Ethanol Blog

Plea Agreement Reached in Biodiesel Fraud Case

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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A plea agreement was reached in an ongoing biodiesel fraud case in Utah. (Photo courtesy of the National Biodiesel Board)

The former owners/operators of a biodiesel plant in Utah have reached a plea agreement with prosecutors in a biodiesel tax and renewable identification numbers, or RINs, fraud case, according to documents filed in the U.S. District Court for the District of Utah in Salt Lake City on July 18.

Washakie Renewable Energy Chief Executive Officer Jacob O. Kingston, Washakie Chief Financial Officer Isaiah Kingston, Special Projects Manager Rachel Kingston, Jacob Kingston's wife and Compliance Manager Sally Kingston, pleaded guilty to multiple charges.

According to the indictment in the case, http://www.dtn.com/…, the Kingstons conducted an illegal scheme that led to the company receiving $511 million from the federal government.

Jacob O. Kingston pleaded guilty to 41 charges including money laundering, conspiracy, fraud, obstruction of justice and witness tampering, according to the plea agreement. A trial was scheduled to start on July 29.

The Salt Lake Tribune, https://www.sltrib.com/…, outlines the properties that have been seized from the Kingstons that were acquired as part of the scheme.

According to court documents, Washakie Renewable Energy produced little or no actual biodiesel. Instead, the plea agreement outlines a scheme that involved buying biodiesel and other commodities from other companies and misrepresenting the biofuel as its own.

Jacob O. Kingston admitted in the plea agreement to conducting such a scheme. He could be imprisoned for a maximum of 30 years. His brother, Isaiah, could face up to 20 years in prison.

"I was the owner and Chief Executive Officer of Washakie Renewable Energy. I was the CEO and functional owner of United Fuel Supply. I created Washakie Renewable Energy in 2006 to 2007 to produce biodiesel. While WRE was capable of producing some amounts of biodiesel, in no year did WRE ever produce more than 8.5 million gallons. Starting in 2010, I began filing false claims for renewable fuel tax credits as charged in the second superseding indictment and to fraudulently claim renewable identification numbers," the plea agreement reads.

Kingston's company agreed to buy biodiesel from a third party while filing false paperwork to obtain tax credits.

In the plea agreement, Jacob Kingston describes how the company conducted what it called the "Gulf project."

In 2013, Kingston said he began to file false claims in "larger and larger" amounts.

The plea agreement said he directed staff to rent shore tanks in Houston and to purchase B99 and other products from third parties "in order to rotate the fuel between shore tanks in order to make it falsely appear that transactions involving the purchase and sale of feedstock, B100, B99, and other fuel products were taking place."

Kingston admits to exporting about 3.3 million gallons from Houston to Isla Melones, Panama, and to be "papered as a sale of B99 and then caused that exact same fuel to be re-imported as B100, all to support the double filing of false claims for fuel tax credits, on both the export and import of the same product.

"No qualifying fuel was ever produced or sold during this project, but at least a hundred million gallons of mixed fuel product were rotated between tanks in Texas and Louisiana and Panama. In 2013, during this project, I caused over $272 million of fraudulent renewable fuel tax credits to be claimed on these fictitious transactions based on the false paperwork."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow me on Twitter @toddneeleyDTN

(TN)

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