Pattison Pleads Guilty to RIN Fraud

STREATOR, Ill. (DTN) -- Evelyn Katirina Pattison, also known as Katirina Tracy, entered a guilty plea in United States District Court Southern District of Indiana Indianapolis Division on charges of biodiesel Renewable Identification Number fraud.

Schneider Electric obtained court documents Wednesday morning that were filed July 29 in the court by the prosecutors.

She pled guilty of charges that she conspired with others to charges of wire fraud, making false claims to the Internal Revenue Service in violation of the Clean Air Act, and a charge she obstructed by "craft, trickery, deceit, and dishonest means" the functions of the Environmental Protection Agency in enforcing the Clean Air Act governing renewable fuel mandates.

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Under the plea agreement, Pattison faces a maximum penalty of five years in jail and a fine of $250,000.

Charges were originally brought before her and other co-defendants by the Securities and Exchange Commission for posing to investors as a biodiesel production business while allegedly concealing illegal activity, the SEC said in a news release last September.

The SEC alleges that when Imperial Petroleum purchased Middletown, Ind.-based E-Biofuels LLC as a subsidiary in 2010, E-Biofuels' owners allegedly falsely represented that they were producing biodiesel. Imperial's annual revenue increased from $1 million to more than $100 million and its stock price soared as the company falsely told investors that E-Biofuels was in the business of environmentally friendly biodiesel production, SEC said.

Imperial's stock price plummeted to less than 10 cents per share after the scheme fell apart, resulting in a market loss of approximately $60 million.

The complaint also charges three New Jersey-based companies -- Caravan Trading LLC, CIMA Green LLC, and CIMA Energy Group -- and their operators Joseph Furando and Pattison for acting as the middlemen in the scheme. Charges are still pending against Furando.

According to the SEC's complaint, Imperial falsely stated in its annual reports for fiscal years 2010 and 2011 that E-Biofuels produced and sold more than 28 million gallons of biodiesel from May 24, 2010, the closing date of Imperial's acquisition of E-Biofuels, to July 31, 2011, the end of the fiscal year. More than 99% of Imperial's revenues came from E-Biofuels during this time period. In reality, the vast majority was biodiesel bought from the New Jersey companies and fraudulently recertified with new incentives and tax credits. The biodiesel was purchased and then resold unchanged to customers for more than $100 million.

(BM/AG)

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