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Fraud Friday – Billion Dollar Fraudsters Get Additional Charges

February 8, 2019

By Dominic J Bartolone
Contributing Editor, Fraud Friday

Fraud Friday – Billion Dollar Fraudsters Get Additional Charges

Federal prosecutors in Salt Lake City filed new charges against executives and two employees of an energy company over a fraudulent renewable tax credit scheme.

A grand jury returned a second indictment against the CEO of a renewable energy company, Jacob Kingston, and Chief Financial Officer Isaiah Kingston, along with a California businessman, Lev Dermen, on 46 counts of mail fraud, money laundering, filing false tax returns, and destroying records.

The new indictment also named the Kingston mother, Rachel Kingston, and Jacob Kingston’s wife, Sally Kingston. The family all worked at a business called Washakie, a biodiesel company owned by Jacob and Isaiah, with corporate offices in Salt Lake City, Utah.

According to the indictment, the Kingstons, along with Dermen, who is the owner of multiple California-based fuel companies, conspired to file more than $1 billion in false fuel tax credits, causing the IRS to issue more than $511 million in refunds to Washakie.

The Kingstons, who are members of a polygamist group known as the Davis Cooperative Society, are alleged to have hatched a scheme to launder $3.2 billion in proceeds from hundreds of financial transactions between accounts of various business entities to make it appear that Washakie was buying, selling, and processing renewable biodiesel fuel.

On top of creating fraudulent documents, the Kingstons and Dermen also moved renewable fuel between the U.S. and other countries, including Panama, to make it look as though they were operating a legitimate business. According to prosecutors, the group used “burner phones” and other covert measures to communicate with each other.

Jacob Kingston, Isaiah Kingston, and Lev Dermen used some of the tax refund proceeds to purchase a $3.1 million Sandy, Utah home for Jacob, a $1.8 million 2010 Bugatti Veyron sports car, a $3.5 million Huntington Beach, California house for Dermen, and another $483,000 for another Dermen property in Turkey.

The group is also accused of transferring over $134 million in fraudulent proceeds from Washakie to Turkey, either directly or through third parties, including SBK Holdings USA, a California corporation that Dermen and Jacob Kingston created.

The indictment also details how Jacob, Rachel, and Isaiah Kingston transferred over $20 million to a Turkish bank account owned by Jacob Kingston.

Before federal agents could serve search warrants to Jacob and Isaiah Kingston, he and his brother allegedly destroyed records, tried to bribe government officials, and hired an “enforcer” to intimidate or harm witnesses. Rachel Kingston is also charged with attempting to destroy documents.

Federal prosecutors argued for the Jacob and Isaiah Kingston to remain in jail pending trial, claiming the men have access private jets, millions of dollars stashed abroad and an unidentified federal law-enforcement contact who apparently tipped them off ahead of a raid.

The Kingston brothers and Dermen, also known as Levon Termendzhyan, were initially indicted in August on 15 counts of money laundering and filing false tax returns. Prosecutors then added additional charges in November. All those named in the indictment have pleaded not guilty.

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