Ex-fuel distributor sentenced, fined for tax evasion scheme

user-gravatar Headshot

The owner-operator of a Texas-based kerosene distribution company recently was sentenced in state court to 12 years in prison and $1 million in restitution to the State of Texas for his role in a scheme to impede collection of millions of dollars in state motor fuel taxes.

Sidney Baldon II of Mid-Coast International pled guilty to evading motor fuel taxes, blending motor fuel and engaging in a motor fuel tax scheme, according to the U.S. Department of Transportation’s Office of the Inspector General; Baldon was indicted on the charges by a Travis County grand jury in June 2007.

Between March 2002 and November 2003, Baldon – acting through Mid-Coast – purchased kerosene from Calcasieu Refining Co. in Lake Charles, La., under fraudulent pretenses, DOT-OIG said; Baldon and his associates presented a letter to the refinery that indicated that the fuel was purchased for export to Mexico, which allowed Mid-Coast to acquire the fuel untaxed.

The untaxed fuel was transported from Louisiana to Mid-Coast locations in Houston and Channelview, Texas, where the fuel then was blended with other materials to produce more than 22 million gallons of blended fuel, according to DOT-OIG; the untaxed blended fuel then was transported to retail filling stations in the Houston area and sold as taxable motor fuel.

The scheme also resulted in impeding the collection of federal fuel excise taxes, and Baldon was sentenced in federal court in May to five years imprisonment and $1.6 million in restitution, DOT-OIG said.