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David Epstein

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It’s a fundamental law of nature… or at least nature legislation: For every action that the government takes to protect the natural environment, there is a cleverly corrupt reaction. An investigation by Bloomberg Businessweek profiled an extraordinary case of fraud that exploited the Renewable Fuel Standard program, which President George W. Bush signed into law in 2005. That’s what he gets for trying to lessen our dependence on foreign oil… sucker! Your six W’s:

What’s the background?

The catchily named Renewable Fuel Standard law requires traditional gas and diesel refiners (ExxonMobil, BP, etc.) to mix a certain amount of ethanol and biodiesel into their products. But, according to Bloomberg Businessweek, refiners can avoid that little nuisance if they instead purchase renewable fuel credits from manufacturers of ethanol or biodiesel. It’s kind of like when your great-great-grandaddy Phineas slipped his buddy Granville a fiver to take his spot in the Civil War. (Srsly, people did that.) Except, in this case, refiners pay a renewable manufacturer so they don’t have to get their own hands messy with cleaner fuel. Hmm. That’s where Philip Rivkin, founder and CEO of Houston-based Green Diesel came in.

What did he do?

According to Bloomberg Businessweek, EPA investigators say that Green Diesel’s production of biodiesel ended in 2008, at which point Rivkin decided to skip the whole, laborious making-renewable-fuel part of the operation and focus exclusively on selling credits to big oil companies. When an EPA inspector paid a visit to Green Diesel, he found rusted canisters where biodiesel was supposed to be mixed, a grand total of zero employees at the factory, and pipes that connected to nothing. Maybe Rivkin was designing a tribute to M.C. Escher? More likely, he realized that the only thing better than making renewable fuels and selling renewable credits is not making renewable fuels and still selling renewable credits.

What did that accomplish?

Let’s just say that, according to Bloomberg Businessweek, Rivkin later left Houston to live in Spain with his wife, his son, a Lamborghini Murcielago and his very own Canadair Challenger jet. And he didn’t make all that dough leading private Pokémon Go training sessions. Rivkin was selling tens of millions of dollars worth of renewable fuel credits to major oil companies, without making any renewable fuel to which those credits were supposed to be tied, the story says.

Why was he able to do that?

My guess is that the EPA saw how good preschoolers are at being honest about whether they already had dessert, and so decided also to use self-reporting of violations as the main method of enforcement. Works every time! Sellers of the credits — known as Renewable Identification Numbers (RIN) — just had to send the EPA spreadsheets of their transactions. As Bloomberg Businessweek put it: “All an unscrupulous biofuel trader really needed in the early RIN years was a talent for Microsoft Excel.” Ok, I know that sounds bad, but you have to admit, that program is glitchy.

What happened next?

After the factory visit, the feds began to pursue Rivkin. So he claimed that, while his factory wasn’t running anymore, he was now importing biodiesel on a ship. In a stunningly highbrow British opera joke, government investigators began referring to the supposed ship as the HMS Pinafore. “It didn’t exist,” a Department of Justice attorney told Bloomberg Businessweek. To make matters even more highbrow, Rivkin appeared to be laundering some of his loot by purchasing artistic photographs, like a $675,000 snap Alfred Stieglitz took of Georgia O’Keefe. In summary: George W. Bush is a great patron of the arts. I’ve been telling NPR for years that they should quit it with the annoying fund drives and just subtly note that public radio coffee mugs and totes are an underrated avenue for renewable fuel credit peddlers to launder money. Everybody wins!

What happened when he got caught?

Rivkin pleaded guilty to fraud, and in March was sentenced to 10 years in prison. Now various creditors are trying to get their money back. One Houston attorney was appointed by a court to seize Rivkin’s property on behalf of a commodities trader. The attorney (accompanied by mechanics and pilots) tracked Rivkin’s jet to Panama, where he found it blocked in by two other aircraft. One of the attorney’s companions bet the locals $50 they couldn’t move the two planes out of the way. That was $50 well spent, as the attorney took off in Rivkin’s jet over the loudspeaker objections of an airport official. Most importantly, the lawyer really liked the plane. “Supple leather,” he told Bloomberg Businessweek. Good to know.

They Said It

“I was expecting a raid any day…. We were kind of looking forward to it.” —Martin Brau, a consultant who worked for Rivkin.

I hear you, Martin. I always update my LinkedIn when I’m looking forward to a government raid on my employer.


SRSLY Shortstack

According to a Fusion report, police contacted a Michigan State computer scientist to ask if he could 3D-print a replica of a murder victim’s finger so that they could use the fingerprint to unlock the man’s phone. The report says it isn’t clear yet if this will work, but, if it does, you can imagine the security implications. On the bright side, should we end up in the future portrayed in the film Demolition Man, perhaps Wesley Snipes can 3D-print a copy of that guy’s eyeball he skewered to get past retinal scanners.

Tweet of the Week

Additional research by Kate Brown.

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ProPublica does not vouch for the accuracy of stories appearing on SRSLY. We select, review and summarize key points from accountability stories that may not have gotten wide exposure. But we are not able to independently vet or vouch for the accuracy of stories produced by others. We will inform readers if we learn that stories have been challenged publicly or corrected.