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Business Crimes Hotline
Utah Biodiesel Executives in $511 Million Fuel Tax Credit Scheme
On Aug. 24, 2018, two senior executives of Washakie Renewable Energy (WRE) were indicted in the U.S. District of Ohio on felony charges of fraud and money laundering. Jacob Kingston, the Chief Executive Officer of WRE, and his brother, Isaiah Kingston, the Chief Financial Officer, were accused of receiving over half a billion dollars in renewable fuel tax credits from the Internal Revenue Service (IRS) that they were not entitled to. Founded in 2007, WRE, a biofuels and chemicals company headquartered in Salt Lake City, UT, is jointly owned by Jacob and Isaiah, each having a 50% interest.
Over a six-year period (from 2010 – 2016), the Kingston brothers, along with Lev Aslan Dermen, owner of NOIL Energy Group, a fuel company headquartered in California, were accused of filing false claims for IRS refundable fuel tax credits for biofuel that WRE never produced. The goal of the IRS's program is to boost the use of biodiesel renewable fuel. To facilitate the scheme, Jacob and Isaiah fabricated various documents, including invoices for sales — said to have been taking place in the United States and abroad — along with accounting records. The proceeds were allegedly funneled through Derman's company. Further, the individuals were also charged with laundering a portion of the proceeds through real estate (a multi-million dollar home) and luxury automobile (a 2010 Bugatti Veyron) transactions.
The charges against Jacob and Isaiah resulted from evidence obtained during a February 2016 IRS raid on the Kingston family businesses. Prosecutors also claim that, in advance of this raid, the Kingstons learned of the government's search warrant and destroyed a significant amount of evidence.
Following an appearance before a federal magistrate judge, the brothers pleaded not guilty and were ordered to remain in Weber County Jail pending trial, based partly on concerns that they (and their family members) may flee to Turkey. Documents made available by prosecutors indicated that approximately $134 million was wired to a Turkish bank and the brothers had recently returned from a trip to Turkey, where they purchased a residence. Both Jacob and Isaiah pleaded not guilty. If convicted, the brothers could face decades in prison, in addition to monetary penalties, including restitution.
— Colleen Snow, Mayer Brown
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