Owner of biofuel company in Allentown sentenced to prison in green energy scheme
The owner of an Allentown biofuel company who pleaded guilty to a conspiracy to fraudulently claim green energy subsidies was sentenced to prison and ordered to repay the government more than $10 million.
Ralph Tommaso, 51, of Warren, New Jersey, and business partner Dave Dunham Jr. were indicted in 2015 on charges they conspired to defraud the government and other businesses in a scheme to claim credits for producing renewable diesel and heating fuel from used cooking oil.
U.S. District Judge Jeffrey Schmehl sentenced Tommaso to one year and one day in federal prison and ordered him to pay $10.2 million in restitution. The sentencing happened Nov. 17 but the sentence was not made public until Dec. 1. A spokeswoman for the U.S. attorney’s office in Philadelphia said the case was under seal.
Tommaso’s attorney, Nathan Andrisani, said his client had no comment. Schmehl suspended Tommaso’s sentence until May 7, when he will be required to report to prison.
Tomasso pleaded guilty to a single count of conspiracy in 2017 and testified in a trial last year where Dunham was convicted of 54 counts including conspiracy, wire fraud, false tax filings and obstruction.
Dunham, 40, of Hanover Township, Northampton County, was sentenced in August to seven years in prison and also ordered to pay $10.2 million in restitution.
Prosecutors said Dunham and Tommaso defrauded the U.S. Environmental Protection Agency, IRS and U.S. Department of Agriculture programs to encourage the production of renewable fuels.
A Lehigh University graduate and biofuel advocate, Dunham started Smarter Fuel Inc. in 2004 after converting his Volkswagen to run on cooking oil to keep his commuting costs down, according to the company’s website.
He partnered with Tommaso, owner of Environmental Energy Recycling Corp. in Allentown, to collect used cooking oil from restaurant and cafeteria kitchens to process into biodiesel to power vehicles and heat buildings.
While the companies did collect and process used cooking oil, most of it was not suitable for use as fuel, the indictment said. Rather, the companies sold the processed oil as an intermediate product for other companies to further refine as motor and heating fuel.
That didn’t stop Dunham and Tommaso from applying for and receiving government subsidies for producing clean diesel and heating oil, prosecutors said in the indictment.
In 2010, Dunham and Tommaso claimed subsidies and other payments for more than 17.5 million gallons of renewable fuel when the companies actually produced less than 6 million gallons, according to the indictment. The following year, the men claimed the companies produced more than 18 million when they actually produced only 7.5 million gallons, it said.
Dunham and Tommaso allegedly claimed credits for more than a million gallons of wastewater produced in the processing of oil, sales of their nonfuel product to other refiners and transactions that existed only on paper for a “ghost product” the companies never produced or possessed.