Reading, Pennsylvania - Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Environment and Natural Resources Division (ENRD) and United States Attorney William M. McSwain for the Eastern District of Pennsylvania announced that a federal jury in Reading, Pennsylvania, convicted David M. Dunham Jr. of the following crimes: conspiracy to commit wire fraud and defraud the United States; wire fraud; filing false tax documents; and obstruction of justice. The conviction stemmed from Dunham hatching and executing a scheme to defraud the Environmental Protection Agency, the Internal Revenue Service, and his customers to obtain renewable fuel credits in his “green energy” business.
The government is also seeking forfeiture of approximately $1.7 million in fraudulently obtained revenue and several parcels of real estate. The trial lasted four weeks before United States District Judge Jeffrey L. Schmehl.
In Dunham’s green energy scam, he fraudulently applied for, received, and sold “credits” for selling renewable biofuels that he, in fact, did not sell and, in many instances, had never possessed in the first place. He obtained these credits from government agencies, which resulted in Dunham obtaining $50 million in fraudulent revenue. Dunham ran the scam from approximately 2010 to 2015, using his business, Smarter Fuels, and that of his co-defendant, Ralph Tomasso, who previously pleaded guilty to conspiracy to defraud federal programs.
“Today’s conviction sends a clear message to any future fraudsters out there: crime does not pay. Especially when that crime involves defrauding American customers and multiple federal agencies,” said Assistant Attorney General Clark. “When the defendant knowingly cheated a federal government program aimed at energy conservation, he gave himself an unfair advantage over his competitors and stole millions of dollars from the American taxpayer in the process. The Department of Justice will not tolerate this type of deception and will continue to work with its law enforcement partners to root out this unlawful conduct.”
“Though this defendant tried to deflect blame on others, his years of scamming the government and his customers has finally caught up to him,” said U.S. Attorney McSwain. “And the truth is as simple as this: Everyone has to follow the rules. You cannot lie, steal, or cover up your misdeeds. If you do, we will hold you accountable. Experience shows that fraudsters like Dunham are always looking for the next best scam. As American consumers become increasingly more concerned with energy conservation, green energy scams like the one in this case provide criminals with an easy angle. We are grateful that the jury saw through Dunham’s lies and reached the correct result.”
“David Dunham created an elaborate scheme that served no purpose other than to mislead and defraud the government,” said IRS Special Agent in Charge Guy Ficco. “Unfortunately for him, our special agents were able to track the movement of paperwork and uncover the deceit behind his actions. We, along with our fellow law enforcement partners and the Department of Justice, will continue to investigate and prosecute those who commit similar crimes.”
“The defendant made numerous fraudulent claims to illegally profit from the Renewable Fuel Standard (RFS) Program,” said Director Jessica Taylor, Director of EPA’s Criminal Investigation Division. “Today’s conviction should send a clear signal that EPA and our law enforcement partners are committed to protecting the integrity of the Energy Independence and Security Act of 2007.”
“We appreciate the commitment of the Department of Justice and the cooperative efforts of our law enforcement partners throughout this significant investigation,” said USDA-OIG Special Agent-in-Charge Bethanne M. Dinkins. “Mr. Dunham’s conviction at trial sends a strong message regarding the benefit of working across agency lines to protect the integrity of Government programs like the USDA Advanced Biofuel Payment Program, established in the 2008 Farm Bill as an incentive for companies to produce and use alternative fuel sources. The USDA Office of Inspector General will continue to dedicate resources to protect the Department’s programs and assets by investigating those who commit fraud and compromise the integrity of USDA programs.”
The case was investigated by the Environmental Protection Agency’s Criminal Investigation Division, the Internal Revenue Service’s Criminal Investigation Division, and the United States Department of Agriculture’s Office of Inspector General. The case is being prosecuted by Trial Attorney Adam Cullman of the Environmental Crimes Section and Assistant United States Attorney John Gallagher.