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www.fueloilnews.com | FUEL OIL NEWS | AUGUST 2014 19 Hove noted that the EPA's new rule also includes new requirements for fuel exporters, and shifts some compliance burdens to blenders while staying "relatively silent" with respect to RIN separation. EPA also stated that it is not currently finalizing rules which would require suppliers to disclose biodiesel content of 5% or less, according to Hove. The new rule directly impacts marketers/blend- ers that are currently accepting RINs on neat gal- lons of renewable fuels. "First and foremost, the new rule provides protection against intentional and unintentional fraudulent and invalid RINs," Hove wrote in a RINAlliance briefing. The final QAP is a voluntary compliance tool that renewable fuel producers may adopt to show downstream parties that RINs have been verified by a third-party engineering firm currently registered with the EPA under the RFS rules. The final rule states that if a RIN is gener- ated under a QAP and is later found to be invalid, downstream parties cannot be issued a violation for owning the invalid RIN, Hove explained. Penalties for violations are as high as $37,500 per occurrence, plus the return of any financial gains from the sale of invalid RINs. Interim QAP rules covering Feb. 21, 2013, through Dec. 31, 2014, have been finalized and any downstream party that accepted RINs under these interim QAP protocols (approximately 60 facilities proactively adopted QAP A or QAP B plans) are also privy to the same affirmative defense against violations as is found in rules moving forward. Beginning Jan. 1, 2015, however, there will be only one QAP (Q-RIN). This QAP will not create a system which will replace RINs for the blender or obligated party; however, the new rules include provisions that allow the RIN generator to replace invalid RINs found in the system. Numerous administrative steps are required for any party replacing RINs, claiming an affirmative defense, requesting a corrective action, or designating a potentially invalid RIN. In the event of a PIR, the QAP provider must notify the EPA and the RIN generator within five business days. The QAP program may prove to create added value on the Q-RINs, creating a new tier pricing structure, Hove noted. Lisa Coffelt of the RINAlliance told Fuel Oil News, "It's going to be interesting to see if the RINs that come from a producer that has a QAP may be higher-priced" than those coming from a producer without a QAP. Asked what the likely outcome is, Coffelt said, "We'll just have to wait and see what the market decides to do." Fuels l F O N Trading in fake fuel credits fueled a high-flying lifestyle for scammers, until their schemes came to a crashing halt. Convictions in high-profile fraud cases involving fuel credits called Renewable Fuel Identification Numbers prompted the Environmental Protection Agency to come up with a new rule designed to help establish their validity (see main story). In 2013, Jeffrey David Gunselman, then 30, was sentenced by U.S. District Judge Sam R. Cummings to "188 months"—more than 15 years—in federal prison, fined $175,000 and ordered to pay $55 million in restitu- tion following his guilty plea to an indictment charging 51 counts of wire fraud, 24 counts of money launder- ing and four counts of making false statements in violation of the Clean Air Act, according to U.S. Attorney Sarah R. Saldaña of the Northern District of Texas. Saldaña referred to the investigation of Gunselman, by EPA's Criminal Investigation Division and the U.S. Secret Service, as a "complex fraud case." "Congress created the Renewable Fuel Standard to ensure that transpor- tation fuel sold in this country contains a minimum amount of renewable fuel," said Ivan Vikin, special agent in charge of EPA's criminal enforcement program in Texas. The sentencing of Gunselman demonstrated the consequences of "exploiting the renewable fuels pro- gram in order to steal millions of dollars from customers and taxpayers." Gunselman was the owner of Absolute Fuels, which he formed in April 2009. He also operated other busi- ness entities associated with Absolute Fuels, including Absolute Milling, Ellipse Energy, 21 Investments and YGOG Holdings. However, Gunselman admit- ted that these entities were "solely alter egos of himself," and that he alone owned, managed, directed and con- trolled each of them, authorities said. From September 2010 to mid- October 2011, Gunselman conducted fraudulent transactions, which were transmitted by wire communica- tions, that represented to the EPA that biodiesel fuel had been produced at the Absolute Fuels facility in Anton, Texas, when in fact, no bio-diesel fuel had been produced, authorities said. This ultimately resulted in Gunselman requesting and receiving payments, by electronic funds transfer, of approxi- mately $41.7 million, authorities said. Regarding the money laundering convictions, during the same time period, Gunselman purchased real and personal property valued at approxi- mately $12 million with the funds derived from the wire fraud. Included in that property were: several vehicles, including a Bentley, Mercedes-Benz, Lexus, Cadillac and Shelby Cobra; a Patton Military Tank; a Gulfstream air- plane, professional basketball season tickets and corporate sponsorship; and agricultural, business and residential real estate. Also in 2013, Rodney R. Hailey of Perry Hall, Md., was sentenced to twelve and a half years in prison and ordered to pay more than $42 million in restitution after being convicted of selling $9 million worth of fake RINs to oil companies and commodities brokers, reported The Baltimore Sun. Hailey operated Clean Green Fuel, a company that claimed to be making renewable fuel from waste cooking oil, and sold RINs for more than 23 million gallons of biodiesel he never made, The Sun reported. EPA investigators visited Hailey's office in 2010 after receiving a tip that he was selling fake credits, according to The Sun. Months later, a federal financial crimes task force investi- gated after a neighbor complained to Baltimore County police about luxury cars parked outside Hailey's house, The Sun reported. Hailey was charged in October 2011, and accused of using money from the fuel credits to pur- chase real estate, jewelry and several cars, including a Rolls-Royce and a Lamborghini. – Stephen Bennett Crime Stories