SALT LAKE CITY — Jacob Kingston, a Utah biofuels entrepreneur with ties to a major polygamist organization, and three relatives have pleaded guilty to federal charges in a $511 million tax fraud scheme.
In a plea agreement filed in U.S. District Court on Friday, Kingston admitted to conspiracy, mail fraud, tax fraud, intimidation of witnesses and other offenses.
According to the deal with U.S. prosecutors, he could be sentenced to up to 30 years in federal prison.
In the lengthy plea document, Kingston implicated his four co-defendants in various aspects of the scheme.
His brother, Isaiah Kingston; mother, Rachel Ann Kingston; and wife, Sally Louise Kingston, also pleaded guilty for their roles in the conspiracy.
As of Friday afternoon, the fifth co-defendant, California businessman Lev Aslan Dermen, still faced trial, according to court records.
Jacob Kingston also agreed to surrender the Washakie Renewable Energy plant and surrounding property in Box Elder County, which prosecutors said was a focal point in the biofuels scheme.
Jacob and Isaiah Kingston were co-founders of WRE. They also are the sons of John Daniel Kingston, a senior member of a polygamist group also known as The Order and the Davis County Cooperative Society.
Jacob Kingston admitted in the plea bargain that he and the other three Kingstons began fraudulently claiming biofuels tax credits in 2010 that dwarfed the actual production output of the Box Elder plant.
“While WRE was capable of producing some amounts of biodiesel, in no year did WRE ever produce more than 8.5 million gallons,” Kingston’s plea statement said.
He said he met Dermen in 2011 and they expanded the conspiracy, setting up a web of faked biofuels shipments and transactions, backed by false paperwork.
Jacob Kingston described Dermen as his chief co-conspirator and said that as the scheme grew, he began taking instructions from Dermen on funneling millions of dollars from the ill-gotten tax credits to Turkey, where Dermen is a citizen.
Kingston said Dermen told him they had nothing to fear because Dermen had protection from authorities.
“I began to file false claims in larger and larger amounts,” Kingston said in the document. “Dermen not only directed me on what amounts to file for, which would be protected by his ‘umbrella’ of federal law enforcement contacts, but he also agreed that I should use my staff and contacts to create fake business transactions to support these claims.”
The Kingstons also may have had some sort of help in Utah, because Kingston said he and other family members were tipped off to federal search raids in 2016. They were able to destroy and hide evidence because of the tip, Kingston said.
In 2013, Jacob Kingston said, he and Dermen went on a spending spree with the loot. They bought property for a casino in Belize and land in Washington state to start a marijuana grow operation.
Dermen bought Kingston a $3 million house in Sandy, and Kingston in turn bought Dermen a top-end Bugatti sports car, the document said. Then Dermen gave Kingston a Lamborghini.
That same year, Kingston said, Dermen told him to send $32 million to his associates in Turkey.
“Dermen instructed me to keep some of this money and investments in my name as his ‘white boy’ face of his Turkish investment activities,” Kingston said.
He said he and Isaiah Kingston in 2013-15 spent tax fraud proceeds to prop up WRE and support business entities related to The Order.
“Some of these payments to Order-related entities were supported by false or inflated invoices, and the monies returned to Washakie were falsely characterized as draws or loans,” he said.
No individuals in control of those Order-related entities have been charged. However, attorneys representing Order-affiliated companies filed court motions in the criminal cases seeking to shield their records from the trial discovery process.
Jacob Kingston also admitted to trying to bribe a government official and attempting to tamper with a witness who could expose their illegal activities.
The Kingston brothers, he said, “engaged in efforts to bribe what I believed to be a high-level DOJ official, codenamed ‘Commissioner Gordon,’ and others, including federal agents, prosecutors and judges, by providing cash bribes to an intermediary.
“During this time period, I also engaged in efforts to pay cash to ‘Beto,’ also through this intermediary, who I believed to be an enforcer, for the purpose of intimidating witnesses through force or threat of force.”
The Kingston brothers were returned to jail to await sentencing. Rachel Ann Kingston and Sally Louise Kingston were freed pending sentencing. No dates have been set.
Dermen, who is held in the Davis County Jail, recently lost an effort to have his trial severed from the cases against the Kingstons.
His attorneys argued Dermen had a lesser role in the alleged conspiracy, but a judge ruled much of the alleged misconduct overlapped.