In this photo provided by the Davis County Sheriff’s Office shows Lev Aslan Dermen. Openings arguments are set Wednesday, Jan. 29, 2020, in Utah for a California businessman who prosecutors accuse of being a key figure in a $511 million tax credit scheme carried out by two executives of a Salt Lake City biodiesel company linked to a polygamous group. The men from the polygamous group pleaded guilty last year to money fraud and other charges and are expected to testify against Lev Aslan Dermen, who has pleaded not guilty. (Davis County Sheriff’s Office, via AP)

SALT LAKE CITY (AP) — A California businessman teamed up with a pair of Utah polygamists and helped them expand a biodiesel fraud scheme that ended up getting nearly $500 million in government funds that they used to buy luxury sports cars and million-dollar homes, a prosecutor said Wednesday during closing arguments.

Gas station owner Lev Dermen sold polygamist Jacob Kingston on the false idea that he had an umbrella of government officials he knew who would protect the scheme from investigation and prosecution, U.S. Justice Department attorney Arthur Ewenczyk said in a federal court in Salt Lake City. Dermen traveled with bodyguards and used private planes to bolster that image, he said.

Ewenczyk acknowledged that Kingston and his brother, Isaiah Kingston, were “no strangers to fraud” before they met Kingston, but said the the scheme expanded in scope and brazenness after they met Dermen. Jacob Kingstons had filed about $41 million in fraudulent claims to the U.S. government at the time they met Dermen around 2012. By the time they were caught, the three had filed more than $1 billion in claims, Ewenczyk said.

Jacob Kingston’s belief in Dermen’s “umbrella” of protection grew as the government paid out claim-after-claim, he said. The final $650 million claim the men made was denied in 2015. The three men were indicted in 2018.

The size of the fraud grew and it grew enormously,” Ewenczyk said.

The closing arguments cap off a trial that played out over nearly six weeks and featured extensive testimony from Kingston against his former partner in the scheme, Dermen. Kingston had already pleaded guilty last year to money fraud and other charges.

Dermen has pleaded not guilty to 10 counts including money laundering and mail fraud.

His attorney, Mark Geragos, who will deliver his closing argument later Wednesday, has said Dermen was being used by Kingston and his brother who didn’t want to share the proceeds with their northern polygamous community that he says for decades has practiced fraud to steal money from the U.S. government.

Geragos, a Los Angeles lawyer who has represented Michael Jackson and other celebrities, has said the monetary transactions cited in the case by prosecutors were all legitimate and that Dermen is a reputable businessman who has owned gas stations and a trucking company for 25 years.

The business involved in the scheme, Washakie Renewable Energy, owned by the Kingstons, 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 laundered the proceeds from 2010 through 2016.

Instead of making its own biodiesel, as required in the program, the company was allegedly buying and selling biofuels from other places. Dermen bought some of that second-hand biofuel and sold it at his gas stations, prosecutors allege. They brought or shipped fuel to and from India and Panama during the scheme.

Ewenczyk took aim at Dermen’s claim that Jacob Kingston was just another fuel supplier. He pointed to trips Dermen and Kingston took together overseas and frequent meetings in Los Angeles. He reminded jurors about the transfer of millions from Kingston’s company to Dermen’s bank accounts and showed jurors a picture of a Bugatti luxury sports car that he said Kingston bought for Dermen’s birthday using funds from the scheme.

“Jacob Kingston was not just another supplier to the defendant,” said Ewenczyk in a packed courtroom. “Jacob Kingston and the defendant were partners in crime.”



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