A Maryland man whom the U.S. Environmental Protection Agency took to court for allegedly selling fraudulent renewable fuel credits has been sentenced to more than 12 years in prison, the agency announced Friday. U.S. District Judge William D. Quarles, Jr. sentenced Rodney R. Hailey, of Perry Hall, Maryland to 12 years and six months for allegedly selling $9 million worth of renewable fuel credits to energy companies.
Judge Quarles also ordered Hailey to hand over a bit more than $9 million in profits earned from the sale of the credits, as well as $42.2 million in restitution to about 20 companies found to have been harmed b economically by the fraudulent sales.
Hailey was convicted in June 2012 on 42 counts ranging from wire fraud to violating the Clean Air Act.
Under federal law, fuel companies are required to produce a certain amount of renewably sourced fuels or else buy renewable fuel credits from companies that produce said fuels. Those credits are sold in the form of "Renewable Identification Numbers (RINs)," 38-digit numbers that correspond to two-thirds of a gallon of biodiesel. In June, the U.S District Court found that Hailey, through his dummy biodiesel corporation Clean Green Fuel LLC in Baltimore, had illegally sold more than 35 million of those RINs despite his company having no means to create biodiesel.
Hailey apparently plowed the proceeds from Clean Green Fuel into supporting a lavish lifestyle, including a $600,000 house in Perry Hall, MD for which he paid cash.
In addition to the energy companies who bought the fraudulent renewable fuel credits, Clean Green Fuel also apparently contributed to driving a number of bonafide biodiesel firms out of business by saturating the market for RINs.
The EPA says that Hailey made false statements to agency investigators, including claims that his company collected waste grease from thousands of restaurants in the Delmarva Peninsula area.
"When invalid renewable fuel credits are 'produced' and sold, it undermines the integrity of an important program designed by Congress to reduce the nation's dependence on foreign oil and to grow the nation's renewable energy industry," said the EPA's Cynthia Giles in a press release issued. "Today's sentence shows that there are serious consequences, including jail time, for defrauding the renewable fuels program for personal gain."