• Aug 3, 2012
Alternative energy and cleantech have been a platform for political jabs and Congressional hearings in Washington over the past year – the Solyndra scandal, Chevrolet Volt post-crash-test battery fires, and Fisker Automotive's Department of Energy grant loan quickly come to mind. The latest one deals with companies committing fraud tied into the federal renewable fuel standard, and it's not pretty.

Oil companies like Sunoco buy renewable identification numbers (or RINs) from biodiesel suppliers to earn credits to meet the renewable fuel rules, but things aren't turning out so well. Last month, for example, Jeffrey David Gunselman, former CEO of Absolute Fuels, got busted by the feds for pilfering more than $50 million in fake RIN credits without producing the biodiesel needed to meet federal standards.

This isn't the first time it's happened. In June, Rodney Hailey of Maryland, who headed Clean Green Fuel LLC, made $9.1 million for selling renewable fuel credits that were not delivered, and is now facing legal consequences. Similar fraud cases have been reported in Texas and Alabama, and Congress is being pressured to address the problem. The Environmental Protection Agency is revising the program to reduce fraud, and has been sued by people that were rooked by Rodney Hailey. For those doing business in alternative energy and cleantech, it's wise to do some background checking.


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    • 1 Second Ago
  • 30 Comments
      Marcopolo
      • 1 Hour Ago
      @ 2 Wheeled Menace There is much truth in what you say ! Except, why honeybadger ? What's wrong with the good old American Wolverine ?
      PR
      • 1 Hour Ago
      A conversation between to companies responsible for buying renewable fuel credits. Company 1: Yea, I read the law and saw that my company is responsible for validating RIN numbers are valid. Since I'm handing over millions of dollars of our money, I called Clean Green Fuel and asked to tour their facility. There was a huge red flag when they said no. Company 2: Wait, I didn't know I was responsible, I thought as long as any private company put any RIN in front of me, I could just throw a few million dollars at anybody who claimed to have RIN's for sale. How could WE be responsible for who we hand millions of dollars to??? Company 1: Maybe your should have read the law before handing out millions of dollars. Anyways, I then asked if I could get some references from some of their customers. Clean Green Fuel couldn't provide any customer references. Now the warning bells were banging away like crazy. So I did a basic state lookup of the company in records anyone can access on the internet, and found it was registered to a private residence in a residential neighborhood. That's not normal for a manufacturing facility. At this point I knew there was no way I would hand over millions of dollars of money that I'm legally responsible for to Clean Green Fuel until they could address these very basic questions. Company 2: Did you say Clean Green Fuel? I just sent them a couple million dollars. Damn, my boss is going to be pissed!! Why didn't I ask even basic questions that would have exposed they were a scam? Damn gubberment! I'm suing!! Company 1: Suing Clean Green Fuel? Company 2: Heck no, everyone knows the damn gubberment is who is to blame for my not finding out even basic information about Clean Green Fuel before I handed them millions of my money! What are you, some apoplectic socialist idiot? I'm downvoting your comments! How dare you blame this on me! Commie lefty, you must work for Obama, or you must be some gov't employee. Company 1: *face-palm*
        PR
        • 1 Hour Ago
        @PR
        Just in case someone is wondering what I'm talking about, Clean Green Fuel LLC claimed to be producing biofuels, but had no manufacturing facility. They had no customers that were buying their products, and the business was registered to a residential home. All things that could be found out by basic due-diligence by anyone who happened to have a few million dollars at their disposal.
        Marcopolo
        • 1 Hour Ago
        @PR
        PR, Yes, but then again, why didn't the government anticipate when planning such a scheme, (which is after all a government invention), contain the danger of being manipulated in such a manner, and take adequate precautions? It's hardly a surprise ! Most government schemes of this nature have fallen into disrepute as a result of one form or another chicanery. A simple registration and authorization 'license' system to regulate those eligible to trade RIN credits, would have help prevent fraudsters like Clean Green Fuel to operate. While that doesn't excuse the fraud, it also doesn't excuse the poor planning by the government administrators of the program. Blaming the victims of criminal conduct , to excuse government ineptitude, is an unhelpful attitude usually only employed by desperate government apologists.
          PR
          • 1 Hour Ago
          @Marcopolo
          I think it is funny that you are calling for more government regulation of private industry in order for the gov't to step in and regulate transactions between two purely private companies in order to protect them from each other. Meanwhile, I've posted a link to a pure private industry solution that protects private industry from being scammed by other private industry players, and is paid for by private industry and doesn't involve the gov't at all: http://biodieselmagazine.com/articles/8607/rintrust-program-formed-as-rfs2-engineering-review-deadline-nears Why exactly should the taxpayers step in to pay for a program to stop fraud between two private companies doing a private transaction? Why do you want to Socialize the risks, while privatizing the profits? Private companies should be paying for their own loss mitigation when buying from other private companies, not having the gov't be their nanny and have the taxpayers pay for private company's loss mitigation. But good job in figuring out a way to try and blame the gubberment for private industry's failure to conduct proper loss mitigation. What next, are you going to blame the gov't for toys stolen from toy stores because the gov't mandates that toy stores only sell toys that meet gov't safety standards?
          PR
          • 1 Hour Ago
          @Marcopolo
          Private industry faces fraud whether or not there is any involvement by gov't or not. It is part of running a business and making money. Should private companies pay for their own loss mitigation out of their own profits, or should there be a big gov't program payed for by tax dollars to regulate every private transaction a company does with another company? How about an intellectually honest answer from you for once. Which do you choose: A) A big gov't solution where taxpayers pay for private companies' loss mitigation, while the private companies keep the profits. B) Private companies paying for their own loss prevention in transactions between them and other private companies. Which do you choose? This is an easy question.
      PR
      • 1 Hour Ago
      2WM -- Crime doesn't just affect the gov't. Let me see if I can boost your rage through the roof. Criminals targeting private industry is emptying your pockets even faster, much of which could be avoided if private companies tightened their security practices. 1) People shoplifting from the private sector costs a typical family around $500 dollars a year in higher costs when we shop at Brick and Mortar private companies. 2) Credit card fraud on private sector companies cost consumers around a Billion Dollars in a typical year. All paid for through higher banking fees and higher consumer prices that come out of our pockets. 3) Auto insurance fraud committed against private auto insurance companies is another $200-300 per year for an average household. etc... The list goes on and on. The problem clearly lies with the criminals --- whether they steal from the gov't or steal from the private sector.
      PR
      • 1 Hour Ago
      This is a problem between private industry and the criminals who ripped them off. The correct solution is for private industry to take responsibility for their own solution, such as this private industry solution: "As a result of a few bad apples, all advanced fuel plants are now held to a higher standard to prove that their RINs are legitimate. Because of the increasing amount of negative publicity directed at the industry, programs have emerged to assure the marketplace that RINs being traded are indeed valid. Frazier Barnes & Associates, a trusted name in the biodiesel industry for more than a decade, has launched a comprehensive RIN verification program to meet the needs of the industry." http://biodieselmagazine.com/articles/8607/rintrust-program-formed-as-rfs2-engineering-review-deadline-nears
      PR
      • 1 Hour Ago
      "For those doing business in alternative energy and cleantech, it's wise to do some background checking." Not only is it wise, it is mandated by the very RIN laws that are the basis for this legislation. The law was very clear in requiring each private company purchasing tax credits from another private company be responsible for doing their own research on the tax credits they were buying. It is no different than a car manufacturer being required to validate that the catalytic converter supplier was selling them cats that met emissions law requirements. If a car maker buys a batch of catalytic converters that don't meet emissions requirements, blaming the law that mandates cats would be stupid. Or let's look at a real life example. PepBoys sold a whole bunch of gas-powered mini-bikes and scooters that didn't meet federal emissions laws that their suppliers lied and said they passed emissions. Did PepBoys get to blame the US emissions laws for their failure to confirm the products had valid emissions waivers? No. They had to take personal responsibility for the products they chose to purchase from another private company, and they paid a fine and are now required to take old gas lawnmowers as a trade-in on discounted electric and push mowers. The US gov't isn't anyone's nanny who is responsible for private companies doing their own due diligence to make sure the suppliers they choose are selling them products that comply with US law. Nor is the US Gov't responsible for criminals ripping off private companies who fail to do their own due diligence.
      PR
      • 1 Hour Ago
      2WM Let me know the instant you can file a Freedom of Information request on a private business, then we can talk about accountability.
      2 Wheeled Menace
      • 1 Hour Ago
      Sure! violence, theft, and other unjust uses of force happen in every area. But the government can do it better and on a larger scale, and get away with it 99% of the time. You can boycott, fire, or otherwise put a company out of business if you can convince others to go along, since your money is their only form of sustenance. You cannot do that with government. When you sue the government, you sue the taxpayer. You can protest, but you'll be ignored. You can vote, but most people get suckered into voting for the 'lesser evil', so we get evil each time. You do not have to shop at a brick and mortar store, you do not have to use a credit card, and there are ways around having a bank too. You do not have to pay for auto insurance ( ride a bike, use public transport ) either. In the private sector, you have a choice. If the price of a service goes up due to XYZ corporation being sued for billions, you can shop with another corporation. You have a choice to not pay for those externalities. But you have to pay taxes, or people come to your house and arrest you at gunpoint; you have no choice but to fund wars based on false allegations. You can't fire the EPA and give your money to an agency that will protect the environment better. If your local police are running around beating and killing minorities at traffic stops, you cannot fire the police captain and the employees responsible and replace them with better people. You cannot replace the USDA for allowing monsanto to introduce GMOs into the market with 0 testing, or for cracking down on raw milk, or various other things. Government has the ultimate monopoly over all things. Even if a private company has a monopoly over a service and is charging unfairly high prices, without leveraging ( which is a nice word for corrupting or bribing ) government in their favor, they do not have any way of preventing another company from coming along and offering the service for a more fair price. Now if you don't mind, you've got me all ragey and i'm gonna go honeybadger on something... :)
      Marcopolo
      • 1 Hour Ago
      Despite PR's apoplectic defense of the Ethanol industry, and the obvious culpability of the perpetrators, these sorts of government programs have a 'greater than normal' responsibility to ensure that t taxpayer's money is not being abused or defrauded. Government programs have a long history of being defrauded, due in part to the lack of management involvement between the promoters of such programs, and those charged with implementation and administration. After all the political effort to get such schemes passed into law, the legislator moves on to the next policy fight leaving often poorly equipped or disinterested public servants to administer and monitor the programe. Since many of these programs are established with faulty or vague legislation, and are breaking new ground, the civil servants often have little or no experience in the industry or regulation they have been charged with administering. The opportunity for unscrupulous operators to defraud the new scheme is obvious. The opportunists have the initiative and the hapless administrators are slow to become aware of malfeasance. Opponents of the Ethanol Industry will point the fact that the EPA is moving, albeit belatedly, " to revise the program to reduce fraud " . This could be interpreted as an admission that fault was due to the incompetence of the way the program was operated, and the validity of it's objectives. But is that fair? The fact that a few ripp-off merchants were able to defraud the system, may reflect badly on the administration, but it doesn't mean the objectives of the program are not valid. That's a different issue.
        PR
        • 1 Hour Ago
        @Marcopolo
        Marco blathered "these sorts of government programs have a 'greater than normal' responsibility to ensure that t taxpayer's money is not being abused or defrauded. " There was absolutely zero "taxpayer's money" being defrauded. This company stole money from other private companies, not "taxpayer's money". Why do you think that the gov't should be responsible in any way for transactions between two private companies? Oh well. I guess it is easy to get even the most basic facts about the issue wrong when you have anti-government tourettes, and are always looking for something to blame on the gubberment. Go ahead, now attack me for correcting you on the actual facts. I'm used to it. Who are you going to accuse me of working for today?
          Marco Polo
          • 1 Hour Ago
          @PR
          PR, Why you find it do necessary to desperately defend government bureaucrats ? I'm sure if it was a different political party in office you wouldn't be so keen to defend government ineptitude ! The only value of these schemes is to obtain exemptions or credits. Whether taxpayer funds are directly involved or not, the potential for fraud is only possible due to the creation of these programs by government legislation. Because the government created the market for such instruments, it has a duty of care to ensure the program is not improperly abused, and government departments are not forced to waste 'taxpayers money' to defend potential lawsuits from angry taxpayers. Worse, supposing the court rules in favour of the litigants ? ! In that case not is the taxpayer required to funds the costs of litigation, but fund compensation for victims of government negligence. You must try to think the repercussions of these things through more thoroughly, before posting misconceived rants, defending bureaucratic ineptitude, under the mistaken belief that someone is not supporting the political party in power. In addition, you might also try a little less personal invective. It adds nothing to the validity of your opinion, but gratuitously reduces the value of your post.
          PR
          • 1 Hour Ago
          @PR
          Good old predictable Marco. Nice job of twisting you being wrong on the facts and needed to be corrected on the facts into it an attack on me. Poor easy to predict Marco!! How about just saying "Yes, I screwed up and I was wrong on the facts" and take personal responsibility for your own failure?
          PR
          • 1 Hour Ago
          @PR
          Private industry faces fraud whether or not there is any involvement by gov't or not. It is part of running a business and making money. Should private companies pay for their own loss mitigation out of their own profits, or should there be a big gov't program payed for by tax dollars to regulate every private transaction a company does with another company? How about an intellectually honest answer from you for once. Which do you choose: A) A big gov't solution where taxpayers pay for private companies' loss mitigation, while the private companies keep the profits. B) Private companies paying for their own loss prevention in transactions between them and other private companies. Which do you choose? This is an easy question.
      EVnerdGene
      • 1 Hour Ago
      Power corrupts. Absolute power corrupts absolutely. Money corrupts. Government money corrupts absolutely.
        Marcopolo
        • 1 Hour Ago
        @EVnerdGene
        EVnerdGene, On the other hand money makes the world go round, and to do great good, you need great power. Strange how every adage has a counter-adage, just depends on the mood you are in ! " you can't get rich and stay honest" ! " poverty breeds crime " ! Go figure...:)
        PR
        • 1 Hour Ago
        @EVnerdGene
        What "Government money" are you talking about? There were absolutely zero government funds involved with the fraud that Green Clean Fuel LLC committed. All of the fraud was private money from private companies that went to Green Clean Fuel LLC. What was the point of posting this?
      EZEE
      • 1 Hour Ago
      Honey badger don't play that sh*t.
      2 Wheeled Menace
      • 1 Hour Ago
      Another hole for the taxpayer to be fleeced. Cmon, if nobody wants to buy biofuels, or sell biofuels, why does such a program exist? It will only be abused.
        Marcopolo
        • 1 Hour Ago
        @2 Wheeled Menace
        @ 2 Wheeled Menace What d'ya mean crime doesn't pay ? It certainly paid us ! Signed, Johnnie Cochran ,Al Cowlings , Robert Shapiro, F. Lee Bailey ,-Marcia Clark. Kicking back and sinkin' a few at Alan Dershowitz's place In memory of Bob Kardashian Beverly Hills California
        2 Wheeled Menace
        • 1 Hour Ago
        @2 Wheeled Menace
        PR, are you trying to give me a rage blackout? :) I know about all those things you mention and they piss me off even more :P We may occasionally arrest some companies for things like this, but accountability in the government ( who contains many more larger and more nefarious criminal operations ) is basically nil, and yes it is a bigger problem.. don't even get me started on that.
        PR
        • 1 Hour Ago
        @2 Wheeled Menace
        If you are outraged by these criminals, you should really be outraged by the US Military contracting system and how the taxpayer is fleeced through those contracts. Did you hear about the pallets of cash that were "lost" in Iraq? No bid contracts? If you don't think this program should exist because some criminals who are being arrested have fleeced some private companies, you must really want the US Military to no longer exist, following your logic. Oh, and credit card fraud is pretty wide-spread these days too, including fraud on credit cards issued for Gov't use. Yet another hole for taxpayers to be fleeced. Should we shut down every single department of every gov't agency because of credit card fraud too following your logic? The criminals are being arrested and will go to jail. The criminals and the criminals alone are responsible for their criminal acts This has nothing to do with the validity of the underlying program.
          EZEE
          • 1 Hour Ago
          @PR
          Whoa whoa whoa whoa whoa. Below you said, 'the problem clearly lies with the criminals' You didn't blame society, guns, or anything else. I knew I liked you for some reason.... :)
      EZEE
      • 1 Hour Ago
      So wait... While making stuff you have to pay someone else off for, to make it seem like you are doing cool things when you are not, you find out the cool things others are supposed to be doing aren't being done? The web we weave....it is tangled....
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