The largest tax and securities fraud case in the history of Indiana. That's what the U.S. Attorney's Office is saying about a sophisticated scam that included an Evansville petroleum business.
E-Biofuels is a fuel company based out of Middletown, Indiana. U.S. Attorney's Office is accusing them of fraudulently selling 35-million gallons of biofuel to customers, creating losses to victims totaling more than $100 million.
E-Biofuels was bought by Evansville based Imperial Petroleum in 2010.
"The numbers in this case are staggering," said U.S. Attorney Joseph Hogsett.
E-Biofuels is hit with federal charges for taking $35 million in tax breaks from the federal government, which they weren't supposed to have.
Customers say they were defrauded more than $55 million.
E-Biofuels' parent company, Imperial Petroleum's investors say they were defrauded too.
"The largest tax and securities fraud scheme in the state of Indiana," said Hogsett.
Hogsett says E-Biofuels was selling a high grade fuel to customers, only the fuel they were delivering was not high grade.
"The scheme was not only sophisticated but it was extremely complicated," said Hogsett.
E-Biofuels allegedly pretended to convert it to high grade, then delivered the unchanged fuel to unknowing customers.
The U.S. Government offers a tax credit for each gallon of high grade biofuel a company makes. E-Biofuel is being charged for each gallon it claims to have produced, totaling $35 million.
"These people believed that they and their businesses were entitled to a free ride on the backs of Indiana tax payers," said Hogsett.
Former Imperial Petroleum CEO Jeffrey Wilson is accused of knowing about the alleged scheme.
In all 7 people are arrested, with three companies, in a fraud scheme that tops the list in the history of Indiana.
Hogsett says Jeffrey Wilson was released today under an agreement that he is not allowed to travel.
Wilson has a trial date set in November, although it is expected to be delayed.