SALT LAKE CITY — Federal prosecutors have filed a new indictment against the executives of an energy company, including two more employees, with ties to a northern Utah polygamous group, alleging a billion-dollar renewable fuel tax credit scheme.
A grand jury returned a second superseding indictment charging Washakie Renewable Energy CEO Jacob Kingston and Chief Financial Officer Isaiah Kingston, and California businessman Lev Dermen with at total of 46 counts of mail fraud, money laundering, filing false tax returns and destroying records.
The new indictment also names Jacob and Isaiah Kingston's mother, Rachel Kingston, who is listed as the company's special projects manager, and Jacob Kingston's wife, Sally Kingston, the compliance manager.
Washakie, a biodiesel company with corporate offices in Salt Lake City, describes itself as the largest producer of biodiesel and chemicals in the Intermountain West.
The indictment alleges the Kingstons and Dermen, also known as Levon Termendzhyan, the owner of multiple California-based fuel companies including Noil Energy Group, conspired to file $1.1 billion in false claims for fuel tax credits, causing the IRS to issue $511 million in refunds to Washakie.
The Kingstons — members of the Davis County Cooperative Society or the Kingston Order, which practices polygamy — are charged with conspiring to launder the proceeds in hundreds of financial transactions between the accounts of various entities totaling $3.2 billion to make it look like Washakie was buying, selling and processing renewable fuel.
In addition to false paperwork, the Kingstons and Dermen also rotated renewable fuel and other products through various places in the U.S. and other countries, including Panama, to make it appear that they were involved in legitimate renewable fuel transactions, prosecutors allege. They allegedly used “burner phones” and other covert means to communicate with each another.
Jacob Kingston, Isaiah Kingston and Lev Dermen used some of the money for Jacob Kingston's $3.1 million home in Sandy, a $1.8 million 2010 Bugatti Veyron sports car, a $3.5 million Huntington Beach home for Dermen, and $483,000 in taxes on a waterside mansion in Turkey, according to the indictment.
Jacob Kingston, Isaiah Kingston and Dermen are accused of transfering more than $134 million in fraudulent proceeds from Washakie to Turkey both directly and through other entities, including SBK Holdings USA, a company Dermen and Jacob Kingston created in California.
According to the indictment, Jacob Kingston, Rachel Kingston and Isaiah Kingston transferred $20 million to a bank account in the Turkey in the name of Jacob Kingston.
The Kingston brothers are also accused of running money through the Davis County Cooperative Society, also known as “the Order,” and used it build out the Washakie plant.
Jacob Kingston and Isaiah Kingston also destroyed records before being served with federal search warrants, tried to bribe government officials and hired an “enforcer” to intimidate or harm witnesses, according to the indictment.
Rachel Kingston is also charged with removing or destroying records before the search warrants were executed in February 2016.
Prosecutors argued to keep Jacob Kingston, Isaiah Kingston and Dermen in jail pending trail because they are a risk to flee to Turkey. Rachel Kingston and Sally Kingston were released with GPS ankle monitors after a court appearance this week.
The Kingston brothers and Dermen were originally charged in August with a total of 15 counts of money laundering and filing false tax returns. Prosecutors filed a superseding indictment adding more charges in November. They have pleaded not guilty.