SALT LAKE CITY — Prosecutors have lodged more charges against businessmen Jacob and Isaiah Kingston stemming from an alleged $1.1 billion scheme to defraud the federal government of renewable energy tax credits.
In a superseding grand jury indictment filed in U.S. District Court on Nov. 20, Jacob Kingston is charged with 14 counts of filing false tax returns and 11 counts of money laundering. His brother, Isaiah, faces seven money laundering counts. Business partner Lev Aslan Dermen, who has businesses and investments in California and Turkey, is charged with four counts of money laundering.
The original indictment filed in August, just before the three were arrested, contained 15 counts.
The three have pleaded not guilty. A status conference in the case is scheduled for Dec. 4.
Prosecutors detail in the new indictment 36 allegedly false claims for tax credits filed by Jacob Kingston, who with his brother founded Washakie Renewable Energy.
The document also lays out transactions among a series of companies, investment accounts, banks and a mortgage company from 2010 to 2016 that prosecutors said were used to disguise the distribution of tax credit funds received.
The three men are held without bail after prosecutors argued they are extreme risks to flee. The three could face life prison sentences if convicted and they have millions of dollars of investments in Turkey, where they could go without fear of extradition, according to the U.S. Attorney’s Office.
Prosecutors allege the Kingstons and Dermen falsified sales invoices and accounting records, plus production records, blending tickets, bills of lading and other paperwork routinely created in qualifying for renewable fuel transactions.
They rotated fuels between various places in the United States and elsewhere, including Panama, to make it appear that transactions involving the purchase and sale of feedstock and biofuels products were taking place, the indictment said.
It said some payments received from the government were deposited and then transferred to appear to be related to a loan payable to a company controlled by Dermen, who also is known as Levon Termendzhyan.
The tax credits, administered by the Internal Revenue Service, are designed to increase the amount of renewable fuel used domestically. The tax credits were refundable regardless of whether the taxpayer owed other taxes, and were paid by U.S. Treasury check, according to the indictment.
As of Tuesday, Jacob Kingston, 42, is in the Salt Lake County Jail, while Isaiah Kingston, 38, is at the Weber jail in Ogden. Dermen, 52, is at the Davis County Jail.
In court documents, prosecutors allege the Kingstons and Dermen “schemed to defraud the Internal Revenue Service of $1.1 billion.” The three were able to obtain $511 million, but the “intended loss” documented in the scheme was more than double that, prosecutors said.
Jacob Kingston used some of the money to buy a $3.8 million home in Sandy, and he and his brother together bought a $1.7 million Bugatti Veyron sports car, the indictment said.
Prosecutors have served notice of intent to seize assets related to the case, including the home and car. In a document related to Dermen’s unsuccessful attempt to be freed on bail, prosecutors said the Bugatti was last known to be in Dermen’s possession, but they now can’t locate it.
The Kingstons, sons of polygamist leader John Daniel Kingston, created Washakie in 2007 and the company built a huge biofuels production plant near Plymouth in Box Elder County.