The Herald Bulletin

Evening Update

Local Business

October 5, 2013

Biofuel equipment sold from company accused of historic fraud scheme

Former town official says he does not believe company planned to defraud anyone

(Continued)

Prosecutors say that in May of 2010, the value of the RINs being sold by the Middletown plant added approximately $0.42 to each gallon of biodiesel. The RIN prices peaked in September 2011, adding $2.95 to each gallon the company sold.

In the summer of 2007, E-Biofuels reported a production of biodiesel fuel with an annual capacity of 5 million gallons and said they planned to increase their production to 25 million gallons within six months.

Jake Smith was the Middletown Town Council president when E-Biofuels originally pitched its business proposal to town officials.

“I am disappointed, of course,” Smith said. “I think they had a pretty sound business plan. I don’t think in the beginning there was intent to defraud anyone.”

Smith left the council in 2010.

“It’s always not a good thing to lose a business,” he said. “Every little town across the state needs all the businesses they can get. That is essential to keep the tax base up.”

Chad Ducey, CEO, and his brother, E-Biofuels president Craig Ducey, presented the business plan to Smith and the town council. The brothers were former civil engineers who were purchasing “choice white grease” from animal processors and separating the product in a process called “transesterification,” turning the grease into a biodiesel which can then be mixed in various blends of standard diesel fuel.

As part of its package to bring the biofuel company to Henry County, local government officials brought the company a $40,000 grant to go along with a $10,000 grant of its own to finance infrastructure. Seven months after receiving the county grant, Chad Ducey said the money disappeared. In a story in The Herald Bulletin, Ducey said, "It was a miscommunication between Henry County, the town of Middletown and E-Biofuels. That is all that I would like to say about this situation. I think the town will still benefit from this program."

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