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Dozens of Fuel Oil Company Execs and Truck Drivers Arrested in Fraud Scheme

By Murray Weiss | November 10, 2015 9:58am
 Castle Oil in The Bronx was among five fuel oil companies raided by investigators last March.
Castle Oil in The Bronx was among five fuel oil companies raided by investigators last March.
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DNAinfo/Eddie Small

NEW YORK CITY — More than 40 owners, executives and truck drivers from some of the city's largest fuel oil companies were arrested Tuesday in connection to a massive swindle of city agencies and some of Manhattan's most prominent developers, DNAinfo New York has learned.

The suspects are accused of running a years-long scheme where fuel trucks were rigged to systematically shortchange customers on heating oil delivered to homes and other buildings, law enforcement sources told "On the Inside."

The fraud allegedly made them hundreds of millions of dollars and targeted city agencies, including the NYPD and FDNY.

“The whole industry was making outrageous amounts of money, incredible amounts, really,” said a source close to the investigation.

Officials said that the suspects — including the owners of eight fuel companies and three transportation depots — would take the undelivered fuel they had shortchanged a customer, sell it to another client and then split the profits.

In addition to robbing the police and fire departmenst, the scammers also shortchanged other government agencies, including those that serve the homeless and city school children.

“No illicit business or black market can be allowed to operate while honest New Yorkers are working hard to keep their homes warm during colder months," DA Cyrus Vance said in a statement.

The pre-dawn round-ups began as early as 3 a.m. Tuesday with investigators rousting suspects from their homes, some in posh suburban neighborhoods.

Officials say the case is one of the largest ever brought against the fuel oil industry and is expected to lead to changes in the way the industry is regulated.

“On the Inside” reported last March that Investigators from the Manhattan District Attorney’s Rackets Bureau, the NYPD Organized Crime and Control Bureau and the city’s Office of Business Integrity raided the offices of five fuel oil companies and seized roughly 50 trucks along with a small mountain of files and electronic equipment.

Sources said nearly every truck was found to have a “diverter valve,”  or some other devise, that allowed the truck to register that oil was being pumped into a building when, in fact, it wasn't.

Customers were then handed inflated bills and not given all the oil they paid for.

“And with last winter’s extreme cold they were practically manufacturing money,” the source said.

"We think this is a systemic, citywide issue," another source observed, saying the joint investigation started more than a year ago.

"There were many schemes going on, but the prime one was the overcharging by the millions."

The indicted suspects included 29 truck drivers who also received ill-gotten cash, according to the DA's office.

The indicted companies were: F&S Distribution; G&D Petroleum Transportation, Inc.; G&D Heating Oil, Inc; Casanova Fuel Oil, Inc.; Express Petroleum, Inc.; 4th Avenue Transport, Inc.; All-Boro Transportation, Inc.; Enterpriese Transportation, Inc., and Century Star Fuel Corp.

“The victims of these alleged schemes include all those who managed, worked or lived in the affected buildings, as well as the City itself — and when schools, hospitals and police precincts were shorted, it was residents and taxpayers who paid the price and suffered the consequences,” Vance said.

The city's Business Integrity Commission and Departmetn of Investigation pledge to come up with better regulation to stem systemic corruption in the oil heating industry.

“These indictments, coupled with prior prosecutions of fraud in this industry, signal that there are systemic, chronic problems with the heating oil delivery business in this city," said Daniel Brownwell, the BIC commissioner.

Mark Peters, the city DOI commissioner, added that "these wide-reaching schemes had real financial implications for the City and its taxpayers, and we must focus our attention and resources on plans to stop them in the future."