What’s one way to make a quick million, buy fancy cars and score some famous artwork? How about taking advantage of one of the most broken policies in America?
From volatile food prices, to engine damage, to a government boondoggle, the Renewable Fuel Standard has been a burden on the country and consumers. And now, it’s clearer than ever that the RFS compliance system is broken. It is being blamed for costing American refiners BILLIONS every year, leading some to bankruptcy, and that’s just part of the problem. Criminals are exploiting the Renewable Identification Number (RIN) system by selling fake biodiesel credits, defrauding businesses and taxpayers for the sake of getting rich and making completely over-the-top purchases.
The RFS RIN compliance system is exactly what you’d expect from Washington—a complicated mess. The law says certain volumes of biofuels have to be blended into the fuel supply. Every batch of biofuels is assigned a RIN serial number. Companies that blend biofuels get credit under the law and they also get to sell the RINs attached to their fuels to others, typically those who structurally aren’t able blend biofuels themselves but still need to prove that they’re complying with RFS. The price of RINs can vary wildly and refiners who can’t blend have no choice but to pay.
If this sounds complicated, it is. Due to the convoluted compliance system, RIN fraud has run rampant. Criminals figured out early on that they could launch fake companies, pretend to produce biofuels, register those fake fuels for RIN numbers and then sell fake RINs to others. The RFS made it easy. That’s right. Criminals are scamming the system by selling numbers attached to non-existent biofuels.
As the Los Angeles Times highlighted, the system criminals are exploiting “is creating all manner of havoc for fuel businesses operating legally across the country.”
Let’s take a trip down memory lane and look at some of the higher-profile (and more ridiculous) fraud cases resulting from the RFS RIN compliance system…
- The Art of RIN Fraud: Imagine walking into a biodiesel factory with pipes and valves filled with nothing but air (and probably dust), pumping out imaginary biofuels. Welcome to Phillip Rivkin’s Green Diesel.
After defrauding the government and taxpayers out of nearly $100 million, Rivkin fled the country to Spain and went on a little spending spree. What exactly did he buy? Well, the indictment included “cash in excess of $29 million; three vehicles including a Lamborghini, Maserati, and a Bentley; a Canadair LTD airplane; and millions of dollars’ worth of artwork.”
However, justice was served, and Rivkin was sentenced to 10 years in prison and ordered to pay restitution of $87 million. And as icing on the cake, art auctioneers Christie’s sold his collection, with proceeds benefiting his victims.
- Triple the Trouble: The Ducey brothers from Indiana had a great idea … just resell the serial numbers already sold by another company. After taking complete advantage of the RFS compliance system, Chad, Chris and Craig Ducey resold over $145 MILLION in RINs. The brothers had purchased $7.5 million in jewelry, artwork, cars and homes, all through the exploitation of the policy intended to help our country. But don’t worry — the brothers now face up to 20 years in prison, as well as “large fines and the requirement that they provide full restitution to the victims of this crime, which include U.S. taxpayers, truck stop companies, fuel traders and others.”
- No Fuel, No Problem: Andre Bernard from New York made real money selling meaningless numbers attached to absolutely nothing. As the Los Angeles Times explains, Bernard generated “$42 million worth of phony credits.” At least he’s had to answer to the law, Bernard was sentenced to 87 months in prison for his crimes.
Sadly, this is just a sample of the fraud cases resulting from the RFS compliance system. As the former director of the EPA’s criminal investigation division puts it, “There has already been north of $500 million in fraud prosecuted. That to me means there have been billions of dollars in fraud losses out there.” However, the system is so broken there’s likely no way to be able to prosecute every instance of RIN fraud that’s occurred across the country.
Isn’t it about time our legislators put an end to the mess caused by the RFS? Write your legislator today and demand that they put an end to this easy criminal fraud by reforming the ethanol mandates and the RIN compliance system!