Five sentenced in billion-dollar biofuel tax fraud scheme
Several members of a family and an associate implicated in a billion-dollar biofuel tax fraud scheme were sentenced last week.
According to a press release from the Department of Justice, Lev Aslan Dermen, a.k.a. Levon Termendzhyan, 56, was sentenced to 40 years in prison; Jacob Kingston, 46, was sentenced to 18 years; Isaiah Kingston, 42, was sentenced to 12 years; Rachel Kingston, 67, was sentenced to seven years; and Sally Kingston, 45, was sentenced to six years.
“According to court documents and testimony from Dermen’s 2020 trial, from 2010 to 2018, Dermen conspired with Jacob and Isaiah Kingston, their mother, Rachel Kingston, Jacob Kingston’s wife, Sally Kingston, and others, to fraudulently claim more than $1 billion in refundable renewable fuel tax credits,” the release reads. “The IRS ultimately paid out more than $511 million in credits to Washakie Renewable Energy … a Utah biodiesel company owned by Jacob and Isaiah Kingston. The Kingstons distributed the fraud proceeds among themselves and Dermen.”
The business had been based in Box Elder County.
The release goes on to detail the charges and penalties levied against each individual in the scheme, which stretched all the way back to 2010:
- “Dermen was found guilty after a seven-week jury trial of conspiracy to commit mail fraud, conspiracy to commit money laundering and money laundering. In addition to the prison sentence, U.S. District Judge Jill N. Parrish ordered Dermen to pay $442,615,520 in restitution to the IRS and imposed a money judgment of more than $181 million against him.”
- “Jacob Kingston was ordered to pay $511 million in restitution to the IRS. The court also imposed a $338 million money judgment against him. Jacob Kingston was co-owner and CEO of Washakie. In July 2019, he pleaded guilty to conspiracy to commit mail fraud, filing false claims with the IRS, money laundering and conspiracy to commit the same, obstruction by concealing and destroying records and conspiracy to commit the same and witness tampering.”
- “Isaiah Kingston was also ordered to pay $511 million in restitution to the IRS. Isaiah Kingston, Jacob Kingston’s brother, was co-owner and CFO of Washakie. In July 2019, he pleaded guilty to conspiracy to commit mail fraud, aiding and assisting in the filing of false partnership tax returns, money laundering and conspiracy to commit the same and obstruction by concealing and destroying records and conspiracy to commit the same. Jacob and Isaiah Kingston both testified at Dermen’s trial in 2020.”
- “Rachel Kingston was the ‘special projects manager’ at Washakie and participated in the scheme by backdating documents and creating fake invoices to support the filing of the false claims. In July 2019, she pleaded guilty to conspiracy to commit mail fraud, money laundering and conspiracy to commit the same and obstruction by concealing and destroying records.”
- “Sally Kingston also worked at Washakie and participated in the scheme by similarly backdating documents and creating fake invoices to support the filing of the false claims. In July 2019, she pleaded guilty to conspiracy to commit mail fraud and conspiracy to commit money laundering.”
The conspiracy, which lasted from 2010-2018, featured several fraud schemes that spanned the globe and brought in millions of dollars for those convicted. The money was used on lavish gifts, including cars, yachts and property.
“The significant sentences imposed by the Court reflect the breathtaking scope of the defendants’ nearly decade-long tax fraud scheme — one of the largest ever,” Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division said in the release. “Dermen and members of the Kingston family cost law-abiding taxpayers more than $500 million and attempted to steal double that. They also sought to cover their tracks by cycling billions-of-dollars in transactions through the banking system and using fuel purchases and oil tankers to give the illusion their plant was actually producing and selling biodiesel fuel eligible for IRS credits. Tax Division prosecutors and IRS-CI Special Agents not only unraveled this scheme — they uncovered, traced and recovered millions in proceeds secreted in Turkey, the United States and elsewhere.”