Chepurko exposed a $100 million green energy scam at his New Jersey-based company, and put his life in jeopardy.
Alex Cherpuko, a 21-year-old whistleblower at the time, exposed a $100 million criminal enterprise, securing a $69.6 million judgment and becoming the first to simultaneously use False Claims Act, Dodd-Frank Act, and IRS whistleblower laws.
Alex “Sasha” Chepurko was hired as a financial trader by Caravan Trading, a New Jersey-based company that purchased and sold biodiesel.
Biodiesel, derived from products like soybean, corn, and recycled cooking oil, is regulated by the Environmental Protection Agency’s alternative fuel program. To promote the use of biofuels, the federal Government offered generous tax credits for companies that used this alternative fuel.
Chepurko soon realized that his company was engaged in a massive fraud.
They were part of a conspiracy with a producer, and they pretended to manufacture new biofuels to qualify for millions in tax credits. But instead, they were simply selling unused biofuels obtained from sources for which tax credits had already been cashed in.
Chepurko carefully obtained evidence, which was used later in building his case.
When Chepurko realized that his employer and business partners were operating a shell and not creating any new products, he became suspicious and confronted his boss. Chepurko’s boss admitted that the entire business enterprise was a big scam and described the process as alchemy. Chepurko started secretly recording his boss and other fraudsters involved in the conspiracy to obtain proof of these frauds.
Former Headquarters of Caravan Trading Company
52 Park Ave, Park Ridge, New Jersey
Chepurko sought legal assistance, and filed under three separate whistleblower programs.
After retaining a qui tam whistleblower law firm, Chepurko filed three separate whistleblower claims. Because one of the companies involved in the scam was publicly traded, Chepurko first filed as an anonymous whistleblower under the SEC Whistleblower Program, which is part of the Dodd-Frank Act.
Next, because the fraudsters were profiting from an environmental tax credit program, Chepurko filed a claim under the confidential IRS whistleblower program. The third case was filed in federal court “under seal” pursuant to the False Claims Act qui tam law.
The False Claims Act covers false claims made to the federal Government, including the Environmental Protection Agency’s alternative fuel program.
Home Purchased in Cash by Joseph Furando
23 Burning Hollow Rd.
Chepurko’s Win
Once Chepurko’s information was provided to federal law enforcement officials, he became the key confidential informant in a number of federal investigations.
He and his attorneys met secretly with agents from the Justice Department, Environmental Protection Agency, Securities and Exchange Commission and Internal Revenue Service and turned over his tapes (all of which could be used as evidence against the fraudsters) and other critical evidence.
Chepurko’s whistleblowing ended the scam, resulted in millions of dollars collected in fines and penalties, shutting down the companies that committed the frauds, and resulted in numerous criminal convictions and long jail sentences for the ringleaders.
- The main kingpin behind the frauds, Joseph Furando, pled guilty to wire fraud, false statements to federal investigators, engaging in prohibited financial transactions and conspiracy.” He was sentenced to 20-years in prison and ordered to pay restitution of more than $56 million.
- A second defendant, Craig Ducey, pled guilty to wire fraud, false statements under the Clean Air Act, false claims against the IRS, obstruction of justice, engaging in prohibited financial transactions with criminal proceeds, and conspiracy.” He was sentenced to 6 years in jail and also ordered to pay more than $56 million in restitution.
- A third defendant, Chad Ducey, pled guilty to charges of wire fraud, false statements to the EPA and IRS, and conspiracy.” He was sentenced to 7 years behind bars and also ordered to pay restitution.
- The former CEO of Imperial Petroleum, Inc., Jeffrey Wilson, was convicted by a federal jury of committing securities fraud, filing false reports with the SEC, falsely certifying reports to the SEC, lying to the company’s outside auditor and lying to federal investigators. Wilson was sentenced to 10 years in federal prison and ordered to pay over $16 million in restitution. Both Mr. Chepurko and his attorney, David Colapinto, were called as witnesses by the Government and testified at trial.
In closing arguments in U.S. v. Wilson, the senior federal prosecutor on the case told the jury that Mr. Chepurko was a true and honest “whistleblower” who was “the hero in the story.”
In all, there were multiple successful SEC enforcement actions resulting in orders to pay additional civil monetary fines in excess of $50 million in addition to the related DOJ criminal prosecutions against 6 individuals and 3 companies.
Several of the Defendants in the fraud scheme forfeited assets, which have been seized and auctioned off or will be sold by the Government to pay some of the fines and restitution ordered in the civil and criminal cases.
These seized assets included luxury vehicles (such as a Ferrari, a Karma Fisker EV, a BMW), a multi-million dollar mansion, artwork (such as paintings by Salvador Dali, Pablo Picasso, Katia Pissaro and Leroy Neiman), a grand piano, expensive jewelry and watches, and cash. However, due to collections issues the Government will likely never collect the full amounts due to taxpayers resulting from the massive fraud scheme.
Art Seized by the Government
Artwork from Salvador Dali, Pablo Picasso, Katia Pissaro, Leroy Neiman and more
On April 30, 2020, in the case U.S. ex rel. Chepurko v. e-biofuels, LLP, et al., the U.S. District Court Judge Tanya Walton Pratt issued a $69.6 million judgment on behalf of Mr. Chepurko and the United States, of which Mr. Chepurko is entitled to an award of between 25-30% of whatever the Government collects on the judgment.
This case became a model for how a whistleblower can assist multiple Government agencies to combat major fraud. As a result of filing several whistleblower claims, the SEC, IRS, DOJ and other agencies formed a team to prosecute the fraudsters. Mr. Chepurko’s case is also a good example of how the SEC Whistleblower Program can pay a whistleblower award based on DOJ related criminal actions, when most of the funds are recovered through federal court orders or monetary restitution in the criminal actions. Without the SEC Whistleblower Program these collected proceeds might not have been available to pay a relator’s share in the whistleblower False Claims Act case.
The SEC eventually granted Mr. Chepurko a whistleblower award on the amounts that have been collected by the SEC and in the DOJ’s related criminal cases, and the SEC continues to pay an award on additional amounts as they are collected by the Government. His KKC whistleblower attorneys continue to press the SEC Office of the Whistleblower, the IRS Whistleblower Office, and the Justice Department to pay Mr. Chepurko a fair relator’s share and whistleblower award on all collected proceeds resulting from the multiple judgments the Government has obtained in multiple civil and criminal enforcement proceedings.
“Because of Chepurko’s whistleblowing efforts, the Government was able to criminally prosecute [various wrongdoers] for their roles in a multi-state scheme to defraud biodiesel buyers and U.S. taxpayers by fraudulently selling biodiesel incentives.”
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Published on May 1, 2020
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Published on August 28, 2018
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