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August 18, 2008

State Lawsuit: Pronto Markets Fraudulently Sold Blended Fuel as Unleaded

A state consumer-protection lawsuit alleges that Pronto Market gas stations in Sumner and Fairbank, Iowa, “improperly and fraudulently” sold E85 blended ethanol fuel as either unleaded regular gasoline or 10% ethanol-blend fuel.

Jerry Fratzke of Jesup is named as defendant in the lawsuit, doing business as Pronto Market. Fratzke owns Pronto Market convenience stores, with locations in Sumner and Fairbank and other sites.

The consumer-fraud lawsuit was filed by the Attorney General’s Office in Black Hawk County District Court in Waterloo, based on investigation by the Weights and Measures Bureau of the Iowa Department of Agriculture & Land Stewardship (IDALS).

Gasoline retailers can buy E85 blended fuel at substantially lower prices than regular unleaded or 10% ethanol blend fuel (often 30 to 45 cents lower per gallon) because of tax breaks and other incentives to promote E85, which contains 70 to 85 percent ethanol. The suit notes that E85 fuel can damage vehicles that do not have flex-fuel engines equipped to run on blended fuel.

The lawsuit, which was filed August 13, asked the Court to enter an immediate temporary restraining order prohibiting the defendants from further sales of E85 blended ethanol fuel. Judge Jon C. Fister entered the TRO on August 13 and set the matter for hearing at 11 a.m. September 22. The lawsuit also asks the Court to permanently prohibit further violations, order reimbursement to consumers, and assess civil penalties up to $40,000 per violation. [Go to lawsuit petition and Judge Fister's temporary restraining order.]

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Additional background and detail:

The lawsuit states that Ivan Hankins, Bureau Chief of the Weights and Measures Bureau of IDALS, was informed on or about June 17, 2008, that documents indicated that the Fairbank and Sumner Pronto Market stations were receiving shipments of E85 blended ethanol fuel from Consolidated Energy Company, a bulk fuel distributor in Jesup. The fuel was being dumped into underground storage tanks at the two Pronto Markets, including tanks that served unleaded regular gasoline pumps. Neither store had an underground fuel tank or pump for just E85 fuel.

On June 17, an IDALS inspector took samples from each of the underground storage tanks at the Fairbank and Sumner Pronto Markets. The samples were tested and found to contain E85 blended ethanol fuel.

The suit alleges that the Pronto Markets in Sumner and Fairbank bought at least 2,500 gallons of E85 blended ethanol fuel from March 10 to June 6, 2008, and then sold the fuel as either unleaded regular gas or 10% ethanol-enhanced fuel.


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