Scam artists pretending to produce biofuel and sell the energy credits to petroleum companies are under investigation by the EPA. And the situation is not boding well for start-up biodiesel companies. 

Read the stories in Reuters here and The Baltimore Sun here.

From Reuters: 

Rodney Hailey, a Baltimore, Maryland-area man, was convicted last this month of selling $9 million worth of RINs without producing a gallon of biodiesel.

He was caught after suspicions were raised about a large number of luxury cars in front of his home: BMWs, a Mercedes, a Rolls Royce Phantom, a Lamborghini, a Ferrari, a Maserati, according to a Justice Department description of the crime.

Hailey was the first to be convicted, but the EPA has said it is investigating others. Two Texas companies have been handed EPA violation notices for selling fake RINs in 2010 and 2011.

For start-up biodiesel companies, the scandals have had a chilling effect on their ability to sell credits to oil refineries. The credits helps the companies, that use feedstocks such as used cooking oil and plant materials, to  subsidize their biodiesel operations and better compete with petroleum-based diesel companies.