The 30-year-old businessman received a prison term of 188 months, was fined $175,000 and ordered to pay $54.9 million in restitution, the U.S. Justice Department said in a release.
He pleaded guilty in December to an indictment charging him with 51 counts of wire fraud, 24 counts of money laundering and four counts of making false statements in violation of the Clean Air Act.
"Today's sentence is the second significant penalty against an alleged bio-diesel producer who, in fact, produced no fuel at all," said Cynthia Giles, assistant administrator for Environmental Protection Agency's Office of Enforcement and Compliance Assurance.
"These cases demonstrate that EPA and our law enforcement partners have and will catch criminals who defraud federal programs and the American people by falsely selling renewable fuel credits."
Gunselman admitted that from September 2010 to October 2011 he schemed to defraud the EPA by falsely representing that he was in the business of producing bio-diesel fuel, even though he had no facility to do so.
Authorities said Gunselman generated fraudulent renewable fuel credits and sold them to oil companies and brokers who wired about $41.76 million in payments to a bank account he controlled.
Gunselman created a number of shell businesses, including Absolute Fuels LLC, Absolute Milling LLC, Ellipse Energy LLC; 21 Investments LLC and YGOG Holdings LLC. He admitted the entities were solely alter egos of himself with no separate and distinct existence from him.
Gunselman conducted 51 fraudulent transactions in which he represented to the EPA that bio-diesel fuel had been produced at an Absolute Fuels facility in Anton, Texas, when in fact, no bio-diesel fuel had been produced.
Authorities say he used about $12 million he obtained to buy luxury cars, including a Bentley, Mercedes-Benz, Lexus, Cadillac and Shelby Cobra, a military tank, a Gulfstream airplane, professional basketball season tickets and corporate sponsorship, and agricultural, business and residential real estate.