cooling, what is it this week, fire bugging, is a scam????
I am SHOCKED!

AllahsNippleHair on January 18, 2014 at 5:36 PM

And on the other side of the coin is FARMERS.

moonsbreath on January 18, 2014 at 5:51 PM

I bet this started with Free ObamaPhones!!

canopfor on January 18, 2014 at 5:51 PM

That’s ok with me. The whole thing is a fraud. Why should we care whether some people broke the rules when the overall scheme is evil to begin with?

Kohath on January 18, 2014 at 5:52 PM

Two men just defrauded the Renewable Fuel Standard credit system for $37 million

…in other words…there are probably thousands of others!

KOOLAID2 on January 18, 2014 at 5:53 PM

Justice Department’s Environment and Natural Resources Division, Criminal Division, and the U.S. Attorney’s Office for the District of Nevada. The 57-count indictment against James Jariv, 63, of Las Vegas, and Nathan Stoliar, 64, of Australia

Who are their contacts in Chicago? And Hollywood?

Or, perhaps these two guys are the lone sacrificial dudes.

Lourdes on January 18, 2014 at 6:12 PM

Free market fraudsters defraud government fraudsters over ecofraud birthed of climate fraud.

Lesson there somewhere.

BL@KBIRD on January 18, 2014 at 6:23 PM

Who are their contacts in Chicago? And Hollywood?

Don’t be silly. If they had those, they’d never have been indicted.
Should have given more to Harry Reid’s re-election. Might’ve been able to scam FIFTY-seven million dollars, if they’d just taken this simple precaution.

orangemtl on January 18, 2014 at 6:25 PM

These guys are pikers compared to the criminals *in office*.

Midas on January 18, 2014 at 6:31 PM

Get rid of it?
But….but….Global Warming!

Another Drew on January 18, 2014 at 6:41 PM

…in other words…there are probably thousands of others!

KOOLAID2 on January 18, 2014 at 5:53 PM

.
These two didn’t pay their kickbacks … so they got “caught”.

PolAgnostic on January 18, 2014 at 6:50 PM

“So… can we get rid of this unworkable, top-down, not-clean, not-green, fraud-riddled disaster yet?”

Are you kidding? Just wait until we get cap and trade and there is a market for CO2 credits.

Nomas on January 18, 2014 at 6:50 PM

Who are their contacts in Chicago? And Hollywood?

Or, perhaps these two guys are the lone sacrificial dudes.

Lourdes on January 18, 2014 at 6:12 PM

Or just a couple of dopes who didn’t make a big enough campaign “contribution” to OFA.

Ripping off taxpayers for millions, or even billions, of dollars isn’t a crime in Obamaworld. But failing to give Obama his cut is.

AZCoyote on January 18, 2014 at 6:52 PM

I’ve come to the conclusion that Politicians just get over the fact that private industry are smarter than they are. Can anyone imagine private industry getting scammed out of that kind of money?

cajunpatriot on January 18, 2014 at 6:56 PM

The 57-count indictment against James Jariv, 63, of Las Vegas, and Nathan Stoliar, 64, of Australia, includes allegations of conspiracy, wire fraud, false statements under the Clean Air Act, obstruction of justice, and conspiracy to engage in money laundering.

.
57…
….57
……..57….
……………..why does that number sound so familiar….?

ExpressoBold on January 18, 2014 at 6:57 PM

On a smaller scale, here’s how California’s CRV law funds recyclers in Nevada:

http://www.latimes.com/local/la-me-homeless-recycle-20140119,0,3584896.story#axzz2qnWdWsyX

The state also cracked down on out-of-state recyclers. They were trucking loads of discarded materials into California from Nevada or Arizona, where cans and bottles are not subject to a cash deposit. Officials in 2012 estimated the fraud at $40 million a year. The state imposed load limits and is requiring recycling trucks to submit to inspection when they cross the state border, Oldfield said.

unclesmrgol on January 18, 2014 at 7:05 PM

Ahhhh…… the mental giants in King Barry’s Court of Jesters……someone forgot…..It takes more energy to make ethanol from grain than the combustion of ethanol produces…….. to put in another way….. So the smartest guy in the room (stooge Barry) can understand…….about 70 percent more energy is required to produce ethanol than the energy that actually is in ethanol. Every time you make 1 gallon of ethanol, there is a net energy loss of 54,000 BTU…….. pay no attention to that man behind the curtain…. I sure wish I had me one O dem…… Harrrrrrrvard Deeeeegreeeees.

roflmmfao

donabernathy on January 18, 2014 at 7:07 PM

…Can anyone imagine private industry getting scammed out of that kind of money?

cajunpatriot on January 18, 2014 at 6:56 PM

The method-goal of the Left appears to be: government exists TO scam this kind of money. That’s their point when they say/think/’do’ “government”.

Lourdes on January 18, 2014 at 7:41 PM

Pikers…

Look up Broin Brothers & POET

trs on January 18, 2014 at 7:54 PM

Why is it, whenever the federal government — in all of their august and well-meaning wisdom — creates a program that either hands out money and/or attempts to manipulate the free market by injecting it with artificial incentives, it always seems to be so rife with waste, fraud, and, abuse?

It’s what they do. Scorpions sting, Goober ment drools.

SparkPlug on January 18, 2014 at 8:06 PM

It’s been said that Chicago is famous are three things, Pizza, Gangsters, and Crooked Politicians and we all know that Obama is not a Pizza.

savage24 on January 18, 2014 at 8:22 PM

Two men have been indicted by a federal grand jury…

Heck. If they were congress critters, they would have been re-elected.

locomotivebreath1901 on January 18, 2014 at 8:34 PM

Well let’s recap…Food stamps SNAP benefits are now a close second to the dollar as the official currency. Jimmy Carter/Bill Clinton/Barney Frank’s “house for everybody” led to a near collapse of the world banking system and still has most of the construction industry on extended leave.

Seems that when you let the government control anything, they convert entitlements into a “checklist”. Unfortunately the people on the other side know how to benefit from the “checklist” (they are smarter than the people employing the “checklist”).

teejk on January 18, 2014 at 8:55 PM

It’s been said that Chicago is famous are three things, Pizza, Gangsters, and Crooked Politicians and we all know that Obama is not a Pizza.

savage24 on January 18, 2014 at 8:22 PM

Wrong! He’s a Pizza Crap.

HiJack on January 18, 2014 at 10:15 PM

It seems CA is running out of water and JBrown is so sad about it because now he’ll have to throw money at a real problem and not pour it down the drain of his train to nowhere. If he had only spent the dough on desal plants along the coast, the people of his state would have enough water to get thru this drought. They could have used some of that rising sea level water and taken care of another problem at the same time. Cher would have been pleased.

Kissmygrits on January 19, 2014 at 9:06 AM

It’s been said that Chicago is famous are three things, Pizza, Gangsters, and Crooked Politicians and we all know that Obama is not a Pizza.

savage24 on January 18, 2014 at 8:22 PM

Wrong! He’s a Pizza Crap.

HiJack on January 18, 2014 at 10:15 PM

@ HiJack: you’re so smart. <- That'd be a gen-you-wine observation there, what you wrote, what I wrote about it.

Lourdes on January 19, 2014 at 11:48 AM