Lev Aslan Dermen, Biofuel Tax Fraud, California 2020

A multi-million dollar biofuel tax fraud scheme has been brought to justice, with a Los Angeles businessman and Utah fuel plant operators and employees sentenced to prison for their roles in the $1 billion conspiracy.

Lev Aslan Dermen, 56, was sentenced to 40 years in prison, while Jacob Kingston, 46, and Isaiah Kingston, 42, received 18 years and 12 years, respectively. Rachel Kingston, 67, was sentenced to seven years, and Sally Kingston, 45, got six years.

According to court documents, from 2010 to 2018, Dermen conspired with the Kingstons and others to fraudulently claim more than $1 billion in refundable renewable fuel tax credits. The IRS paid out more than $511 million in credits to Washakie Renewable Energy, a Utah biodiesel company owned by Jacob and Isaiah Kingston.

Dermen was found guilty of conspiracy to commit mail fraud, conspiracy to commit money laundering and money laundering. He was also ordered 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 and faced a $338 million money judgment. 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, Jacob’s brother and co-owner and CFO of Washakie, 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.

The scheme involved multiple fraudulent schemes, including purchasing biodiesel from the East Coast and exporting it to foreign countries, then doctoring transport documents to disguise and import the biodiesel as “feedstock.” Washakie used this false paperwork to claim it had produced biodiesel from the feedstock to support its filing of fraudulent claims for IRS biofuel tax credits.

Related Federal Cases