Three Texas Fuel Distributor Officials Plead Guilty to Multi-Million Dollar Fuel Excise Tax Fraud
On April 14, 2008, Sidney B. Baldon II, Tracy D. Diamond, and Yousef I. Abuteir pled guilty in U.S. District Court, Houston, Texas, to one count of conspiracy in connection with a fraud scheme to avoid paying Federal fuel excises taxes. Mr. Baldon owned and operated Mid–Coast International (MCI), a distributor of kerosene and other fuel products in Houston; Mr. Diamond was an officer of MCI; and Mr. Abuteir purchased products from MCI for resale to Houston–area retail outlets. The three men were charged with conspiracy and tax evasion in a July 2007 indictment, which alleged that the men avoided paying Federal fuel excise tax by falsely representing to a Louisiana refinery that the fuel products purchased were for export to Mexico. The fuel products were actually transported to locations in the Houston and Channelview, Texas, areas, where they were mixed with other petroleum–based materials and sold at retail fuel stations as taxable motor fuel. The misrepresentation of the fuel purchases for export allowed the men to avoid approximately $2.6 million in Federal fuel excise taxes on the $10.7 million of fuel they purchased from the Louisiana refinery from July 2002 to November 2003. The three men also face State charges for importing motor fuels without the required permits. Sentencing for the three men is scheduled for July 8, 2008. This investigation is being conducted jointly by DOT/OIG, the Internal Revenue Service/CID, the Immigration Customs Enforcement, EPA/CID, and the Texas State Comptroller Office.