-InsideTheGate.com staff (January 22, 2014)
James Assi Jariv, 63, who is awaiting trial with six other defendants in Houston, TX on charges of conspiracy, wire and mail fraud and money laundering in a case of timeshare resale fraud, has been indicted by a federal grand jury in Las Vegas for yet another fraud, offenses that allegedly netted more than $37 million. The 57-count indictment against James Jariv and Nathan Stoliar, 64, of Australia, includes allegations of conspiracy, wire fraud, false statements under the Clean Air Act, obstruction of justice and conspiracy to engage in money laundering.
The indictment was unsealed late Wednesday, Jan. 15, following Jariv’s initial appearance in federal court in Las Vegas, which followed his arrest on Tuesday, Jan. 14. Stoliar resides in Australia.
The Energy Independence and Security Act of 2007 created a number of federally-funded programs that provided monetary incentives for the production of biodiesel and to encourage biodiesel use in the United States. Biodiesel producers and importers could generate and attach credits known as “renewable identification numbers” or RINs to biodiesel they produced or imported. Because certain companies need RINs to comply with regulatory obligations, RINs have significant market value. In addition, in order to create an incentive for biodiesel in the United States to be used in the United States, anyone who exports biodiesel is required to obtain these valuable RINs and provide them to EPA. The market price charged for exported biodiesel therefore includes the value an exporter is required to later spend to acquire these RINs.
The indictment alleges that beginning around June of 2009, the two defendants, James Jariv and Nathan Stoliar, operated and controlled a company — City Farm Biofuel in Vancouver, British Columbia, Canada — that held itself out as a producer of biodiesel from “feedstocks” such as animal fat and vegetable oils. Jariv also operated and controlled a company based in Las Vegas, Nevada, called Global E Marketing. The government alleges that these defendants claimed to produce biodiesel at the City Farm facility, claimed to import and sell biodiesel to Global E Marketing, and then generated and sold RINs based upon this claimed production, sale and importation. In reality, little to no biodiesel produced at City Farm was ever imported and sold to Global E Marketing as claimed. The indictment alleges that the defendants’ scheme allowed them to generate approximately $7 million in RINs that were fraudulent, which were then sold to companies that needed to obtain them.
The indictment also alleges that, beginning around the same time period and continuing through Dec. 31, 2013, the defendants, using their company MJ Biodfuels, bought over 23 million gallons of RIN-less biodiesel that had been blended with small amounts of petroleum diesel, known as B99, from companies in the United States. The defendants sold some of this biodiesel to purchasers in the United States, claiming it was pure biodiesel, known as B100, produced at the City Farm facility and imported into the United States. By claiming this biodiesel was B100 and not RIN-less B99, the defendants were able to claim the fuel was eligible to be used to generate credits and incentives, and were able to sell the fuel for significantly more than they otherwise would have been able. The defendants also exported the RIN-less B99 they bought in the United States to Canada. The defendants then sold the biodiesel in Canada, and conspired not to acquire and provide RINs for these exports to the United States as they were required to do, but instead to keep the money they received from the sales for themselves. The indictment alleges that, in doing so, the defendants failed to give to the United States RINs worth in excess of $30 million, keeping this money for themselves instead.
The indictment alleges that the defendants created false records and made false statements to conceal their fraudulent claims of biodiesel production, importation, sale and fraudulent RIN generation. Finally, the indictment alleges that the defendants engaged in a conspiracy to launder the proceeds of their crimes, utilizing foreign banking institutions and complex financial transactions to conceal the illegal nature of the funds they received, and to attempt to protect these funds from government enforcement. On January 16 the United States also seized and restrained the assets contained in a number of bank accounts utilized by the defendants, as well as several pieces of real and personal property in Las Vegas, Nevada.
An indictment is only a charge and is not evidence of guilt. All defendants are presumed innocent and are entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
The collaborative investigation that led to today’s arrest and seizures was the result of work by the EPA’s Criminal Investigation Division and the FBI, with assistance from the United States Secret Service and the Department of Homeland Security.
The case is being prosecuted by Senior Trial Attorney Wayne D. Hettenbach of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, Assistant U.S. Attorneys Crane M. Pomerantz and Daniel D. Hollingsworth of the U.S. Attorney’s Office in Nevada, and Trial Attorney Darrin L. McCullough of the Justice Department’s Criminal Division, Asset Forfeiture and Money Laundering Section, with the assistance of the Justice Department’s Office of International Affairs.
The timeshare resale case against James Jariv, which was originally filed in November 2012 in Las Vegas before being transferred to the Houston courts, also includes as defendants Alexander Jariv, the 25-year-old son of James Jariv, Thresa Lloyd, 42, Varda Jariv, 72, and Jiwon Jariv, 33, all of Las Vegas, and Leon Avedikian, of Los Angeles. The trial date for that case is scheduled for March 11, 2014.
Two other defendants, Ronald Frank Muise and his son Michael Derek Muise, pleaded guilty in Dec. 2013 of one count of conspiracy to commit mail and wire fraud. Sentencing for the pair is set for March 17.
According to the indictment in that case, between Feb. 1, 2011, and Jan. 31, 2012, the defendants victimized approximately 1000 victims living in Canada and throughout the United States including the Southern District of Texas, and deposited into eight bank accounts approximately $6,925,137.04 in fraudulently obtained timeshare owner funds. Approximately $5,945,433.04 in victim funds were retained by, and subsequently transferred into, other accounts controlled by the defendants.
For more information on that case, please refer to The GateHouse blog.