A federal jury on Monday convicted Rodney R. Hailey of selling $9.1 million worth of bogus renewable energy credits under a U.S. Environmental Protection Agency program.
Judge William D. Quarles Jr. ordered Hailey, whom he deemed a flight risk, detained pending his sentencing on Oct. 11.
Hailey, of Perry Hall, faces up to 32 years in prison based on his convictions for wire fraud, money laundering and Clean Air Act violations.
The 12-member jury got the case Monday afternoon and deliberated for one hour and 15 minutes before rendering its guilty verdict on all 42 counts. The trial lasted six days in U.S. District Court in Baltimore.
Hailey’s lead attorney, Assistant Federal Public Defender Joseph L. Evans, declined to comment after the verdict.
However, he gave an emphatic “yes” when asked whether he plans to appeal.
U.S. Attorney Rod J. Rosenstein of Maryland praised the verdict.
“Rodney Hailey took advantage of the regulatory scheme because it relied on the good faith of producers of renewable fuel,” Rosenstein said. “The evidence showed that Hailey’s entire business was a fraud. He claimed that he produced more than 20 million gallons of biodiesel fuel when it fact he produced absolutely nothing.”
According to prosecutors, Hailey acquired his millions by exploiting the federal government’s Renewable Fuel Standard program.
The program, created under the 2005 Energy Policy Act, encourages the domestic development of renewable energy sources, such as biodiesel. Under the program, renewable energy must constitute a percentage of the fuel sold by major refiners.
According to prosecutors, Hailey registered his company, Clean Green Fuel LLC, with the EPA on March 26, 2009. He claimed he was using waste oil from restaurants to produce biodiesel at a plant in White Marsh.
Hailey, 33, then sold “renewable identification numbers” or RINs — 38-digit numbers that each supposedly corresponded to a certain amount of clean fuel he was producing — to fuel companies and RIN brokers. The RINs have value because oil companies can use them to satisfy their renewable fuel obligations under the Clean Air Act.
Hailey sold RINs representing 23 million gallons of biodiesel without producing a single gallon, according to the prosecution.
During closing arguments Monday, Evans argued that Hailey was a convenient “scapegoat” for unindicted energy traders, brokers, oil refineries who should at the very least share in any culpability for fraud.
These sophisticated individuals with whom Hailey dealt directly or indirectly knew the millions of gallons of biodiesel he claimed to have produced was “preposterous,” Evans told the jury.
The traders, brokers and refiners engaged in “willful blindness” and then cried deception when the federal government began investigating the validity of the energy credits, Evans added.
“We know they knew,” he said. “They had to know because any person in their position would know.”
Evans also said the EPA was not deceived by Hailey and had in fact permitted him to continue distributing the credits as part of a trap.
“They have to blame Mr. Hailey because they have to answer to Congress” for late enforcement, Evans said. “It’s easy to point the finger at Mr. Hailey.”
“Blame in this instance goes downhill,” he told the jury. “Everybody in this case … needed to blame Mr. Hailey for something.”
But Assistant U.S. Attorney Tonya N. Kelly urged the jury not to be “distracted” by Evans’ “red herring” of shifting the blame from Hailey. The traders, brokers and refiners would have been committing “professional suicide” if they knowingly traded or accepted phony renewable energy credits, she said.
“The only person who told lie after lie is sitting in this courtroom,” Kelly said, referring to Hailey. “Mr. Hailey [was] telling a tale and hoping that nobody would figure it out.”
Also during closing arguments, Assistant U.S. Attorney Stefan D. Cassella said Hailey spent much of the $9.1 million in “an orgy of conspicuous consumption,” buying diamond jewelry and sports cars, including a Ferrari and Lamborghini.
The defense agreed that Hailey spent lavishly but said his public display of the jewelry and cars pointed toward his innocence, as it showed he had nothing to hide.
But Cassella told the jury to disregard the argument that true criminals know enough to hide their money.
“There’s no requirement that every criminal be smart,” Cassella said. “There is no prize for being the least clever criminal on your block.”