Salt Lake City, UT – Lev Dermen, also known as Levon Termendzhyan, has been sentenced to 40 years in prison for his central role in a massive, decade-long scheme to defraud the United States out of over $511 million in renewable fuel tax credits. The case, stemming from the operation of Washakie Renewable Energy, a Utah-based biodiesel company, involved a complex web of fraudulent claims, money laundering, and lavish spending, according to court documents and trial testimony.
From 2010 to 2018, Dermen conspired with the Kingston family – Jacob and Isaiah Kingston, their mother Rachel Kingston, and Jacob’s wife Sally Kingston – to exploit the Renewable Fuel Standard (RFS) program. This program, designed to promote domestic renewable fuel production and reduce reliance on foreign oil, incentivizes producers through Renewable Identification Numbers (RINs) and tax credits. The conspirators allegedly purchased biodiesel already accounted for, shipped it overseas, and then falsely documented it as “feedstock” upon re-importation. This allowed Washakie to fraudulently claim production credits and RINs with the EPA, generating millions in illicit proceeds.
The scheme extended beyond simply falsifying paperwork. Investigators revealed that Dermen and the Kingstons cycled over $3 billion through numerous bank accounts to mask the origin of the funds. Dermen allegedly offered the Kingstons protection from prosecution through a network of corrupt law enforcement officials – a so-called “umbrella” – in exchange for a significant cut of the profits. Over $134 million in fraudulent proceeds were funneled to companies in Turkey and Luxembourg before being laundered back into the U.S. financial system.
The ill-gotten gains were used to fund a lavish lifestyle. Dermen’s associates purchased and rebuilt a 150-foot yacht, the “Queen Anne,” which was later seized and sold for $10.1 million. Funds were also directed towards a planned casino in Belize and extravagant gifts, including a $1.8 million Bugatti Veyron for Dermen and a Lamborghini and Ferrari for Jacob Kingston. A mansion in Sandy, Utah, was purchased using laundered funds, and further assets were acquired in California and through various companies.
Sentencing for the key players in the fraud concluded earlier this month. Dermen received the harshest sentence of 480 months (40 years) incarceration, along with $511,842,773 in restitution and a $1,000 special assessment. Jacob Kingston was sentenced to 18 years (216 months), with $511,842,773 in restitution and a $4,100 assessment, plus a $338,606,523 money judgment. Isaiah Kingston received 12 years (144 months), Rachel Kingston 7 years (84 months), and Sally Kingston 6 years (72 months), all with substantial restitution obligations. The government is actively pursuing the forfeiture of numerous properties and assets linked to the fraudulent scheme.
Key Facts
- Defendant: Lev Dermen a/k/a Levon Termendzhyan
- Scheme: Fraudulent renewable fuel tax credit claims through Washakie Renewable Energy.
- Fraud Amount: Over $511 million in fraudulent claims paid by the IRS and EPA.
- Money Laundering: Over $3 billion cycled through bank accounts to conceal funds.
- Assets: Yacht, luxury vehicles, real estate in the US, Turkey, and Belize purchased with fraud proceeds.
Statutes Violated & Penalties
Dermen and the Kingstons were convicted of violating several federal statutes, including:
- 18 U.S.C. 1957: Conspiracy to defraud the United States (potential 5 years imprisonment).
- 18 U.S.C. 1512(k): Obstruction of an official proceeding (potential 10 years imprisonment).
- 18 U.S.C. 1956(a)(1)(B)(i): Money laundering (potential 20 years imprisonment).
- 18 U.S.C. 1512(c)(1): Tampering with a witness, victim, or informant (potential 20 years imprisonment).
- 18 U.S.C. 1512(a)(2): Threatening a witness (potential 20 years imprisonment).
- 18 U.S.C. 1349: Conspiracy to commit wire fraud (potential 20 years imprisonment).
- 26 U.S.C. 7206(2): Filing a false tax return (potential 3 years imprisonment).
- 18 U.S.C. 1956(h): Engaging in monetary transactions in property derived from unlawful activity (potential 10 years imprisonment).
In addition to imprisonment, the defendants face significant financial penalties, including restitution and money judgments totaling hundreds of millions of dollars.
Source: EPA ECHO Enforcement Case Database
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