Former Biofuels Company Employees Plead Guilty and Sentenced for Conspiracy
On August 27, 2015, Dean Daniels, Brenda Daniels, Richard "Ricky" Smith, and William Bradley pleaded guilty and were sentenced in the U.S. District Court, Columbus, Ohio, for conspiracy to defraud the United States. Dean Daniels also pleaded guilty and was sentenced for transporting hazardous waste without required safety placards.
Dean Daniels was sentenced to 63 months incarceration, Brenda Daniels was sentenced to 12 months incarceration, Smith was sentenced to 41 months incarceration, and Bradley was sentenced to 51 months incarceration. They also each received 36 months supervised release and were jointly ordered to pay over $23 million in restitution.
This investigation began in August 2011 after the Houston Police Department, Environmental Investigations Unit, identified the illegal dumping of hazardous waste by New Energy Fuels, LLC (NEF), a Texas company which claimed to process animal fats and vegetable oils into bio-diesel. The dumping occurred in at least 13 different locations in Houston including storm drains and holding ponds. NEF was owned and operated by Dean Daniels. Bradley was a company officer, and Brenda Daniels and Smith were employees. Investigators later discovered that NEF relocated to Logan, Ohio, and began operating under the name Chieftain Biofuels (Chieftain).
The investigation disclosed that NEF fraudulently claimed millions of dollars in credits under EPA's Renewal Identification Numbers (RIN) program. This program required petroleum refiners to produce a certain amount of renewable fuel or purchase RIN credits from renewable fuel producers. The defendants fraudulently claimed millions in bio-diesel RIN credits and associated tax credits for the production of fuel that was not bio-diesel. The estimated RIN fraud and associated tax fraud committed by NEF and Chieftain was more than $20 million. The investigation further revealed that Dean Daniels caused hazardous waste to be transported by highway without the safety placards required under transportation safety regulations.
We conducted this investigation with the Houston Police Department, the Internal Revenue Service – Criminal Investigation, and the Environmental Protection Agency – Criminal Investigation Division.