DEBRA W. YANG
United States Attorney
Central District of California
Thom Mrozek, Public Affairs Officer
(213) 894-6947
thom.mrozek@usdoj.gov
January 11, 2005
BROKER OF AIR POLLUTION CREDITS NAMED IN FEDERAL INDICTMENT THAT ALLEGES SHE DEFRAUDED NEW YORK INVESTMENT FIRM
A woman who traded air pollution credits among Southern California businesses was indicted this afternoon by a federal grand jury that alleged the defendant took $12.5 million from investors who were falsely told that the money would be used to purchase pollution credits that would be sold to a Southern California Mobil refinery.
Anne Masters Sholtz, 40, of Bradbury, was indicted on six counts of wire fraud, charges that carry a potential penalty of 30 years in federal prison. Sholtz, who was arrested in this case last summer and subsequently freed on a $100,000 bond, will be arraigned on the indictment in the coming weeks.
The indictment filed today and a criminal complaint filed in June outline a scheme in which Sholtz allegedly used forged documents and her knowledge of trading pollution credits to defraud AG Clean Air, a New York-based company that trades in energy credits.
In 1993, the South Coast Air Quality Management District, the state air pollution control agency that regulates 28,000 pollution-emitting businesses in the Los Angeles metropolitan area, established the Regional Clean Air Incentive Market, or RECLAIM. In 1998, the United States Environmental Protection Agency approved the RECLAIM program, under which each pollution-emitting facility is issued an annual allocation that limits the amount of nitrogen oxides and sulfer oxides that can be emitted. If a facility improves its pollution-control equipment, it may sell part of its pollution-producing allocation via RECLAIM Trading Credits, or RTCs.
Sholtz owed a company called Sholtz & Associates, which later merged with another company and became EonXchange. Through these companies, Sholtz operated a Pasadena-based Internet site called Automated Credit Exchange (ACE), which was a forum for companies to trade and sell RTCs. ACE was closed in August 2002 when it went into bankruptcy.
According to the court documents, Sholtz approached an officer of AG Clean Air in the fall of 1999, telling him that Mobil Corporation needed to purchase a large quantity of RTCs for use at a refinery in Southern California. Over the next two years, AG Clean Air purchased $12.5 million worth of RTCs based on Sholtz’s representations that Mobil would purchase the RTCs for $17.5 million.
Sholtz paid AG Clean Air for some of the RTCs it had purchased, but when AG Clean Air demanded the remaining money, Sholtz claimed that Mobil was having trouble paying for the RTCs. As part of the scheme, Sholtz sent a series of faxes and e-mails to AG Clean Air that purported to document ongoing negotiations between Ace and Mobil. For example, on May 8, 2001, Sholtz allegedly sent a fax to AG Clean Air which contained a fax of a purchase and sale agreement showing that ExxonMobil Corporation had agreed to purchase $22 million worth of RTCs from Sholtz’s company. In truth and in fact, there was no such agreement and the signature of the ExxonMobil executive vice president had been forged, the indictment alleges.
The indictment alleges that the scheme caused AG Clean Air to suffer more than $2.5 million in losses.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven.
The case against Sholtz is part of an ongoing investigation being conducted by the United States Environmental Protection Agency, Criminal Investigation Division, and the South Coast Air Quality Management District.
Release No. 05-006
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