A recent indictment is another case in point. The U.S. Department of Justice (DOJ) recently announced that a federal grand jury in Houston, Texas indicted an individual for allegedly selling fraudulent renewable identification numbers (RINs).
The indictment alleges that an individual using the name Philip Joseph Rivkin operated and controlled several Houston-based fuel companies including Green Diesel LLC, Fuel Streamers Inc. and Petro Constructors LLC.
The defendant allegedly claimed that Green Diesel produced millions of gallons of biodiesel at its Houston facility then generated and sold about 45 million RINs based on the claim. However, according to the indictment, Green Diesel did not actually produce any biodiesel at its facility. The defendant allegedly made millions of dollars selling the fraudulent RINs.
This type of fraudulent activity undermines the policy goal of RINs – to ensure a certain level of renewable fuel in U.S. gasoline – by damaging the market for valid RINs and ultimately reducing the actual volume of biofuels in circulation.
According to a spokesman for a biodiesel trade group quoted in this StarTribune article, the RIN scam has hurt the biofuels industry by making obligated parties more wary of purchasing the credits from biodiesel producers.
The fraud and resulting damage are recognizable when we view the putative RIN purchasers as green consumers, albeit commercial consumers instead of individuals, falling victim to false representations about the validity of renewable energy-based financial products.
In apparent recognition of the damage caused by fraudulent RINs, Biofuels Digest reported that the U.S. Environmental Protection Agency recently finalized additional regulations to ensure oversight of RIN generation and improve the RIN market.