New York Times: Fraud Case Shows Holes in Exchange of Fuel Credits

July 4, 2012

Gary L. Miller knew something was afoot in the garage rented out behind his auto equipment business. Through an open door, Mr. Miller glimpsed piles of pipes, polyethylene tanks and pumps. But nothing was hooked up. Nothing was being made.

So it came as a surprise — to say the least — when he learned that the tenant, Rodney R. Hailey, had told a federal agency that he would produce millions of gallons of biodiesel fuel there.

“Not out of here. Not out of a few plastic tubes,” Mr. Miller said, standing outside the tiny ramshackle building.

Mr. Hailey never made a single gallon of fuel. But that did not stop him from selling more than $9 million of fake fuel credits through a federal program critics call deeply flawed. Mr. Hailey, 33, was convicted in federal court on June 25 on 42 counts of wire fraud, money laundering and Clean Air Act violations. His prosecution highlighted one of several schemes connected to the energy credits known as renewable identification numbers, or R.I.N.’s.