3 Indiana brothers plead guilty in biofuels fraud that bilked taxpayers, fuel buyers


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INDIANAPOLIS — Three Indiana brothers have pleaded guilty in a biofuels scam that bilked taxpayers and fuel buyers out of tens of millions of dollars, federal prosecutors said Wednesday.

Chad Ducey, 39, of Fishers, pleaded guilty Tuesday in U.S. District Court in Indianapolis to conspiracy, wire fraud and other charges. His brothers, Chris Ducey, 48, of North Webster; and Craig Ducey, 44, of Fishers, had pleaded guilty to the same charges late last week, prosecutors said.

The trio, who had faced a May trial, operated E-biofuels LLC from a central Indiana biofuels plant.

Craig Ducey also pleaded guilty to a related $58.9 million securities fraud scheme that prosecutors said bilked more than 600 investors and shareholders of E-biofuels' parent company, Imperial Petroleum.

The brothers sold more than 35 million gallons of biodiesel to customers in several states in the Midwest, South and East Coast, charging prices well above what it was worth by claiming it was pure biofuel made from renewables such as vegetable oils, prosecutors said. But that fuel actually contained some petroleum diesel, and during the scheme, the government paid out renewable energy tax credits and other benefits that should not have been paid because it wasn't pure biofuel.

Prosecutors said the brothers, their co-conspirators and their companies saw more than $55 million in gross profits in the scam, at the expense of customers and U.S. taxpayers.

Earlier this month, a New Jersey man also pleaded guilty in the scam, which prosecutors said is one of the largest frauds in Indiana history.

Joseph Furando of Montvale, New Jersey, pleaded guilty to all of the charges he faced, including conspiracy, wire fraud, lying to investigators and money laundering. Guilty pleas were also entered on behalf of Caravan Trading Co. and CIMA Green — two companies that Furando, 49, co-owns.

"There are opportunities in Indiana for innovators in agriculture and biofuels," U.S. Attorney Josh Minkler said. "The Duceys and their co-conspirators in New Jersey undercut those opportunities by exchanging greed and fraud for innovation."

Under his plea, Furando has agreed to pay full restitution to his victims and forfeit real estate, sports cars — including a Ferrari he bought for $247,000 — jewelry, a piano, artwork and other luxury items he bought with proceeds.

Prosecutors said the E-biofuels plant in Middletown could produce biodiesel, a renewable fuel, from animal fats and vegetable oils, but that between the fall of 2009 and the summer of 2011, its production equipment was hardly used. E-biofuels instead purchased biodiesel from Furando and sold it as its own as pure biofuel, allowing the defendants to illegally claim tax credits and other benefits, prosecutors said.

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