California Air Resources Board

SACRAMENTO –  The California Air Resources Board (ARB) and the Imperial County District Attorney announced today that nine oil companies were indicted for allegedly violating California tax and consumer fraud laws by selling over 300,000 gallons of non-complying gasoline.

         ARB Chairman John Dunlap said, "Selling non-complying gasoline may have endangered California air quality.  In addition, if the allegations of tax evasion are upheld, other market competitors which obeyed the law were placed in an unfair marketing position."

         Those indicted include: National Petroleum Marketing, Inc.; Miller Distributing, Inc.; La Paz Products, Inc.; C.Y.A., Inc.; Polmex Oil Company, Inc.; Sunshine Western Inc.; Petro Source, Inc.; Camin Cargo, Inc.; USA Petroleum/Big John; John B. Knight, Jr.; John B. Knight, III; John Lyddon and Dr. Neil Boone.  If convicted, they face up to eight years in prison and a fine of $37 million.  Both Knight's have already been indicted by a Utah federal grand jury for money laundering and conspiracy to sell bad diesel fuel.

         The grand jury indictment is the result of a two-year investigation resulting in 31,000 counts of theft, failing to pay fuel taxes and conspiracy related to selling fuel that violated California regulations between December 1995 and February 1996.  Specifically, the indictment alleges that gasoline was imported from Arizona that contained oxygenate additives greater than the 2.2 percent limit set in ARB regulations.

         The non-complying fuel originated at National Petroleum Marketing, an Arizona refinery, and sold as ARB certified fuel to USA Petroleum Corp. locations throughout Imperial County, California. The non-complying fuel was then sold at six USA/Big John stations in Imperial County, resulting in approximately 15,000 sales. The ARB provided funds to aid the Imperial County District Attorney in investigating the alleged conspiracy and is cooperating with local authorities in Imperial County and Arizona.