A New Jersey man and two companies he co-owns have pleaded guilty to federal charges in a biofuels scam that became one of the largest frauds in Indiana history and bilked taxpayers and fuel buyers out of tens of millions of dollars, prosecutors said.
Joseph Furando of Montvale, New Jersey, pleaded guilty Wednesday in federal court in Indianapolis to all of the charges he faced, including conspiracy, wire fraud, lying to investigators and money laundering. Guilty pleas were also entered on behalf of Caravan Trading Co. and CIMA Green, for their roles in the scheme.
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Prosecutors said Furando, his New Jersey-based companies, the companies' co-owner and executives with an Indiana biofuels company who face a May trial claimed more than $55 million in ill-gotten profits through the scam. They allegedly sold truck stops and service stations 35 million gallons of fuel, charging prices well above what it was worth by claiming it was pure biofuel made from renewables such as animal fats and vegetable oils.
But that fuel actually contained some petroleum diesel and during the scheme the government paid out renewable energy tax credits and other benefits that should not have been paid because it wasn't pure biofuel, prosecutors said.
The defendants allegedly reaped "huge" profits in the scheme that sometimes exceeded $12,000 per truckload of fuel, they said. The fuel was sold in several states in the Midwest, the South and along the East Coast, said U.S. attorney's office spokesman Tim Horty.
After the September 2013 indictments, prosecutors said customers who purchased the fuel were defrauded of more than $55 million, while the Internal Revenue Service suffered $35 million in losses from the tax breaks and renewable energy credits awarded as part of the scam.
Under his plea, Furando, 49, has agreed to pay full restitution to his victims and forfeit real estate, sports cars — including a Ferrari he bought for $247,000 — jewelry, a piano, artwork and other luxury items he bought with proceeds from the scheme.
U.S. Attorney Josh Minkler said he's pleased Furando has accepted responsibility for his role in the scam that involved nearly a dozen defendants and was one of the largest in Indiana history. He said the scam "defrauded U.S. taxpayers of tens of millions of dollars that Congress appropriated for energy independence and a cleaner environment for all of us."
Messages seeking comment left Thursday for Furando's attorney were not returned.
Furando's sentencing has not been scheduled, but he faces up to 20 years in prison on some of the charges and large fines.
Evelyn Katirina Pattison, who co-owned Caravan Trading Co. and CIMA Green, pleaded guilty last July to one conspiracy charge in the scam. She has not yet been sentenced.
Middletown, Indiana-based E-Biofuels allegedly began the scam when three of its executives arranged to purchase fuel known as B99 — or biofuel blended with a small amount of petroleum diesel — from the two companies and resold it with fake documentation as B100, or pure biofuel.
Although E-Biofuels' Middletown plant was capable of producing pure biofuel, prosecutors said it was rarely in operation during the scam that allegedly ran from July 2009 to May 2012.
Three E-Biofuels executives, brothers Craig, Chad and Chris Ducey, are scheduled to stand trial May 11 along with their company. They face conspiracy, wire fraud and other charges.