Investigations

On May 14, Sidney Berle Baldon II (Baldon), Owner/Operator of a Kerosene distribution company, was sentenced in U.S. District Court, Houston, Texas, to 60 months imprisonment followed by three years supervised released for his role in a scheme to impede the Internal Revenue Service (IRS) in the proper collection of federal fuel excise taxes. Mr. Baldon was also ordered to pay $3.32 million in restitution. In April 2008, Mr. Baldon and two other associates, Tracey Dale Diamond and Yousef Ishaq Abutier, pled guilty to their involvement in a scheme to defraud the IRS of millions of dollars in excise taxes arising from their purchase of kerosene fuel from a Louisiana refinery under fraudulent pretenses. The group presented a letter to the Louisiana refinery that indicated the fuel was purchased for export to Mexico which allowed them to acquire it untaxed. The fuel was then transported to the Houston area, blended with other petroleum products and then sold as taxable fuel in retail outlets in the Houston area. During the course of the conspiracy, the defendants obtained in excess of 13,000,000 gallons of kerosene from the refinery without paying the appropriate tax resulting in a tax loss to the United States in excess of $3,000,000. Co–defendant Yousef Abuteir, also of Houston, was scheduled to be sentenced but failed to appear at the sentencing hearing and a warrant was issued for his arrest. The third defendant, Tracey Dale Diamond, had his sentencing postponed until May 28, 2009. This is investigation was conducted jointly with IRS–Criminal Investigation Division (CID), Environmental Protection Agency–CID, Immigration Customs Enforcement, and the Texas State Comptroller’s Office. OIG participates in investigating fuel tax evasion schemes because of the negative impact these schemes have on the Highway Trust Fund.