Executives of Company with Ties to Polygamous Church Indicted for Over $500 Million in False Claims for Renewable Fuel Tax Credits
On Friday, August 24th, DOJ announced that three individuals had been indicted by a grand jury in Utah for filing false claims for over $500 million in renewable fuel tax credits on behalf of Washakie Renewable Energy. Washakie is associated with the Kingston Group, a Utah-based polygamous church with fundamentalist Mormon beliefs, that has previously paid $3 million to the EPA for falsely claiming to have produced renewable fuel.
According to the indictment, the three men – the CEO and CFO of Washakie, and a third individual who controlled other companies – allegedly created phony records claiming that Washakie made renewable fuel transactions that qualified for the tax credit. In fact, no such renewable fuel transactions had been made.
The renewable fuel tax credits are designed to increase the amount of renewable fuel used and produced in the U.S. They are refundable credits, which means that a taxpayer who claims them is entitled to them whether or not the taxpayer owes any other taxes. If the taxpayer does not otherwise owe taxes, then the IRS writes a check to the taxpayer. The indictment in the Washakie case lists 37 false claims for renewable fuel tax credits, made between 2011 and 2015, with payments by the government to Washakie totaling over $500 million.
As the Washakie indictment demonstrates, false tax credit claims can cost the government hundreds of millions of dollars. Whistleblowers can play a critical role in exposing fraud in these programs, stopping cheaters, and recovering money for American taxpayers. Whistleblowers with knowledge of individuals and entities that have falsely claimed renewable fuel tax credits can submit a tip under the IRS Whistleblower Reward Program. IRS whistleblowers are eligible to receive 15-30% of any taxes collected by the government based on a whistleblower submission that provides the Internal Revenue Service with information relating to any tax underpayment exceeding $2 million. In fiscal year 2017, the IRS paid awards based on 242 whistleblower claims.
Renewable fuel programs have been a frequent target of government enforcement actions on behalf of the IRS and EPA.
- In July 2017, two Indiana biodiesel executives were sentenced to prison for falsely claiming over $60 million in renewable fuel tax credits.
- In January 2016, a man was sentenced to 20 years in prison in a biofuels fraud scheme that was prosecuted in part by the IRS Criminal Investigation division.
- In February 2018, a New York man was sentenced to 87 months in prison for a biofuels fraud scheme that included millions in false tax credits.
- In April, 2015, three individuals pleaded guilty to a $145 million biofuels fraud scheme.
- In September, 2016, Chemoil agreed to a $27 million penalty based on its fraudulent sale of renewable identification numbers (RINs).
- In March, 2016, a Houston man was sentenced to more than ten years in prison for falsely creating and selling renewable fuel credits.
With this government attention to renewable fuels fraud, and the availability of rewards under the IRS Whistleblower program, individuals with knowledge of such fraud are encouraged to consult with experienced whistleblower attorneys about their options.