Businessman guided Utah polygamists in biodiesel fraud scheme
Lev Aslan Dermen joined the scheme in late 2011, about two years after the men launched it
SALT LAKE CITY (AP) — A pair of Utah polygamists teamed up with a California businessman with ties to Turkey to defraud the U.S. of nearly $500 million from a biodiesel fuel program because he offered the men protection from what he called his “umbrella” of law enforcement and government sources, prosecutors said Thursday.
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Businessman Lev Aslan Dermen joined the scheme in late 2011, about two years after the men launched it, and pushed them to expand the operation exponentially by using burner phones, elaborate money transfers to Turkey and Luxembourg and shipping fuels from countries such as Ireland and India and through Panama at one point, U.S. Department of Justice attorney Leslie Goemaat said during opening statements in the trial.
Dermen told the others to launder the money by buying million-dollar luxury cars and houses, she said.
She told jurors in a federal courtroom in Salt Lake City that the men aimed to defraud the government of $1 billion but only received $470 million before their final claims in 2015 were rejected. A federal investigation was started weeks later and the three men were indicted in 2018.
Brothers Jacob Kingston and Isaiah Kingston, the polygamists who owned a renewable energy company used in the scheme, pleaded guilty last year to money fraud and other charges and are expected to testify against Dermen during the trial that may last a month or longer.
Dermen has pleaded not guilty to 10 counts, including money laundering and mail fraud.
His lead attorney is Mark Geragos, a Los Angeles lawyer who has represented Michael Jackson and other celebrities.
In his opening argument, Geragos is expected to push back against the prosecutors' assertion that Dermen was the mastermind of the scheme.
In this photo provided by the Davis County Sheriff's Office shows Lev Aslan Dermen. Openings arguments are set Wednesday, Jan. 29, 2020 (Davis County Sheriff's Office, via AP)
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Goemaat said Dermen owned several companies, including gas stations in California, and traveled with bodyguards and in private planes and an armored car with bullet-proof windows. He has close contacts with government and police contacts, but the prosecutor didn't reveal their names or locations.
She referred to him during her opening arguments by his original name, Levon Termendzhyan, which he changed to Lev Aslan Dermen. She said he loves lions and “Aslan” means Lion in Turkish.
The business involved in the scheme, Washakie Renewable Energy, once described itself as the largest producer of clean-burning and sustainable biodiesel in Utah.
Prosecutors say the company was actually creating fake production records to get renewable-fuel tax credits, then laundering the proceeds from 2010 through 2016. Instead of making their own biodiesel, as required in the program, they were buying and selling biofuels from other places and selling it. Dermen bought some of that second-hand biofuel and sold it at his gas stations, prosecutors allege.
Prosecutors have said the Kingstons are members of the northern Utah-based Davis County Cooperative Society, also known as the Kingston Group, which practices polygamy and owns hundreds of businesses. Group leaders have condemned fraudulent business practices.
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The money they earned in the scheme was used to buy houses and property in Turkey and Belize as well as Utah and Arizona, according to plea documents.
Prosecutors planned to seize items including a $3.6 million home in Huntington Beach, California, as well as a Bugatti and Lamborghini cars as a result of the pleas. Prosecutors are also seizing other cars, cash and homes, including an upscale six-bedroom house in a Salt Lake City suburb that was valued at $4 million, according to county property records.