Five defendants were sentenced to prison terms between six and 40 years for their roles in a $1 billion biofuel-tax conspiracy, according to a Department of Justice press release issued April 7.
“The U.S. Attorney’s Office for the District of Utah thanks the Justice Department’s Tax Division and IRS investigators for their tireless efforts into shutting down this large-scale scheme. However, the work in this case is not over. Going forward, our office and the Tax Division will continue to work together to seek forfeiture of assets connected to this massive fraud scheme to recoup the losses it caused to the United States,” U.S. Attorney Trina Higgins for the District of Utah said in the press release.
Lev Aslan Dermen, alias Levon Termendzhyan, 56, was given a 40-year sentence for his involvement in a $1 billion biofuel tax conspiracy, the release reported. Jacob Kingston, 46, was given an 18-year sentence; Isaiah Kingston, 42, was given a 12-year sentence; Rachel Kingston, 67, was given a seven-year sentence; and Sally Kingston, 45, was given a six-year sentence.
Dermen allegedly conspired with Jacob and Isaiah Kingston, their mother Rachel Kingston, Jacob Kingston’s wife Sally Kingston and others, the release states. From 2010 to 2018, they falsely claimed more than $1 billion in refundable renewable fuel-tax credits, according to court documents and testimony from Dermen’s 2020 trial.
Washakie Renewable Energy, a Utah-based biodiesel company founded by Jacob and Isaiah Kingston, received more than $511 million in credits from the IRS, the release reports. The Kingstons shared the fraud’s gains with Dermen and themselves.
After a seven-week jury trial, Dermen was found guilty of conspiring to commit mail fraud, conspiring to commit money laundering, and conspiring to commit money laundering. In addition to the prison term, U.S. District Judge Jill Parrish assessed a money judgment against Dermen totaling more than $181 million and ordered him to pay $442,615,520 in restitution to the IRS.
The IRS received a $511 million judgment against Washakie CEO and co-owner Jacob Kingston, according to the release. A $338 million money judgment was also rendered against him by the court. In 2019, he entered pleas of guilty to obstruction by hiding and destroying records, conspiracy to commit the same offense, filing false claims with the IRS, conspiracy to commit mail fraud, money laundering, and witness tampering.
In addition, the IRS received a $511 million judgment against the brother of Jacob Kingston, Isaiah Kingston, who served as Washakie’s CFO and co-owner, the release reported. He entered a guilty plea to conspiracy to commit mail fraud, helping to file fraudulent partnership tax returns, money laundering, and conspiracy in July 2019.
