Owners of a biodiesel producer firm based in Middletown conspired against investors and consumers and earning millions of dollars by selling fraudulent biofuels, U.S. Attorney Joe Hogsett charged Wednesday.
About 35 million gallons of biofuels were fraudulently sold, creating more than $50 million in profits for owners of Imperial Petroleum, based in Evansville, and E-Biofuels of Middletown, Hogsett said.
"The numbers, frankly, are staggering," Hogsett said.
Hogsett announced the case by the U.S. Securities and Exchange Commission following a nearly one-year investigation. The 13-count indictment alleges that Imperial Petroleum through its subsidiary, E-Biofuels, falsely claimed it produced more than 28 million gallons of biodiesel from May 2010 through January 2012. By obtaining incentives and tax credits, the owners could sell fuel for more than $100 million.
The federal counts include making falsifying records, securities fraud, obstruction of justice and filing false statements under the Clean Air Act.
Six individuals were charged and had initial appearances before a federal magistrate Wednesday. Three companies were indicted.
In a complex case, Imperial acquired "Ebio" in May 2010. Ebio would use middlemen to buy already finished biodiesel and fake invoices to describe the biodiesel as "feedstock." Ebio was to use feedstock and chicken fat to produce biodiesel. The company then claimed it had produced biodiesel from such raw materials and sought government incentives and tax credits, Hogsett said.
After the company acquisition, Imperial's annual revenue soared from $1 million to $110 million; 99 percent of that was due to the Ebio.
Biodiesel is a renewable fuel manufactured from vegetable oils, animal fats or recycled restaurant greases. It can be used as a diesel fuel or mixed with regular diesel to be used in diesel vehicles. Indiana has biodiesel plants in Kosciusko, Lake, LaPorte and Shelby counties, that together are capable of producing more than 100 million gallons of the fuel annually.