This is a most interesting way to make nine million dollars: selling $9.1 million worth of renewable energy credits that you don't actually have.
According to the Associated Press, Rodney Hailey of Maryland allegedly did just that by taking advantage of lax oversight and confusing rules. Hailey was first accused last October and is now headed to court.

The idea behind the renewable energy credit program is that companies that sell petroleum in the U.S. are also now required to make renewable fuels. If they don't, then they need to buy credits (also known as renewable identification numbers, or RINs) from those who do to satisfy their legal allotment. In stepped Hailey and his company, Clean Green Fuel LLC, which offered up the credits but didn't actually make any biofuel to earn them. Similar fraud cases have been reported in Texas and Alabama, and the AP says that there are calls for Congress to review the program.

Because of the mess, the EPA is being sued by people who paid Hailey but now find their credits not being honored. The EPA says it is changing the program to reduce fraud, including bringing in independent, third-party auditors for the RINs.

There's a twist to all of this "clean green fuel" story, though. Hailey allegedly used the money to buy "Ferraris and other luxury cars, as well as tractor-trailers, homes, jewelry and computers," the AP writes. Someone call Webster, we have a new definition for greenwashing.
Show full PR text
October 3, 2011
http://www.usdoj.gov/usao/md

OWNER OF CLEAN GREEN FUEL CHARGED IN SCHEME TO SELL OVER $9 MILLION IN FRAUDULENT RENEWABLE FUEL CREDITS

Information Alleges that the Company Falsely Claimed it Was Producing Renewable Fuel

Baltimore, Maryland - A criminal information was filed today charging Rodney R. Hailey, age 33, of Perry Hall, Maryland, with wire fraud, money laundering and a violation of the Clean Air Act, in connection with a scheme in which he allegedly sold $9 million in renewable fuel credits purportedly produced by his company, Clean Green Fuel, LLC, when in fact the company did not produce any renewable fuel.

The criminal charges were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge David G. McLeod of the Environmental Protection Agency's (EPA) Criminal Investigation Division - Philadelphia Area Office; Postal Inspector in Charge Daniel S. Cortez of the U.S. Postal Inspection Service - Washington Division; Acting Special Agent in Charge Jeannine A. Hammett of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; Special Agent in Charge Thomas Muskett of the EPA Office of Inspector General - Office of Investigations - Washington Field Office; U.S. Marshal for Maryland Johnny Hughes; and Chief James W. Johnson of the Baltimore County Police Department.

"The information alleges that as the owner of Clean Green Fuel LLC, Rodney Hailey specialized in producing 38-digit 'renewable identification numbers,' each of which supposedly corresponded to the production of two-thirds of a gallon of biodiesel fuel; in fact, he allegedly sold more than 32 million RINs for over $9 million," said U.S. Attorney Rod J. Rosenstein. "Oil companies bought RINs in order to comply with EPA regulations requiring them to support the production of renewable fuel. However, the information alleges that in reality Mr. Hailey did not produce any renewable fuel; he just made up RINs."

According to the criminal information, Rodney Hailey was the owner of Clean Green Fuel, LLC, with several locations in the Baltimore area. Hailey registered Clean Green Fuel with the EPA as a producer of bio-diesel fuel, a motor vehicle fuel derived from renewable resources that can be used like any other motor vehicle fuel.

In order to encourage the production of renewable fuel and lessen the nation's dependence on foreign oil, all oil companies that market petroleum in the U.S. are required to produce a given quantity of renewable fuel or to purchase credits, called renewable identification numbers (RINs) from producers of renewable fuels to satisfy their renewable fuel requirements.

The criminal information alleges that between March 2009 and December 2010, Hailey sold over 32 million RINs (representing 22 million gallons of bio-diesel fuel) to brokers and oil companies for at least $9 million, when in fact Clean Green Fuel had produced no fuel at all. According to the criminal information, Hailey did not have a facility capable of producing bio-diesel fuel and his business operation consisted solely of generating false RINs on his computer and marketing them to brokers and oil companies.

Hailey allegedly used the proceeds of the wire fraud scheme to purchase luxury vehicles, including BMWs, Mercedes Benz', a Rolls Royce Phantom, a Lamborghini, Ferrari, Maserati and others, as well as real estate and jewelry. According to the information, during the investigation Hailey made numerous false statements to EPA investigators, including that he manufactured the fuel from waste vegetable oil collected from 2700 restaurants.

Finally, the criminal information seeks the forfeiture of over $9 million, alleged to be the proceeds of the scheme.

Hailey faces a maximum sentence of 20 years in prison for wire fraud; ten years in prison for money laundering and two years in prison for violating the Clean Air Act. An initial appearance and arraignment are scheduled for October 13, 2011 at 1:00 p.m. before U.S. District Judge William D. Quarles, Jr.

A criminal information is not a finding of guilt. An individual charged by criminal information is presumed innocent unless and until proven guilty at some later criminal proceedings.

For their work in this investigation, United States Attorney Rod J. Rosenstein praised the members of the District of Maryland Asset Forfeiture/Money Laundering Task Force, including the U.S. Marshals Service, the Baltimore County Police Department and IRS - Criminal Investigation; and the EPA Criminal Investigation Division, U.S. Postal Inspection Service, and EPA Office of Inspector General - Office of Investigations. Mr. Rosenstein thanked Assistant United States Attorneys Stefan Cassella and Tonya Kelly Kowitz, who are prosecuting the case.


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    • 1 Second Ago
  • 29 Comments
      GoodCheer
      • 3 Years Ago
      It seems to me like the difference of "adding new taxes" and "stop giving tax advantage, subsidy, and protection" is razor thin at best. You say one would "hurt our economy. It will affect businesses the most", while the other would make "fossil fuels (...) cost more". It seems to me like you're distinguishing the two on semantics, rather than on more important metrics of societal / economic impact. Maybe I'm wrong. On a side note, the Arizona Utilities Commission, the authority that permits electrical sector developments, now interprets its mandate to evaluate proposed electrical generation by the total societal cost, meaning that coal plants will have to include their cost of delivered electricity AND their health and environmental costs.
      Spec
      • 3 Years Ago
      This is why I worry about "cap & trade" plans. I like them economically since they encourage innovation. They allow those who can eliminate CO2 most easily to trade with people that have a harder time. But such systems are more susceptible to fraud than simple carbon tax schemes.
        PR
        • 3 Years Ago
        @Spec
        So you are claiming that tax fraud and tax evasion doesn't exist? I don't see the justification for the claim that "such systems are more susceptible to fraud than simple carbon tax schemes". The rest of your post I agree with.
          Spec
          • 6 Months Ago
          @PR
          MORE susceptible. All systems are susceptible to fraud. But some systems are harder to track and audit than others. Making sure tax is collected from a gas pump is much easier than making sure some guy in South America is really planting trees on some plot of land he claims exists.
        2 Wheeled Menace
        • 3 Years Ago
        @Spec
        Yes they are, Spec. Because it is a silly made up system that focuses on carbon dioxide numbers only. Meanwhile we allow fracking to happen and are about to OK Keystone XL. Meanwhile, we incentivize energy use by subsidizing fossil fuels ( including coal ) You won't have any drinkable water left, but at least the carbon dioxide numbers are looking good! These are half baked schemes ( as always ) that do not adhere to science, but only political goals, and paying back corporations that have donated to campaigns..
        Vlad
        • 3 Years Ago
        @Spec
        Yep, carbon tax is better. And pass it to taxpayers, as they (I believe) did it in Australia.
          Marco Polo
          • 6 Months Ago
          @Vlad
          PR, Be very difficult to defraud an Australian Carbon Tax since the tax is yet to be implemented, ( July 2012) and may be the subject of a challenge in the High Court. It's also very doubtful that the current minority Labour/Green government will survive to see the first receipts of the tax, since the Australian people are more than 70% opposed to the tax, and if an election were held today, the Labour/green/independent party, would be swept out of office on a landslide!
          PR
          • 6 Months Ago
          @Vlad
          Vlad -- It certainly is another choice. But are you 100% certain that there is zero tax fraud and tax evasion going on in the Australian program? Are you 100% certain that there is no black market going on to bring in goods to dodge the tax? Or have they just not been caught....
      Marco Polo
      • 3 Years Ago
      Basically, this article is about some guy's who sought to rip off the system. They didn't fraudulently exploit the system for high moral purpose or as a method of civil disobedience, it was an opportunistic crime conceived to make money ! It wasn't even a very well planned or well executed fraud. Rodney Hailey. and his cronies just ripped off their customers and hoped the government agency wouldn't notice. Well they did, and ol' Rodney is now facing prosecution. (although he's entitled to the presumption of innocence until convicted). 2WM, blames the Administration for a poorly organised, supervised and flawed scheme. He also questions whether the concept of carbon tax, Cap and Trade schemes are the best methods of helping the environment . PR, responds by condemning 2WM, for daring to question the motives of the current administration, and it's ability to implement such policies impeccably. PR goes further and attacks PR for being an " anti-gov't libertarian, making libtard posts". Interesting insights into how public attitudes toward 'carbon taxes' is changing.
        PR
        • 6 Months Ago
        @Marco Polo
        Marco whined "PR, responds by condemning 2WM, for daring to question the motives of the current administration" Where the hell did you get that? 2WM hasn't mentioned the current administration, and neither have I. You are the only person bringing in the Obama administration to this. This program was passed into law before Obama was elected President anyways. My objection to 2WM is that he blames the gov't first and foremost for the crimes that criminals commit, when it is absolutely clear under US law that criminals and criminals alone are personally responsible for breaking the law. Not the victims (the companies who had their money stolen), and certainly not a third party who wasn't even present for the transaction when the criminal stole the money from the company. If you want to re-state my objections to 2WM's posts, at least have the decency to read and understand the points I've made, and accurately condense them instead of making up strawman crap in an attempt to paint me in a negative light.
          Marco Polo
          • 6 Months Ago
          @PR
          PR, I quoted you, "" anti-gov't libertarian, making libtard posts". Accurately ! The current administration is the administration charged with the administration of the scheme ! If there is is lack of supervision, it occurs on their watch ! How can the previous administration be blamed for day to day management ? In other responses you supported your arguments with citing "But are you 100% certain that there is zero tax fraud and tax evasion going on in the Australian program? Are you 100% certain that there is no black market going on to bring in goods to dodge the tax?" Considering that this tax doesn't come into existence until July 2012, and is not a retail tax, nor is a 'black market' possible, shows you have absolutely no understanding of how carbon taxes work. Nor does US law preclude third parties from being liable for losses suffered as a result of criminal activity. In fact to the contrary, the US leads the world in Tort litigation. So many errors! Perhaps if you were less vitriolic, and more understanding, you mightn't find yourself in such bitter disagreements.
      Dan Frederiksen
      • 3 Years Ago
      govs should stop relying on incentives and instead make it happen. Chu your incompetence betrays the world
      Rotation
      • 3 Years Ago
      Like I said before, I won't believe cap & trade really restricts emissions until I go by a gas station and it says "closed because we couldn't get enough carbon credits". I like the idea of cap & trade a lot, but you have to be careful with the supply to prevent fraud and to prevent increasing allowed emissions by mistake and I don't think we've been very careful with either of them.
        2 Wheeled Menace
        • 3 Years Ago
        @Rotation
        Cap and trade is a way of justifying adding new taxes, and will hurt our economy. It will affect businesses the most. If you want to reduce pollution and reduce consumption of fossil fuels, the answer is simple - stop giving tax advantage, subsidy, and protection of the oil industry, domestic and foreign. The price of fossil fuels will naturally rise, and alternatives to using fossil fuels will become more appealing, to the point where people will likely naturally chose them. It would be the least forceful, most natural way to reduce our energy use ( or shift it towards zero-carbon solutions ), and you could not be accused of adding taxes and being a nasty socialist/commie/lefty. You could eventually take the green energy world off the 'dole as well. Fossil fuels would cost more... but considering their externalities ( which are never figured into things ), they *should* be more expensive.
          2 Wheeled Menace
          • 3 Years Ago
          @2 Wheeled Menace
          Yes, i am going on semantics, but most importantly i am going on principle. It is the choice between: 1) subsidizing oil companies ( you pay for this in taxes ), supporting war ( That's 25% of our federal budget so you definitely pay for it ) to keep oil flowing on our terms ( to lower the price, sorta ), then on top of that, paying another tax for carbon?, which sorta, kinda evens things out, but ends up basically benefiting the govt for every gallon... thus they have little incentive for you to cut your use of fossil fuel.. 2) paying a higher gas price to the people producing said gasoline, but your taxes are lower and/or the taxes you pay go towards something more worthy ( health care for example? reducing inflation? maybe having real environmental controls? ). Here is another approach.. You may be here because you actually care about the environment or are tired of paying for gas. But most people are OK with the price. Part of the reason is because we subsidize it, and the real cost is hidden. If you read this site from 2007-2009, you saw that private and federal investment electric & hydrogen cars had exploded when the gas price was around $5/gal. It was that point which people were most interested in what you and me are into. The non-subsidized, upfront cost ( option #2 ) is better for the environment and the development of alternatives, to the point where alternatives no longer require subsidy because they look attractive from the get go.
      2 Wheeled Menace
      • 3 Years Ago
      Oh, you mean a convoluted, poorly thought out govt program is being played by some big corp? I'M JUST SHOCKED!!!
        PR
        • 3 Years Ago
        @2 Wheeled Menace
        When people steal money out of the church collection plate, do you attack the church too? These people aren't "big corp", they are small time "LLC" common criminals who are committing fraud and were caught. They are headed for jail, and the program will continue on without them just fine. The existence of criminals is a problem of crime, and the criminals are the ones personally responsible for their crimes. Pointing the finger at the gov't instead of the criminals is yet another classic 2WM anti-gov't libertarian rant. And you wonder where you get the reputation for being a ranting anti-gov't libtard....
          PR
          • 6 Months Ago
          @PR
          throwback Crime doesn't have anything at all do to with the underlying program. That's like saying that retail shopping in brick-and-mortar stores should be eliminated because of shoplifting. It seems to be very enforceable, since they have caught the criminal and he is going to spend years in prison upon conviction, and will have to forfeit the 9 million he stole.
          throwback
          • 3 Years Ago
          @PR
          The issue still remains, does the policy make sense? Is it enforceable, and what exactly is the out come the government expects? Is it working?
          PR
          • 6 Months Ago
          @PR
          AM -- I'm not against making the program better. I'm arguing against people like 2WM who are clearly against the whole program who would use this one criminal's illegal behavior as an excuse to throw out the baby with the bathwater. See 2WM's other posts in response to Rotation if you don't understand 2WM's clear and obvious agenda. ----------------- Every single gov't program, along with every single Private Sector free market enterprise, are susceptible to criminals stealing from them. That doesn't mean that everything is fatally flawed or poorly thought out. We shouldn't reject shopping in brick and mortar stores because criminals are successful at shoplifting no matter how much additional security stores add. We shouldn't say online shopping is "poorly thought out" and blame free enterprise just because criminals make illegal fraudulent purchases every hour of every day no matter what security measures online stores keep adding.
          PR
          • 6 Months Ago
          @PR
          2WM said "left that money on the front porch of his house in the basket and it was easily stolen" What are you talking about? Hailey had to commit a felony before he could get the money. If you are talking about cash laying around, the felony would be breaking and entering your home to steal the money. You are doing the equivalent of blaming the home-owner because they had just a cheap walmart door lock instead of a top dollar double-dead bolt with a reinforced door-jam and a steel security door. And it isn't even the gov't's door that the money was behind. The 9 million dollars came from behind PRIVATE COMPANY'S doors, not the gov't! I've already explained that to you once already. What is wrong with your reading comprehension skills? This wasn't gov't money laying around anywhere, this was Private Company money. Why do you think the gov't is responsible for keeping track of Private Company's money for them? What part of Hailey committing multiple felonies to get the money don't you understand? What part of criminals being personally responsible for the crimes they commit do you not understand?
          2 Wheeled Menace
          • 6 Months Ago
          @PR
          Let me put it another way. If you lend someone money ( to go towards a good cause ), they leave it out on their front door in a basket and do not protect it.. then say it got stolen, and sorry, i can't pay you back.. Would you be interested in lending that person money again? You don't have a choice since that person is the government. Nor did you have a choice to lend that person money in the first place. Does this make sense to you at all?
          2 Wheeled Menace
          • 6 Months Ago
          @PR
          I got some sweet first edition carbon credits, signed by Al Gore. Never used, mind condition, good for 100 Hummer H3 miles each!
          2 Wheeled Menace
          • 6 Months Ago
          @PR
          Your church analogy has a pretty big flaw in it. Involvement in a church is voluntary, so is tithing ( you may get some heat for not tithing, but you can still get away with not doing it ) What happens when you don't pay your taxes? Do you think that eventually, men with guns may show up at your door? You do not voluntarily pay taxes. And when those taxes are taken from you, and end up buying some CEO a few Ferraris, is that not forcible theft? Who's fault is it then, for taking your money, and then allowing someone else to steal that money from them? Hint: it's the govt.
          Actionable Mango
          • 6 Months Ago
          @PR
          PR - "How exactly is this the fault of the gov't?" Article - "lax oversight and confusing rules" Obviously the program needs clarity, authentication, and auditing. Why defend the existing system instead of calling for improvement instead? If you believe the program is perfectly fine as-is, I have some renewable fuel credits to sell you... just give me a few minutes to print them onto some nice certificate-like paper...
          2 Wheeled Menace
          • 6 Months Ago
          @PR
          Wait - did i ever say that the criminal at the end of the line was not responsible? Where did i say that? Look at my first post. I say that the govt. created yet another poorly designed program that got exploited, and that it is no surprise that somebody figured out how to exploit it. I am pointing to the first person in the chain of theft as MORE responsible than the theif. If you lent your friend some money, and he left that money on the front porch of his house in the basket and it was easily stolen, would you NOT point the finger at him for poorly securing the money he lent you? Now, if he doesn't have to ask you to borrow money from you - he can just take it whenever he pleases - what incentive does he have to return it? maybe if someone points it out, does he ever really do anything? There are fundamental problems with the govt not being held accountable. They will be accountable just enough so that people don't riot, because they don't have much of a incentive to be accountable otherwise. Maybe they will hunt this guy down, in order to look good - in the mean time they will let various other things slide. I trust private business to invest in green tech because they either see profit in it or don't, and they will gauge the risk to reward ratio far better than our govt can. There are more solyndras out there than you think.
          2 Wheeled Menace
          • 6 Months Ago
          @PR
          BTW, 'libtard'? is your first line of offense to start calling names? what a low form of argument that is.
          PR
          • 6 Months Ago
          @PR
          2WM Your understanding of the crimes that happened are fatally flawed. You seem to believe that Hailey stole US taxpayer money from the Gov't. He did not. His contract was with private companies and he stole from private companies. How exactly is this the fault of the gov't? Hailey acted as a supplier the same way an Air Bag manufacturer would supply a gov't mandated airbag to a car maker. This is the same as if an Air Bag manufacturer sent Hefty plastic bags instead of airbags, and falsely claimed their plastic bags met gov't certification when they did not. It's outright fraud, and the person to blame is the criminal. Just to remind you, criminals are personally responsible for the crimes they commit -- end of story. Yes, you going off and blaming the Gov't instead of holding the criminal personally responsible for his crime EARNS you the libtard pejorative for your failed logic and failed understanding and knee-jerk instant "blame the gov't" response. Either take personal responsibility to own the pejorative you earned, or stop making libtard posts.
        Vlad
        • 3 Years Ago
        @2 Wheeled Menace
        Let the obligatory government-bashing commence!
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