Texas Attorney General Greg Abbott today charged Petroleum Wholesale, L.P., Sun Development, L.P., and related defendants with unlawfully defrauding their customers by diluting medium and premium grade gasoline with regular unleaded fuel.
Because the premium gasolines sold at 143 of the defendants’ Texas-based locations were improperly diluted, the defendants are charged with falsifying octane levels, defrauding their customers and violating the Texas Deceptive Trade Practices Act.
The state uncovered the defendants’ fuel dilution scheme -– which is known as cross-dumping -– during the course of a prior enforcement action that charged the defendants with calibrating their gasoline pumps to deliver less fuel than was actually disclosed to customers.
The cross-dumping incidents cited by the state occurred between 2005 and 2008. As of the filing date of the state’s enforcement action, the defendants have refused to provide the state with documents evidencing their conduct after 2008.
Sunmart
In addition to operating Sunmart Travel Centers & Convenience Stores, the defendants also operate approximately 80 service stations that are licensed to sell fuel under branding agreements with three major fuel companies.
Because branded stations feature brand-name products with performance-enhancing additives -– such as fuel injection and valve cleaning products -– those gasolines are marketed for their superiority over other fuels.
As a result, when customers pay for a brand-name gasoline but actually receive generic or additive-free gasoline, they are being deceived about the nature of the product they are purchasing.
According to the state’s enforcement action, the defendants not only diluted premium grade gasoline but also sold unbranded fuel at branded stations. Further, the defendants hid this conduct from their branded fuel providers.
Conventional fuel
The Attorney General’s staff also uncovered evidence indicating that the defendants improperly sold conventional fuel in locations that required reformulated fuel.
Reformulated fuel, which includes detergents and oxygen, has a chemical composition that is intended to reduce carbon-monoxide emissions. The federal Clean Air Act requires densely populated areas that exceed certain air quality levels – such as Houston – to sell reformulated fuel.
The state’s enforcement action seeks a temporary and permanent injunction against the defendants as well as civil penalties of up to $20,000 for each violation of the Texas Deceptive Trade Practices Act.
Today’s cross-dumping case is the state’s third enforcement action against Petroleum Wholesale. In November 2010, a Harris County jury rendered a verdict of at least $30 million against Petroleum Wholesale, L.P. and PWI GP, LLC for deliberately and illegally calibrating their gasoline pumps to deliver less than a full gallon of fuel.
A Harris County district court is currently reviewing the state’s motion to reinstate the jury verdict in that case. The first enforcement action was resolved in December 2009, when Petroleum Wholesale was ordered to pay $100,000 for failing to properly protect its customers’ personally identifying information – in violation of state identity theft prevention laws.
Mark Stevens (Thu, 18 Aug 2011 23:03:20 +0000): Just keep bending over American people.... Un real
Jacqueline Folwell (Fri, 19 Aug 2011 03:17:51 +0000): Not a surprise. Low Quality. High Price.
Linda M Corrigan (Sat, 20 Aug 2011 20:27:43 +0000): How can be sure as consumers that this is not going on all over the US? There are times I will visit one station, put 20 dollars in and get 5.8 gallons on $3.53, and there are times I put 20 bucks in at another station and get 5.9gallons at $3.53. Does anyone bother to watch gallons, dollars, and your gas dial in the car? Check it out, but you have to be very strick, organized and know what your miliage is on gas in the tank, what's left in the tank. Imagin,.5 galls difference is lots of millions of money......just like watching your bank account for the.5 cents, 1 cent, or 1.5 cent charge. mulitply that by millions every day....and wholla....mucho money...
Michael Dakota Sonntag (Wed, 24 Aug 2011 02:42:03 +0000): I did the math and 20 dollars of gas at 3.53 is about 5.66 gallons of gas!
Eric Clemenson (Sun, 21 Aug 2011 06:03:04 +0000): Let's face it, letting crooks off with a fine means they will continue to defraud consumers and their suppliers. Close 'em down. Put 'em out of buisiness. That's got to be part of the punishment. Jail time is nice too.
Ed Beckstead (Tue, 23 Aug 2011 15:52:11 +0000): I am quite surprised, honestly. Where I am, it is a government agency that does the calibrations of fuel pumps (or a government licensed company, which the government randomly checks on). I was under the assumption that it was like this everywhere. As for the fine of $20,000 per incident....why can't they add to that, the amount of "extra" that they defrauded the public by....it they are not showing their sales figures for that period, assume a 10% growth in market share per year, and fine them according to that? Basically hit them in the pocket-book like they are hitting us....money seems to be the only thing they understand.
Rhonda Hughes (Wed, 24 Aug 2011 00:16:08 +0000): Without SEVERE penalties... fines, prison sentences and closing down their businesses nationwide and permanently this won't stop as the cash flow is too good. A petty thief would be treated harsher by the judicial system especially in Texas so why have they gotten off so easily? Deceptive Trade? Damn thieves! Nothing deceptive about it.
El Spanno (Wed, 24 Aug 2011 03:23:27 +0000): There are enough gas stations take the bad ones out of the system!
Celena Null (Mon, 02 Jan 2012 01:43:27 +0000): I bought gas friday at the sunmart on 1960 and 2100, 3.4 miles down the road my engine died had to get the car towed home. I know it's bad gas. I have a high preformance engine with very low miles, never had any problems till I bought sunmarts gas.