Two men indicted in biofuel scam
The Justice Department on Thursday said two men were indicted by a federal grand jury in Las Vegas for violations of the federal renewable fuel program that allegedly netted them more than $37 million.
The 57-count indictment against James Jariv, 63, of Las Vegas, and Nathan Stoliar, 64, of Australia, includes allegations of conspiracy, wire fraud, false statements under the Clean Air Act, obstruction of justice, and conspiracy to engage in money laundering, the department said. The indictment was unsealed late Wednesday following Jariv’s initial appearance in federal court in Las Vegas, which followed his arrest on Tuesday. Stoliar resides in Australia.
The 2007 Energy Independence and Security Act created a number of federally-funded programs that provide monetary incentives for the production of biodiesel and encourage biodiesel use in the United States. Biodiesel producers and importers could generate and attach credits known as “renewable identification numbers” or RINs to biodiesel they produced or imported. Because certain companies need RINs to comply with regulatory obligations, RINs have significant market value, the Justice Department noted. In addition, to create an incentive for biodiesel use in the United States, anyone exporting this fuel is required to obtain these RINs and provide them to Environmental Protection Agency. The market price charged for exported biodiesel includes the value an exporter must later use to buy the RINs.
The indictment alleges that starting in June 2009, Jariv and Stoliar operated City Farm Biofuel in Vancouver, British Columbia, which purported to be produce biodiesel from feedstocks, such as animal fat and vegetable oils. Jariv also operated a company based in Las Vegas, called Global E Marketing. The Justice Department alleges the two men claimed to produce biodiesel at the City Farm facility, import and sell it to Global E Marketing, and then generated and sold RINs based on this claimed production, sale and import.
“In reality, little to no biodiesel produced at City Farm was ever imported and sold to Global E Marketing as claimed,” the department said.
The indictment alleges the defendants’ scheme allowed them to generate about $7 million in RINs that were fraudulent, which were then sold to companies that needed to obtain them. The indictment also alleges at the same time and continuing through Dec. 31, 2013, the defendants, using their company MJ Biodfuels, bought more than 23 million gallons of RIN-less biodiesel that had been blended with small amounts of petroleum diesel, known as B99, from companies in the United States. The defendants sold some of this biodiesel to purchasers in the United States, claiming it was pure biodiesel, known as B100, produced at the City Farm facility and imported into the United States. In doing so, Jarvis and Stoliar failed to give the United States RINs worth more than $30 million, “keeping this money for themselves instead,” the Justice Department said.
In response, the U.S. government seized assets contained in a number bank accounts used by the defendants, as well as real and personal property in Las Vegas.