Members of a Utah polygamist group admitted to defrauding the United States government of $512 million dollars in renewable fuel tax credits in what was reportedly the largest biofuel fraud case in U.S. history.
Four family members admitted the fraud to authorities, Bloomberg News reported. The leader, Jacob Kingston, who was the CEO of Washakie Renewable Energy, pleaded guilty in federal court Thursday. He admitted to falsely claiming that his company produced or blended biodiesel fuel to gain tax credits as well as laundering more than $100 million in fraud proceeds to Turkey, obstructing justice and witness tampering.
The Kingstons will pay back the $512 million, forfeiting their Washakie Renewable Energy plant on the border of Utah and Idaho as well as properties in Utah and Turkey, luxury cars, and bank accounts. They were indicted last year, according to The Salt Lake Tribune.
Kingston said he created fake transactions to make it look like his company produced and purchased fuel that qualified for the tax credits. During one incident, the company rotated at least 100 million gallons of fuel among vehicles in Texas, Louisiana and Panama.
Kingston is part of the Davis County Cooperative Society, also known as The Order. It is one of the largest Mormon polygamist groups in the United States. Kingston's brother Isaiah, wife Sally and mother Rachel all pleaded guilty as well.
The company also allegedly “cycled” money through businesses related to The Order and then returned them to Washakie Renewable Energy's bank accounts under the guise of loans or profits.
Lev Dermon, an Armenian businessman who owns gas stations and truck stops in California, was also indicted with the Kingstons. Kingston accused him of increasing the fraud in testimony. He has been in custody since last August, and he has pleaded not guilty and said he did not play a role in the fraud and money laundering.
“In early to mid-2013, at the direction of Lev Dermen, I began to file false claims in larger and larger amounts,” Kingston said in court papers, according to Bloomberg News. “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.”
Under a plea deal, Kingston’s prison term is capped at 30 years. Isaiah Kingston's is capped at 20 years, and Sally Kingston's and Rachel Kingston's are capped at 15 years.
The Order has thousands of members who control more than 100 businesses across the West, according to Bloomberg News. They own casinos, ranches and arms companies. The organization participates in a practice known as “bleeding the beast,” in which members are encouraged to obtain money from local, state and federal governments for “fear that the government will seek to punish them for their way of life,” prosecutors said in court papers, according to Bloomberg News.