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Former Houston Fuel Distributor Sentenced to 12 Years in Prison and $1 Million in Restitution for Motor Fuel Tax Evasion Scheme

On June 23, Sidney Baldon II, owner/operator of Mid–Coast International (Mid–Coast), a kerosene distribution company, was sentenced in Texas State Court to 12 years in prison and $1 million in restitution to the state of Texas for his role in a scheme to impede the State’s collection of millions of dollars in motor fuel taxes. Baldon pled guilty to evading motor fuel taxes, blending motor fuel, and engaging in a motor fuel tax scheme. Baldon was indicted on the charges by a Travis County Grand Jury in June 2007.

Between March 2002 and November 2003, Baldon acting through Mid–Coast, purchased kerosene from Calcasieu Refining Company in Lake Charles, Louisiana, under fraudulent pretenses. Baldon and his associates presented a letter to the refinery that indicated that the fuel was purchased for export to Mexico which allowed Mid–Coast to acquire the fuel untaxed. The untaxed fuel was transported from Louisiana to Mid–Coast locations in Houston and Channelview, Texas where the fuel was then blended with other materials to produce over 22 million gallons of blended fuel. The untaxed blended fuel was then transported to retail filling stations in the Houston area and sold as taxable motor fuel.

The scheme also resulted in impeding the collection of federal fuel excise taxes, and in May 2009, Baldon was sentenced in federal court to 5 years imprisonment and $1.6 million in restitution.