SAN FRANCISCO -- The president of the bankrupt Holland Oil Co. and two of his top aides have pleaded guilty to charges resulting from a $7.7 million oil fraud.
U.S. District Judge William W. Schwarzer Thursday set Oct. 22 for sentencing John M. Holland Jr., 42, Hillsborough, Calif., and Donald W. Dalziel, 49, Pleasanton, Calif.
James W. Paige, 32, controller for Holland Oil, was sentenced to 18 months in prison and fined $10,000 in a separate but related case involving the same fraud.
Holland, who contributed thousands of dollars to Gov. Edmund G. Brown Jr. and other Democratic candidates, and Dalziel admitted guilt to parts of an indictment charging a $10 million fraud during 1979 and 1980.
At the time of the fraud, the Department of Energy had price controls on crude oil and required refiners to report whether they were processing newly pumped, high-priced oil or old, low-priced oil.
The system, designed to equalize the handling cost for all refiners, required oil firms processing low-cost oil to pay a percentage of their profits to firms refining the high-priced oil.
Holland and Dalziel admitted that they filed reports with the department showing false sales of oil and that they filed reports falsely certifying low-price oil as high-price oil.
The scheme, investigators said, netted $1.7 million in payments from other refiners and also allowed them to avoid paying other oil firms $6 million.
Involved were a subsidiary Holland company, Road Oil Sales, Inc., a small refinery in Bakersfield, Calif.
Low-priced oil was shipped by one trucking company to a storage facility. Then another trucking company would move the same oil from storage to Road Oil, 'thus concealing the source and character of the product,' the indictment said.
The indictemnt added Holland and Dalziel 'caused false invoices to be manufactured under the name of East-West Petroleum Co., a non-existent company with a Hong Kong address.'
The result was that Holland Oil had documentary 'proof' it was processing high-priced oil and was entitled to payments from other oil companies, the indictment said.
Paige, beides admitting he helped prepare phony oil sales invoices, also admitted paying $25,000 to an officer of the Golden State Sanwa Bank branch in Oakland to have the officer issue a phony bank letter of credit for Holland Oil.
The bank lost $1.25 million because of this, and the officer was sent to prison in March.
