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What members of Utah polygamous clan did with $512M in falsely obtained tax credits

By Dennis Romboy | Posted - Jul. 19, 2019 at 5:27 p.m.

SALT LAKE CITY — Members of a northern Utah polygamous group have admitted in federal court to creating false records in their biodiesel company to obtain more than a half-billion dollars in renewable fuel tax credits.

Washakie Renewable Energy CEO Jacob Kingston, Washakie Chief Financial Officer Isaiah Kingston, Rachel Kingston, the company's special projects manager, and Jacob Kingston's wife, Sally Kingston, the compliance manager, pleaded guilty in U.S. District Court to multiple charges.

The charges include mail fraud, filing false claims, money laundering, destroying records and witness tampering.

Federal prosecutors charged the Kingstons and California businessman Lev Dermen, also known as Levon Termendzhyan, last year and added more charges earlier this year.

The Kingstons are members of the Davis County Cooperative Society or the Kingston Order, which practices polygamy.

Jacob Kingston told prosecutors the company was capable of producing some amounts of biodiesel, but in no year did it ever produce more than 8.5 million gallons. He started filing false claims for tax credits in 2010, according to the plea agreement.

Jacob Kingston used the money to buy property in Belize for a casino and property in Washington state to open a marijuana grow house. He also bought himself a house in Sandy and Dermen a 2010 Bugatti sports car. In 2013, Dermen gave Jacob Kingston a chrome Lamborghini, according to court documents.

Later in 2013, Jacob Kingston said Dermen had him send $32 million to associates in Turkey and another $1 million to his company, Viscon International. Jacob Kingston also transferred money to accounts in Luxembourg.

"All funds involved in these financial transactions represented proceeds of the false renewable fuel credit claims filed with the IRS," Jacob Kingston wrote in the plea agreement.

The Kingstons admitted to buying at least 100 million gallons of fuel from third parties and rotating it in tanks in Texas, Louisiana and Panama to make it appear that Washakie was buying and selling biodiesel.

Jacob Kingston filed false claims in the company's name for more than $272 million in biodiesel mixture tax credits based on that project, according to court documents.

In all, prosecutors say the government lost $511.8 million in the scam.

As part of the plea deal, the Kingstons agreed to forfeit the Washakie Renewable Energy plant in Plymouth, Box Elder County, and 53 properties in Utah, California, Arizona and Belize, and other assets.

They also most give up six luxury cars, including a 2015 Lamborghini Aventador, a 2011 Cadillac Escalade and the 2010 Bugatti Veyron — valued at $1.3 million used. In addition, the government wants the proceeds from the sale of a 2008 Lamborghini Murcielago, a 2007 Ferrari 599 and six Kenworth trucks.

Jacob Kingston, who admitted to 41 charges, faces the most time behind bars, with prosecutors agreeing to recommend up to 30 years in prison. Isaiah Kingston faces up to 20 years in prison, while Rachel Kingston and Sally Kingston could be imprisoned for up to 15 years.

A sentencing hearing has not been scheduled. Email: Twitter: dennisromboy; DNewsCrimeTeam

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