Perry Hall Man Convicted in $9M Energy Fraud Scheme
Rodney Hailey faces prison time and the forfeiture of cars, jewelry, property and bank accounts after selling more than 32 million renewable fuel credits.
The Perry Hall businessman accused of selling more than $9 million in fraudulent energy credits was convicted Monday.
Rodney Hailey, former CEO of Nottingham-based Clean Green Fuel, LLC, was found guilty of wire fraud, money laundering and a violation of the Clean Air Act, the Maryland U.S. Attorney announced late Monday afternoon.
Hailey's trial began on June 18 in U.S. District Court in Maryland before Judge William D. Quarles. He was represented by a federal public defender, according to Marcia Murphy, spokeswoman for the U.S. Attorney's Office.
An investigation by several federal and local regulatory and law enforcement agencies found that Clean Green Fuel, LLC had sold more than 32 million renewable fuel credits, also known as renewable identification numbers, to brokers and oil companies for about $9.1 million.
All U.S. oil companies are required by federal law to produce a designated amount of renewable fuel or to purchase credits. These credits are largely available from producers of renewable fuels. Clean Green Fuel, LLC, however, did not produce any renewable fuel. Hailey fraudulently created RINs on his computer without any actual fuel to back them, according to the statement.
The investigation into Hailey began on July 22, 2010, following a complaint that he had been selling fake RINs. Two Environmental Protection Agency inspectors Clean Green Fuel’s headquarters on Franklin Square Drive.
"Hailey was not able to provide an exact location for the bio-diesel fuel production facility, nor any records to support claims that Clean Green Fuel had produced bio-diesel fuel. When asked to explain his method of production, Hailey falsely stated that he paid employees and contractors to recover waste vegetable oil from 2,700 restaurants in the 'Delmarva' area and bring it to his production facility where he converted it to bio-diesel fuel. Hailey claimed that only the drivers who picked up the oil knew the names of the restaurants, and Hailey could not provide the names of the drivers," according to the statement.
The investigation continued with assistance from the Baltimore County police and Maryland’s federal financial crimes task force, which investigated a large number of luxury cars parked in front of Hailey's Perry Hall home in the 10000 block of Catron Road. They included BMWs, Mercedes Benz, a Rolls Royce Phantom, a Lamborghini, Ferrari, Maserati and others, the statement showed.
"Hailey generally used cash or checks drawn on accounts he controlled to make the purchase, including a check for $645,330.15 to buy his home in Perry Hall," according to the statement.
Ultimately, investigators found that between March 2009 and December 20120, Hailey had generated more than $9 million from the sale of fake credits.
Cars, jewelry, property and bank accounts were seized by the federal government after charges were filed against Hailey in October 2011.
Last spring, The Washington Post reported on the case's impact on EPA regulations and other green fuel companies.
Another biodiesel company, based in Texas, Absolute Fuels LLC, is facing similar accusations, according to the article.
Both cases have prompted responses from biofuel companies across the country, trade associations and members of Congress. A bipartisan group of members of the Natural Resources Defense Council, American Fuel and Petrochemical Manufacturers and the Biobased Industry Center began calling for greater consistency and transparency related to renewable fuel credits, the article stated.
Hailey is scheduled to be sentenced on Oct. 11, 2012. He faces a maximum 20-year sentence for wire fraud, 10 years in prison for each of the 31 counts of money laundering and two years in prison for the Clean Air Act violation, according to the statement.
What can federal regulators do to prevent fraud related to renewable energy credits? Is it still a viable program? Tell us in the comments.