28 ms·

In order to be fraud, doesn't there need to be some form of misrepresentation or deceit?

by recursive 14y ago

lostlogin 14y ago
Does knowing your exploiting the system count? There is no way this wasn't intentional.
rgbrenner 14y ago
They claimed to be importing fuel into the US that was actually produced in the US.
- 001sky 14y ago
  Each time the loaded train crossed the border the cargo earned its owner a certain amount of Renewable Identification Numbers (RINs), which were awarded by the US EPA to “promote and track production and importation of renewable fuels such as ethanol and biodiesel.” The RINs were supposed to be retired each time the shipment passed the border, but due to a glitch not all of them were. This enabled Bioversal to accumulate over 12 million RINs edit: The "glich" sounds to be with the EPA system. Its not clear if the problem is technical (like an ATM giving 40 for 20 requested withdrawl) or if the system did not differentiate between "crossing" and "production and importation", by design or specification. In any event, there's not much in the article that supports any forgery or false claim about the shipment's paperwork, etc. It was more that the EPA had no or poor controls. This latter case is a grey area between willful negligence (poor design of credit-issuance-proceedures) and potential fraud (unethical re-submission).
  - anigbrowl 14y ago
    Just because you fail to lock your door does not authorize a burglar to come into your house and help himself to your stuff. You don't get to beg off responsibility by claiming the injured party made it too easy for you to help yourself.
    - 001sky 14y ago
      Maybe a better example: Imagine your eazy-pass was mis-programmed. Going over the GG bridge, you get $$ credited to your account each trip rather than -$$ subtracted. So, depends on if the ez-pass was hacked by the user or just broken/mis-programmed by the EPA.
      - bigiain 14y ago
        There's a graduated response to discovering that though, you could: 1) call up ez-pass and let them know 2) think "it's not my problem" and not let them know 3) decide to drive over the bridge more often 4) mention it to all your friends and suggest they drive over the bridge more often 5) strap your ez-pass transponder to a quadcopter and fly it in continual circles past the transponder reader. I'm not sure where the line is, but somewhere between 3 and 5 is probably "fraudulent" behavior - at least according to my personal ethical standards (even #2 is clearly "wrong"), there's almost certainly a technical legal definition of "fraud" that applies somewhere along that line too.
  - rgbrenner 14y ago
    That's a good point. If it was merely a mistake, then I'm sure the company would not mind the EPA adjusting the credit balance. After all, they did not intend benefit from the error.. they just wanted to ship their goods back and forth for some other reason.
  - Avitas 14y ago
    This begs the question of precisely how the glitch was discovered and by whom. Did one of the involved businesses initially and accidentally enter the details from an old manifest and then realize that they still got credits? Or, perhaps one of the businesses submitted something twice and got credit for both. When this is investigated by the EPA OIG (http://www.epa.gov/oig/ http://www.epa.gov/oig/), the chronology of the fault/exploit/fraud will be investigated along with the parties involved. This may have involved bits of inside information such as company X hires former enforcement regulator Y from government agency Z who details the precise nature of how various governmental systems work. The possible permutations of how this situation evolved are many. From my relatively uninformed perspective, the initial read of the article gives me the impression that this is an intentionally fraudulent scheme and criminal manipulation of the government program by the companies involved. However, I clearly do not have enough information to make such a determination. You can bet the EPA OIG and their Canadian equivalent are going to try to get to the bottom of this.
- deleted 14y ago
  [deleted]
anigbrowl 14y ago
Well, bringing the same fuel load across the border over and over again but claiming a credit for it each time as if it were a different load would be misrepresentation. Update from the CBC story: Once "imported" to a company capable of generating RINs, ownership of the biodiesel was transferred to Bioversel's American partner company, Verdeo, and then exported back to Canada. RINs must be "retired" once the fuel is exported from the U.S., but Bioversel says Verdeo retired ethanol RINs, worth pennies, instead of the more valuable biodiesel RINs. Bioversel claims this was all perfectly legal. So basically Verdeo was lying to the EPA by claiming it was exporting ethanol rather than biodiesel. I would not like to be the person trying to explain to a court why that should be considered legal.
- btilly 14y ago
  So basically Verdeo was lying to the EPA by claiming it was exporting ethanol rather than biodiesel. Since the biodiesel in question actually is ethanol, that was properly purchased in the USA, there is no lie. I am sure that the same situation happens by accident all of the time. When you buy ethanol you do not normally inquire as to whether it is biodiesel, even though a large fraction of it is. And if that ethanol is exported, you report it as ethanol because it is, and you cannot generally be expected to know whether it is biodiesel. In this specific case Verdeo was presumably aware that they were exporting biodiesel (though there might be a lack of paperwork acknowledging that it was). However they believe that the regulations do not cover this case, and given that they had lawyers examining the regulations first, I see no particular reason to disbelieve them. You may think it is ridiculous. But it is no more ridiculous than creating a legal distinction with real monetary value between two batches of identical chemicals. Yet that is exactly the distinction between corn ethanol and ethanol made from some other source.
  - ams6110 14y ago
    Ethanol and Biodiesel are NOT the same thing. At ALL. Ethanol is grain alcohol. Biodiesel is (quoting wikipedia) "a vegetable oil- or animal fat-based diesel fuel consisting of long-chain alkyl (methyl, propyl or ethyl) esters" When you buy ethanol you would certainly not expect to be delivered biodiesel and if you were, it would be unusable for your needs. You can't run an ethanol engine on [bio]diesel, and you can't run a diesel engine on ethanol. Edit: my real point is, if they were reporting ethanol as biodiesel, or vice versa, it's hard to see how it could be a "mistake."
rprasad 14y ago
The company is "importing" and re-"exporting" the same fuel over and over again, collecting a credit each time. The credit is only intended for fuel that is imported into the US. Under international laws, import has a very specific meaning which the company does not appear to even come close to meeting (if the fuel never left the train). Thus, the fraud is that the company is repeatedly claiming the import credit for fuel it has never actually imported.

In order to be fraud, doesn't there need to be some form of misrepresentation or deceit?

lostlogin 14y ago

Does knowing your exploiting the system count? There is no way this wasn't intentional.

rgbrenner 14y ago

They claimed to be importing fuel into the US that was actually produced in the US.

001sky 14y ago
Each time the loaded train crossed the border the cargo earned its owner a certain amount of Renewable Identification Numbers (RINs), which were awarded by the US EPA to “promote and track production and importation of renewable fuels such as ethanol and biodiesel.” The RINs were supposed to be retired each time the shipment passed the border, but due to a glitch not all of them were. This enabled Bioversal to accumulate over 12 million RINs edit: The "glich" sounds to be with the EPA system. Its not clear if the problem is technical (like an ATM giving 40 for 20 requested withdrawl) or if the system did not differentiate between "crossing" and "production and importation", by design or specification. In any event, there's not much in the article that supports any forgery or false claim about the shipment's paperwork, etc. It was more that the EPA had no or poor controls. This latter case is a grey area between willful negligence (poor design of credit-issuance-proceedures) and potential fraud (unethical re-submission).
- anigbrowl 14y ago
  Just because you fail to lock your door does not authorize a burglar to come into your house and help himself to your stuff. You don't get to beg off responsibility by claiming the injured party made it too easy for you to help yourself.
  - 001sky 14y ago
    Maybe a better example: Imagine your eazy-pass was mis-programmed. Going over the GG bridge, you get $$ credited to your account each trip rather than -$$ subtracted. So, depends on if the ez-pass was hacked by the user or just broken/mis-programmed by the EPA.
    - bigiain 14y ago
      There's a graduated response to discovering that though, you could: 1) call up ez-pass and let them know 2) think "it's not my problem" and not let them know 3) decide to drive over the bridge more often 4) mention it to all your friends and suggest they drive over the bridge more often 5) strap your ez-pass transponder to a quadcopter and fly it in continual circles past the transponder reader. I'm not sure where the line is, but somewhere between 3 and 5 is probably "fraudulent" behavior - at least according to my personal ethical standards (even #2 is clearly "wrong"), there's almost certainly a technical legal definition of "fraud" that applies somewhere along that line too.
- rgbrenner 14y ago
  That's a good point. If it was merely a mistake, then I'm sure the company would not mind the EPA adjusting the credit balance. After all, they did not intend benefit from the error.. they just wanted to ship their goods back and forth for some other reason.
- Avitas 14y ago
  This begs the question of precisely how the glitch was discovered and by whom. Did one of the involved businesses initially and accidentally enter the details from an old manifest and then realize that they still got credits? Or, perhaps one of the businesses submitted something twice and got credit for both. When this is investigated by the EPA OIG (http://www.epa.gov/oig/ http://www.epa.gov/oig/), the chronology of the fault/exploit/fraud will be investigated along with the parties involved. This may have involved bits of inside information such as company X hires former enforcement regulator Y from government agency Z who details the precise nature of how various governmental systems work. The possible permutations of how this situation evolved are many. From my relatively uninformed perspective, the initial read of the article gives me the impression that this is an intentionally fraudulent scheme and criminal manipulation of the government program by the companies involved. However, I clearly do not have enough information to make such a determination. You can bet the EPA OIG and their Canadian equivalent are going to try to get to the bottom of this.
deleted 14y ago
[deleted]

anigbrowl 14y ago

Well, bringing the same fuel load across the border over and over again but claiming a credit for it each time as if it were a different load would be misrepresentation. Update from the CBC story: Once "imported" to a company capable of generating RINs, ownership of the biodiesel was transferred to Bioversel's American partner company, Verdeo, and then exported back to Canada. RINs must be "retired" once the fuel is exported from the U.S., but Bioversel says Verdeo retired ethanol RINs, worth pennies, instead of the more valuable biodiesel RINs. Bioversel claims this was all perfectly legal. So basically Verdeo was lying to the EPA by claiming it was exporting ethanol rather than biodiesel. I would not like to be the person trying to explain to a court why that should be considered legal.

btilly 14y ago
So basically Verdeo was lying to the EPA by claiming it was exporting ethanol rather than biodiesel. Since the biodiesel in question actually is ethanol, that was properly purchased in the USA, there is no lie. I am sure that the same situation happens by accident all of the time. When you buy ethanol you do not normally inquire as to whether it is biodiesel, even though a large fraction of it is. And if that ethanol is exported, you report it as ethanol because it is, and you cannot generally be expected to know whether it is biodiesel. In this specific case Verdeo was presumably aware that they were exporting biodiesel (though there might be a lack of paperwork acknowledging that it was). However they believe that the regulations do not cover this case, and given that they had lawyers examining the regulations first, I see no particular reason to disbelieve them. You may think it is ridiculous. But it is no more ridiculous than creating a legal distinction with real monetary value between two batches of identical chemicals. Yet that is exactly the distinction between corn ethanol and ethanol made from some other source.
- ams6110 14y ago
  Ethanol and Biodiesel are NOT the same thing. At ALL. Ethanol is grain alcohol. Biodiesel is (quoting wikipedia) "a vegetable oil- or animal fat-based diesel fuel consisting of long-chain alkyl (methyl, propyl or ethyl) esters" When you buy ethanol you would certainly not expect to be delivered biodiesel and if you were, it would be unusable for your needs. You can't run an ethanol engine on [bio]diesel, and you can't run a diesel engine on ethanol. Edit: my real point is, if they were reporting ethanol as biodiesel, or vice versa, it's hard to see how it could be a "mistake."

rprasad 14y ago

The company is "importing" and re-"exporting" the same fuel over and over again, collecting a credit each time. The credit is only intended for fuel that is imported into the US. Under international laws, import has a very specific meaning which the company does not appear to even come close to meeting (if the fuel never left the train). Thus, the fraud is that the company is repeatedly claiming the import credit for fuel it has never actually imported.