U.S. Attorney Senior Litigation Counsel Steven DeBrota said there are two categories of alleged criminal activity the company officials are facing.
He said the first category involves fraud from the company mislabeling and selling biodiesel that already had received tax incentives. He alleges the company bought fuel from another company that had already had RINs removed and sold this fuel to a third company with new RINs that were generated by E-Biofuels.
This also means that at some point, companies that made purchases from E-Biofuels will have to address the issue of receiving tax funding for a product that had been stripped of RIN funding.
The second category, DeBrota said, focuses on securities fraud and the filing of false information to shareholders and investors of a publicly traded company.
“These two things are not something you see every day,” DeBrota said.
Craig Ducey is charged in both the conspiracy to sell fraudulent biodiesel and the securities fraud cases.
Attempts to contact the defendants for this story were unsuccessful.
DeBrota said the market loss for the securities fraud is $60 million.
Middletown resident Steve Solomon said he is upset that taxpayers lost money and he hates to see people lose their jobs.
Although an exact number of employees at the Middletown plant could not be confirmed, town officials estimate the company employed less than 10 people.
“If they had nine employees, eight of them should have been from Middletown,” said Bruce Hanson of Middleton. “If you build a business here, you should employ local town people.”
Hanson said he had no idea anything was amiss until people wearing FBI jackets showed up in Henry County.
Middletown Clerk Treasurer Drew Cooper said E-Biofuels owes the town $26,735 in utility bills. He said the last bill was generated in December 2011.
“They were one of our biggest electrical customers,” he said.