NYC Recommends New Policies and Procedures in Wake of Probe

Several New York City agencies recently issued a report on schemes allegedly used by delivery companies to defraud heating oil customers, including city agencies. The report follows a two-year investigation that yielded indictments of nine fuel delivery companies and 44 individuals.

The New York Oil Heating Association (NYOHA) issued a written statement about the investigation, as follows. “The indictments of various heating oil trucking companies and associated individuals that were announced today by the Manhattan District Attorney’s Office is deeply concerning for the many honest and hardworking companies in New York City that provide essential clean heating and energy services to New Yorkers.

“The alleged schemes referenced in the indictments are deplorable and in direct contrast to the track record and commitment of the vast majority of honest heating oil companies and their exceptional workforce. It is important for all New Yorkers to know that in the vast majority of cases, their heating oil company and the many hardworking men and women that deliver heating oil are honest and dedicated to customer protection and satisfaction.

“NYOHA works closely with the City of New York on numerous policy and operational issues, from achieving key environmental goals to ensuring consumer protections, and we look forward to assisting the City and its various agencies in a joint goal of weeding out bad actors and ensuring the continuance of this honest, dedicated and essential New York industry.”

Daniel D. Brownell, Commissioner of the New York City Business Integrity Commission (BIC), said the report “offers a startling look at the common methods used by unscrupulous delivery companies to steal, including ‘shorting’ on delivery amounts and delivering ‘blends’ of waste oil with the unused heating oil to unsuspecting consumers.”

The investigators allege that the indicted companies altered delivery trucks to enable drivers to override protective devices and inflate meter readings by pumping air into tanks during deliveries.

In response to the investigation, the new Citywide Heating Oil Task Force identified more than a dozen new processes and standard protocols that all agencies will now employ, including:

1. Maintain a centralized database that identifies all operational fuel tanks and all pertinent information (size, location, grade, type of gauge);
2. Proactively monitor the daily fuel usage at each location to identify any irregularities;
3. Require that all deliveries be scheduled and supervised by a Building Representative;
4. Schedule fuel deliveries centrally by agency, not through the specific location, and automatically when quantity of fuel is below a pre-determined percentage capacity;
5. Train designated personnel regarding their responsibilities during the fuel delivery processes, including receipt and review of the vendor’s fuel delivery ticket;
6. Install fuel level gauge devices at every location receiving deliveries of heating oil, which should be regularly tested and recalibrated. Fuel Delivery Alarms should be regularly checked and maintained;
7. Document fuel deliveries in both an onsite logbook and in a centralized agency database;
8. Record and track daily measurements of fuel levels using both the gauge and stick;
9. Distribute a fuel delivery checklist, including “red flags:” (i) confirming the fuel delivery vendor has a valid DCA inspection certificate; (ii) checking the seal on the meter to ensure it has not been tampered with; (iii) looking at the start-stop times on the delivery ticket; (iv) checking the width of the largest hose that DCA inspected, and/or only accepting deliveries from the largest hose that was inspected by DCA; and (v) confirming that the rate of flow from the fuel tank during the inspection matches the rate of flow at the delivery location;
10. Measure fuel amounts immediately before and after delivery, while the vendor is present, using gauge and stick. Re-measure 30 minutes after delivery. Record data and compare with vendor delivery ticket;
11. Link the centralized fuel ordering and delivery database to the agency’s Accounts Payable unit. Fuel Shortage Reports should be submitted to a central monitoring unit, and “stop payments” should be automatically issued if a fuel shortage occurs;
12. Reconcile the delivery amounts with the amounts ordered and invoiced. Audit all payments, and check for any duplicate invoices; and
13. Take random, but regular, fuel samples during deliveries.

Companies charged in the investigation are 4th Ave Transport; All-Boro Transport; Casanova Fuel; Century Star Fuel; Enterprise Transportation; Express Petroleum Inc.; F&S Distribution; G&D Petroleum Transportation; and G&D Heating Oil (d/b/a New York Liberty). Charges include enterprise corruption, grand larceny, scheme to defraud, criminal possession of stolen property, falsifying business records, and offering a false instrument for filing.

As part of the investigation, dozens of search warrants were executed at the business locations of the indicted heating oil delivery companies, during which computers, phones, and other records were seized, cloned, and analyzed, as well as over $540,000 in cash was seized. Additionally, investigators conducted court-authorized telephone intercepts with regard to principals and employees of these same companies. A number of the delivery trucks that had been involved in the theft schemes were also seized and examined.

The investigators claim that the schemes were primarily carried out by the oil delivery companies themselves, rather than just a few individual rogue drivers. “These companies have the resources and financial incentive to invent the means to by-pass or override mandated safeguards meant to protect customers against fraudulent deliveries,” the investigation report states.

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