Entities with ties to the Kingston polygamist clan are trying to prevent the disclosure of thousands of documents seized as part of a massive fraud case against four members of the family.
Attorneys representing 11 businesses, an accounting company and a Taylorsville woman have filed an appeal in the U.S. 10th Circuit Court of Appeals in Denver in an effort to prevent federal prosecutors in Salt Lake City from sharing any of the documents during the criminal case.
The document litigation draws unusual public attention to the Kingston group’s holdings in Utah. Prosecutors have said the group of an estimated 3,500 members has a sprawling business empire in several Western states.
In August 2018, federal agents arrested brothers Jacob and Isaiah Kingston, co-founders of Washakie Renewable Energy, and California businessman Lev Aslan Dermen on charges that they defrauded the government of $511 million in biofuels tax credits.
In a superseding indictment lodged in January, prosecutors added more charges against the three defendants and also added charges against the Kingston brothers’ mother, Rachel Ann Kingston, and Jacob’s wife, Sally Louise Kingston.
The charges stem from an investigation highlighted by raids of numerous businesses in the Salt Lake City area on Feb. 10, 2016.
Some of the search warrants were served on Washakie’s offices and those of a Washakie affiliate, United Fuel Supply.
Investigators also served warrants at three other business buildings and a Taylorsville home thought to have connections to the Kingston defendants.
But attorneys for the second group of entities argue their clients have no connection to the alleged Washakie fraud and that use of their documents in the criminal case violates their trade secrets and attorney-client privileges.
Two of those entities are central to the Kingston group: The Davis County Cooperative Society Inc., which has existed on state corporation records since 1941; and the Latter-Day Church of Christ, the polygamists’ religious umbrella.
Other companies listed include Fidelity Funding, World Enterprises, Standard Industries, ABM, Security Funding, MBSC, COP Coal Development, Mitchell and Associates and A-Fab Engineering.
A review of state corporation registration records shows that at least two of the companies are registered under other Kingston family members’ names and at least four were registered by a corporate agent who shares a listed address with the A-Fab Engineering. Kingston family law firm members also represent several of the intervenors.
In their court filings, the intervenor businesses said prosecutors eventually returned copies of all the documents and said they had “established a taint team to review all materials and remove all privileged documents.”
But later, the intervenors said, “The government has indicated that due to the voluminous amount of materials they cannot identify the privileged documents and separate them from non-privileged materials and that the seized materials, including the privileged documents, will be produced” for use during the criminal trial.
The intervenors said they identified 11,762 seized documents that are protected by attorney-client privilege and should not be interested in the criminal case.
“Thousands upon thousands” of other documents, the intervenors said, “are sensitive and confidential business records that have no bearing on this prosecution or defense.”
According to the appeal, the search warrants authorized the seizure of documents related to 129 businesses and 913 individuals. The government seized records involving another 142 businesses and 230 people not contemplated in the warrants, it said.
Agents seized documents including tax, income, organizational, bank, computer and accounting records, plus receipts, invoices, payroll records and loan files.
“The intervenors and Washakie are entirely separate entities with no overlap in business or corporate structure or ownership,” the appeal said. “There is no allegation here that the intervenors or any of their corporate officers or employees had any involvement in the money laundering or tax fraud schemes alleged.”
In a Jan. 29 letter, U.S. Justice Department tax crime enforcement official Charles Edgar told the intervenor attorneys that prosecutors needed help from the intervenors to identify any privileged documents.
Magistrate Judge Brooke Wells ruled Jan. 17 that she would not stop production of the case documents because prosecutors and defense attorneys were proceeding under a protocol that requires them to “cease reviewing” any privileged item when they come across one.
“The government does not know for certainty whether any of the 12,000 documents are material” to the criminal case, Wells ruled.
District Judge Jill Parrish later denied the intervenors’ appeal of Wells’ ruling, which sets up the current circuit court review.
The Kingston defendants are scheduled to go on trial in May.