(Updates with pleas from U.S. government statement)
NEW YORK Oct 12 Two men pleaded guilty in a
U.S. court on Wednesday to conspiracy, fraud and making false
statements related to the U.S. government's controversial policy
designed to boost use of renewable fuels, according to court
The case comes in the last four weeks of a contentious U.S.
presidential election campaign as the petroleum industry presses
for reform or repeal of a program that has drawn criticism from
Big Oil and environmentalists alike. The U.S. government is due
to finalize next year's biofuel mandates by end-November.
Fred Witmer, 46, and Gary Jury, 58, co-owners of Indiana
biodiesel plant Triton Energy LLC, pleaded guilty in an Indiana
court on Wednesday to defrauding the U.S. government's renewable
fuel support program and a tax credit program, the U.S.
Department of Justice said on Wednesday.
Witmer and Jury together owe more than $64 million for wire
fraud and conspiracy in a scheme to fraudulently produce
biofuels credits used to comply with the U.S. Renewable Fuel
Standard (RFS) from 2012 to 2015, according to court documents
filed in Indiana last month.
The charges filed by the U.S. Justice Department said Witmer
knowingly sold processed corn oil for uses that do not qualify
under the program, then still collected biofuels credits on the
fuel. He and Jury also conspired to obtain a tax credit they
were not entitled to, the filings said.
Counsel for Witmer declined to comment while Jury's lawyer
did not respond to a request for comment. Witmer will serve 57
months in prison and Jury will serve 30 months as part of their
plea agreements, the Justice Department said in a statement.
The RFS policy was designed to boost use of renewable fuels
including gasoline and diesel in the country's petroleum fuel
supply, in a bid to cut down on greenhouse gas emissions and
promote energy independence.
Biofuels producers create renewable fuels credits known as
Renewable Identification Numbers (RINs) with each gallon of
biofuel they produce. Gasoline importers and oil refiners need
these credits to meet the country's biofuels mandates. They can
either blend fuels to get the credits or buy them in an opaque
Witmer owes $56 million for some 41.1 million fraudulent
RINs sold until at least March 2015. He also could face a prison
sentence of just under five years, the court filings show.
Witmer and Jury jointly owe an $8 million penalty to the
U.S. Treasury Department as part of the plea agreement.
This is the latest in a recent string of cases and
settlements handled by the Justice Department. It may bolster
the case of critics who have said the RIN market is susceptible
Oil refiners have renewed calls for reform of the program in
recent months as prices of the credits have soared. Biodiesel
credits are now trading at more than $1 apiece, making the
mandates costly for some to meet.
Credits already have cost refiners billions of dollars and
2016 looks set to be the most expensive year on record.
Philadelphia Energy Solutions Inc said last month
that it plans to slash benefits and reduce staff, citing the
high cost of buying RINs as one of the principal reasons it
needed to make the cuts.
Biofuels advocates say instances of crime are rare and that
the program has helped boost use of renewable fuels and created
jobs in rural America.
Ineffective regulation may prove to be an "Achilles' heel"
for the RIN market even though fraud has not been rampant, said
Scott Irwin, an economist with the University of Illinois.
"These cases are important because they go to the heart of
the integrity of the RINs market," he said.
(Reporting by Chris Prentice; Editing by Simon Webb and Bill