A joint report released yesterday by the New York City Department of Investigation and Business Integrity Commission revealed widespread heating oil fraud across New York City, with 9 companies and 44 individuals indicted on multiple felony counts. Summing up the results of a two-year investigation, the report alleges that by delivering less oil than promised and mixing waste oil with new heating oil (among other methods), the heating oil industry has stolen at least $18 million per year, with $4 million of that stolen directly from the city government.
“The City spends millions of dollars each year on fuel deliveries to agency buildings—money that is literally being siphoned by unscrupulous fuel delivery companies through various fraud schemes," said DOI Commissioner Mark Peters in a statement yesterday.
The companies indicted were F&S Distribution, Inc. 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., Enterprise Transportation, Inc., and Century Star Fuel Corp. Each company's owner was among the indicted, along with truck drivers and fuel depot dispatchers.
The report details the methods used by delivery companies, principals, and truck drivers to "short" customers. One method involved tampering with the valves in trucks that are meant to detect when air, rather than oil, is being pumped; the magnets used to disable these valves were apparently provided to truck drivers by the oil companies. Another method involved heating the oil prior to delivery, causing it to to expand and seem like a larger quantity. A third, especially devious method diverted some oil through a secret hose into another compartment in the delivery truck, rather than into the building it was meant to be servicing.
According to the New York Times, the buildings affected by this fraud included homeless shelters and buildings on Rikers Island, as well as hospitals, police stations, and courthouses.
“The charges in this case paint a picture of systemic enterprise corruption throughout the City’s heating oil industry," said Manhattan District Attorney Cyrus R. Vance, Jr. in a statement yesterday. "No illicit business or black market should be allowed to operate while honest New Yorkers are working hard to keep their homes and businesses warm during colder months."
The Times reports that in court Tuesday afternoon, the defendants pleaded not guilty to charges including grand larceny, falsifying business records, and enterprise corruption. Lawyers for some of the truck drivers are shifting blame toward the company principals, on the basis that the drivers are from more difficult circumstances than the wealthy business owners; meanwhile, lawyers for the industry executives are taking the opposite tack:
“Of course he’s innocent,” the lawyer for the owner of Express Petroleum Inc. told the Times. “He doesn’t drive the trucks.”
This investigation is ongoing, and authorities are expected to file more charges.