Indiana brothers admit to $145 million biofuel scheme

Three Indiana brothers have pleaded guilty to their roles in what authorities have called "one of the largest tax and securities fraud schemes in Indiana history."

Chad Ducey, 39, of Fishers, pleaded guilty on Tuesday to fraud charges, and his brothers Chris Ducey, 48, of North Webster, and Craig Ducey, 44, of Fishers, admitted to charges last week, federal prosecutors announced in a press conference Wednesday.

The brothers operated E-biofuels LLC, a biodiesel company that made renewable fuel from about 2007 to 2012. The fuel came from sources such as soybean oil and waste grease. The company was based in Henry County, about 15 miles southwest of Muncie.

Prosecutors said they sold 35 million gallons of biofuel for $145 million, netting a profit of about $55 million.

But the biofuel they sold, prosecutors said, was not fuel they made. They resold fuel that they obtained from co-defendants in New Jersey rather than producing the fuel themselves.

Properly made biodiesel fuel is eligible for tax credits. The Ducey brothers claimed the tax credits, prosecutors said, but so too did the New Jersey co-defendants on the same fuel.

The brothers' accomplices in New Jersey, Joseph Furando and Katirina Pattison, already have pleaded guilty for their involvement in the conspiracy.

Officials blasted the brothers for taking advantage of federal programs meant to promote environmentally friendly practices.

"This kind of criminal activity has real consequences, including undermining a law that reduces our impact on climate change," said Cynthia Giles, an assistant administrator for the Environmental Protection Agency.

U.S. Attorney Josh Minkler added: "There are opportunities in Indiana for innovators in agriculture and biofuels. The Duceys and their co-conspirators in New Jersey undercut those opportunities by exchanging greed and fraud for innovation."

The men could face up to 20 years in prison on some of the charges, as well as fines and restitution.

Authorities also have seized about $7.5 million in funds, jewelry, artwork, cars and homes.

Call Star reporter Madeline Buckley at (317) 444-6083. Follow her on Twitter: @Mabuckley88.