Hogsett: Executives indicted in massive tax and securities fraud case

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U.S. Attorney Joe Hogsett announced grand jury indictments against the operators of a Henry County biofuels plant and its parent company, which federal agents claim stole more than $100 million from taxpayers, customers, and investors.

Hogsett called it the “largest instance of tax and securities fraud in state history.” Hogsett said the case marks the first indictment of an Indiana-based top executive in such a large fraud scheme. Jeffrey Wilson, the former president and CEO of Evansville-based Imperial Petroleum is named in the suit. His company aquired E-Biofuels, which is located in Middletown, Ind., in 2010.

The Department of Justice alleges E-Biofuels and Imperial Petroleum engaged in a four-year-long plot to deceive federal regulators and investors about the purity of its alternative fuels.

E-Biofuels allegedly sold an alternative fuel product called B100. The indictment charges that the company received federal incentives for creating the fuel, but instead was engaged in a scheme to sell its customers a less valuable derivative fuel known as B99.

Hogsett said from 2009 to 2012 E-Biofuels sold 35 million gallons of B99, generating $55 million in profits for the company and qualifying for $35 million in federal tax credits plus millions more in investor losses. The 88-count indictment alleges wire, tax and securities fraud, as well as money laundering, obstruction of justice and violations of the Clean Air Act.

Hogsett said the company’s biofuels plant often set idle and was merely a prop to fool investors and generate fraudulent sales. The plant didn’t generate the biodiesel, which was instead bought from third parties and then marketed as being produced at the facility from chicken fat and other feedstocks. Hogsett said the company made 95,000 fraudulent deliveries to truck stops and gas stations from Wisconsin and Indiana to Texas. The company qualified for tax credits, misled investors and drivers paid more at the pump for a less pure biofuel product, the indictment said.

Also indicted were four top executives of the company. Hogsett said the “free ride” mindset of E-Biofuels executives in perpetrating the scheme is over.

Each faces up to 20 years in prison on several counts if convicted as well as fines. They appeared in front of a federal magistrate Monday afternoon.