Buy 35 million gallons of biodiesel on the cheap, sprinkle in green fairy dust and sell, baby, sell. Everybody parties until the clock strikes midnight.
From 2009 to 2012, a New Jersey kingpin with a Midas touch, three seemingly ordinary Indiana brothers and a host of underlings skinned U.S. taxpayers for $145 million by cooking the books on a pipeline of renewable fuel. The recipe replaced corn and soybeans with deception, death threats, diamonds, fine art, fast cars, violence and a tower of lies.
Welcome to a carnival of depravity and the ultimate green energy shell game.
A Faustian Deal
Built like a linebacker, with roughly 250 lb. strapped to wide shoulders, and notoriously hotheaded, Joe Furando, 46, was a force of nature in 2012, or at least a bull in a China shop. He claimed to possess mob connections, looked the part, and could have broken his arm patting himself on the back.
The Bergen County, New Jersey resident owned a host of fuel trading companies anchored to two main establishments: Caravan Trading and Cima Green.
Seven hundred miles west of Furando, in east-central Indiana’s Middletown, the Ducey boys and their family business, E-biofuels, were floundering in farm country.
President Craig, CEO Chad and logistics manager Chris, along with their in-law, director of sales Brian Carmichael, were the backbone of E-bio, a Henry County-based plant producing biodiesel. Animal fat, corn oil, soybean oil and other vegetable feedstock, chased by catalyst chemicals, went into the Ducey’s vats and was reborn as biodiesel.
Started in 2006 on the straight and narrow, E-bio’s profit potential quickly withered. By 2009, searching for an angle, the Indiana brothers signed a devil’s bargain with Furando, who would later threaten to stab, disappear and kill employees or associates.
Come, throw in your lot with us, we’ll all share the loot. Proverbs 1:14
Stolen Honey
Work life and married home life were interwoven in a twisted knot for Furando. His two main companies were steered by 26-year-old Katarina Tracy, director of Caravan Trading and COO of Cima Green, who had lived in his home for roughly a decade. Furando began a relationship with Tracy when she was his babysitter, according to both Tracy and federal prosecutors. At the time, he was 36 and she was 16.
“He knew that I’d had a difficult background, is probably the best way to put it,” Tracy told CBS television’s Whistleblower series in 2018. “And he took advantage of that.”
Surreally, Furando promoted Tracy, once his teen nanny, to the helm of multi-million-dollar, booming businesses. “Joe had two different management styles,” she added. “One was, he would praise you and tell you that everything was fantastic. The other side was a literal version of hell. He would tear you apart and he would make you feel like you were no better than a piece of garbage.”
In late 2009 and early 2010, via Caravan Trading and Cima Green, Furando and Tracy began supplying E-bio and the Ducey brothers with biodiesel—the first drops of an astounding 35-million-gallon total purchase.
Furando sold the biodiesel and the Duceys pretended they made it. At both ends of the Indy-Jersey deal, the players raked in a king’s ransom—millions of dollars with plenty more wood to chop.
How did the scam work? Alchemy.
In 2005, Congress passed the Renewable Fuel Standard (RFS), mandating biofuel blends be added to gasoline and diesel, regulated by EPA. At production, biofuels have RINs attached, essentially bonus bucks. In addition to RINs, every gallon of biofuel comes with a tax credit. Both the RINs and tax credits can be redeemed once—and only once.
E-bio and Furando dynamited the system. Furando bought RIN-less biodiesel from Arkansas and California that had already entered the market, and sold it to the Duceys, who pretended it was virgin and made at the E-bio facility. The Duceys then resold the same fuel, reloaded with RINs and tax credits, to unsuspecting customers. Every transaction was backed by a chop-shop of fake invoices, receipts, and bills of lading.
Among conspirators, “Alchemy” was Furando’s code word for the magical pipeline system. Every freshly-cooked gallon of diesel was legally tagged with 1.5 RINs, and at the time, the commercial market paid 75 cents to $2 per RIN. The additional tax credit paid $1 per gallon. Therefore, a fake gallon of virgin biodiesel technically could be worth at least several dollars beyond market value to the Duceys. On average, after paying Furando 50 cents per gallon above his costs and “piece-of-the-action” kickbacks, they skimmed at least $1.60 per gallon for doing nothing but physically moving the product.
The result? E-bio transformed from a biodiesel cooking plant to a laundering facility. Buy low and sell high—sweeter than stolen honey.
The Money Tree
Greed only grows. In 2010, having bought 1 million gallons of RIN-less biodiesel from Furando, the Duceys sold E-bio to CEO Jeff Wilson of Evansville-based Imperial Petroleum—a fuel company hemorrhaging money. On paper, according to 2009 earnings, it was one floundering business buying another. Wink, wink; nudge, nudge.
E-bio, now under Imperial ownership, blossomed into a money tree. Multiplied by millions of gallons, the profit margins were staggering. Every time a tanker trunk moved, E-bio and Furando made approximately $15,000.
Wilson, Imperial’s CEO, gave flight to E-bio’s golden goose. According to federal prosecutors: “After the acquisition, Imperial’s annual revenue increased from approximately $1 million to approximately $110 million, more than 99% of which was from E-bio’s illegal business.”
As the biodiesel swindle boomed, E-bio’s physical plant was a shell, literally idle from May 2010 to July 2011. Furando, concerned EPA might take note of the glaring lack of genuine production, compelled E-bio to cook token batches of biodiesel. He created Green Grease Solutions, a side business selling genuine feedstock to E-bio to keep up appearances in case the feds came knocking. Furando urged E-bio to purchase catalytic chemicals just to “pour them down the sink.”
Wilson later would claim ignorance regarding E-bio malfeasance. The plain evidence spoke otherwise, including a damning May 2011 email sent to Wilson by his son and Imperial board member, Aaron Wilson. Per a federal complaint, the email detailed part of the scam:
[A Third-Party Biodiesel Supplier] sells [the fuel] to Caravan by barge for $4.30 and makes 30 cents minus transport. Caravan sells to E-bio for $4.45 plus delivery and makes 15 cents per gallon for doing almost nothing. E-bio generates RINs & therefore can sell the product for full market value of $5.25. I think this example paints a fairly accurate picture of what’s really happening.
Wilson wooed investors, provided misleading inspection reports, sent out press releases boasting of E-bio’s biodiesel production, and provided facility tours to showcase ongoing production (nonexistent). In a nutshell, he erected a tower of lies.
Meanwhile, sucking in RINs and tax credits, biodiesel flowed from E-bio to its client base in one of three ways: filtering, turn-n-burn, and ghost loads (terminology used by E-bio employees and its associated truckers).
In “filtering,” biodiesel moved from fuel terminals to E-bio’s Middletown plant. Loaded into tankers, E-bio then drove it to customers. In “turn-n-burn,” tanker trunks arrived at E-bio filled with fuel purchases, but didn’t unload at the plant. Drivers picked up false paperwork and kept rolling to customers. In “ghost loads,” tankers never touched the E-bio facility, instead traveling direct from fuel terminal to customer. They obtained bogus paperwork en route via fax.
Roughly 30% of all E-bio biodiesel was delivered in ghost loads to customers in Illinois, Indiana, Pennsylvania, and Texas. The Texas ghost loads were extremely brazen: The tankers never left the state. They never left the city. How? The tankers picked up biodiesel from terminals in Houston and delivered it to customers in Houston. Crosstown madness—considering the biodiesel was purportedly produced at E-bio in Indiana.
And what to do with whispers and murmurs from the truckers who caught on to the con? E-bio greased them with $100 gift cards after each load. Loose lips sink ships.
Going Feral
Furando craved the catbird seat. Despite $55 million in gross profit in two years, he refused to stay low and count his knot, instead splashing cash. Spending alchemy-derived dollars, he acquired five Salvador Dali paintings, one Picasso painting, three Pissarro paintings, one Renoir etching, one Neiman painting, a 2011 Ferrari, a 2011 Harley Davidson, a haul of gold-diamond jewelry, Rolex and Patek Philippe watches, fancy rugs, grand pianos, and much, much more.
Doubling down on the intensity of the spotlight, in what ranks among the most brazen moves in modern criminal history, Furando and Tracy took the Discovery Channel into the heart of E-bio’s manufacturing facility in Middletown, Indiana. In 2012, Furando wrangled a two-episode spot on American Chopper (Season 9, Episodes 6-7) after ordering a custom-built, $150,000 biodiesel motorcycle emblazoned with one of his company names—Cima Green.
Escorting American Chopper star Paul Teutel Sr., Furando and Tracy marched a nationwide television audience into the E-bio plant—the very location they’d turned into a false front—and crowed about the basics of proper biodiesel production.
“Today we are going to show Paul Sr. and the OCC crew how we make biodiesel,” declared Tracy, without a hint of shame, in the segment’s intro. “We’re going to show them the process for bringing in the vegetable oils and the animal fats and then mixing it with the different chemicals like methanol and sodium methylate, and then we’re going to show them where it goes through the different processes to turn it into the finished fuel itself.”
Then, speaking directly to Paul Sr. as cameras rolled, she amplified the lie: “All of these trucks go out to local U.S. facilities to pick up the soybean oil and the used cooking oil. It’s all domestically produced, which is phenomenal for not only sustaining green jobs, but also creating new American jobs for the people here in the United States.”
Juiced for his camera time, Furando snatched center stage—and didn’t miss a beat. “Different than some of the other renewable energy products, we produce a lot of the fuel that we make out of waste products, so we wanted Jason and Paul Sr. to have a real appreciation of how we take waste, bring it in, and produce a new product—a new fuel.”
A new fuel. Indeed.
By all measures, Furando was supremely confident his con game would hold up to legal scrutiny. Gobbling even more attention, he donated the Teutel-built chopper to the National Biodiesel Board.
Outwardly, Furando was flush. Inwardly, Furando was feral. What began with cheating on soybean oil devolved into violence, fake rape charges, death threats, and murder-for-hire claims.
Swimming With Boots
In 2011, Furando caught wind that Imperial/E-bio shorted him $1 million. Maybe; maybe not.
Furando put the squeeze on Imperial’s top investor-relations consultant, Gary Williky, who would later give incriminating info to the feds. According to an affidavit submitted by Williky:
Furando threatened to “start with Williky’s sister and that he knew where she lived.” Furando repeatedly told Williky and others in front of Williky that he was “connected” to the mafia and that his father had actually been part of the mafia. Later, Williky learned that Furando had held a gun to an employee’s head when the employee displeased Furando.
Tim Jones, CFO of Imperial and president of E-bio, after likewise crossing Furando, received a double-barreled blast. One, Furando threatened to stab Jones, and, two, Furando had Tracy threaten to file a knowingly false rape charge against Jones.
There were others, including employees of Caravan Trading and Imperial/E-bio, with similar allegations against Furando—from holding a worker hostage to smashing an employee’s head in a wall, leaving a dent.
Behind the menace and intimidation, Furando was swimming with his boots on—and he didn’t even know it. In walked a whistleblower.
Lying Eyes
In January 2011, Furando hired 21-year-old Alex Chepurko as a financial trader at Caravan. Chepurko seemed a willing dupe: lanky college dropout, naturalized citizen from Russia, easily steered.
Nope. Furando may as well have hired Elliot Ness.
Out of the gate, Chepurko was struck by the obvious: Caravan had no production capacity. Everything Caravan sold was made elsewhere. Yet, 99% of sales were to one giant whale, E-bio, who sometimes paid almost $1 above the market.
Months into Chepurko’s tenure, Furando spilled the tea: “He pulled me aside and basically tells me that this operation they’re doing with E-biofuels is called alchemy,” Chepurko told CBS television in 2018.
Rattled, Chepurko began copying incriminating reports and recording conversations with a hidden smartphone app. Chepurko’s level of risk was extreme. Furando had grown paranoid, deploying anti-bug device technology, convinced a mole was in the mix. Furando was right.
As Chepurko continued gathering evidence, rumors of the E-bio-Caravan con game bounced around the biodiesel industry. The walls, for E-bio and Caravan, were closing.
In August 2011, ear to the ground, Furando fired Chepurko. Instant regret. Furando understood the maxim: Keep your friends close and your enemies closer.
Furando attempted a rehire. “He actually sent threatening text messages,” Chepurko later detailed in 2018. “Pick the f*** up.”
“At one point, he actually called my parents and made a threat that guys my age, ‘get found in ditches all the time in New Jersey,’” Chepurko continued.
Backed by a trove of evidence and recordings, Chepurko ran to the feds, becoming the first in history to simultaneously trigger the False Claims Act, Dodd-Frank Act, and IRS whistleblower laws.
In May 2012, the FBI raided Furando’s New Jersey offices. At Caravan, Cima Green, E-bio, and Imperial, almost all the players instantly turned into know-nothings, professing ignorance: Conspiracy? Alchemy? Who ya gonna believe, me or your lying eyes?
Furando made bail and promptly resorted to form, allegedly attacking Tracy. “He threw me to the ground and started beating me,” she told CBS. “He proceeded to smash my head into the marble floors. He bent my fingers back to the point where they nearly broke. He strangled me. He pulled out my hair. I was only able to get away by the sheer grace of God.”
When Tracy cooperated with federal investigators, Furando dropped her a text: “Suicide is ur only option.” And from a jail cell, according to prosecutors, he threatened to hire a hit on Tracy.
After $100 million-plus in loot and enough dysfunction to fill a season of Jerry Springer, the top players in a criminal chain stretching from Indiana to New Jersey changed their tune. They copped pleas.
No one left to lie to.
A Gaggle of Felons
In 2015, Brian Carmichael, 39, E-bio director of sales, was sentenced to 5 years after acknowledging guilt. The Ducey brothers all pleaded guilty. Chad, 40, E-bio CEO, got 84 months; Craig, 44, E-bio president, 74 months; and Chris, 49, E-bio logistics manager, 72 months.
Imperial Petroleum CEO Jeff Wilson, 63, was the lone plea holdout. After an eight-day trial, he was found guilty and sentenced to 10 years and $16 million in restitution.
In 2016, Joe Furando, 50, pleaded guilty and got 20 years and a roughly $56 million restitution penalty. He also was forced to surrender his jewelry hoard, Rolex and Patek Philippe watches, Picasso’s and Dali’s, a 7,447-square-feet home worth $3.5 million, a Schimmel grand piano, motorcycles, cars, and a haul of other items. Tracy, 30, turned state’s evidence and was sentenced to 5 years—reduced to probation.
All told, the E-bio-Furando debacle stands as the biggest tax and securities fraud scam in Indiana history: 35 million gallons of biodiesel sold for $145 million-plus. Among the felons at the heart of the heist, only Furando remains in prison. He is slated for release on Feb. 5, 2031.
Stunningly, the main haul of cash stolen off the backs of U.S. taxpayers by Furando and E-bio was pinched in a mere two-year time frame. If not for arrogance, reckless behavior, and greed, how much “alchemy” might have been in the cards?
Tens of millions more? Hundreds of millions more? Furando’s lament.
My son, do not walk the road with them or set foot upon their path. For their feet run to evil, and they are swift to shed blood. Proverbs 1:15-16
For more from Chris Bennett (@ChrisBennettMS or cbennett@farmjournal.com or 662-592-1106), see:
Corn and Cocaine: Roger Reaves and the Most Incredible Farm Story Never Told
Ghost Cattle: $650M Ponzi Rocks Livestock Industry, Money Still Missing
Game of Horns: Iowa Poacher’s Antler Addiction Leads to Historic Bust
How the Deep State Tried, and Failed, to Crush an American Farmer
Sisters of Farm Fraud: How 4 Siblings Fleeced USDA for $10M
Organic Implosion: How Two Grifters Cooked $50M In Fake Fertilizer and Rocked Agriculture
