A federal jury Monday convicted Lev Aslan Dermen, the only defendant to go to trial in a Utah fraud scheme that sought $1.1 billion from a government biofuel program, on all 10 felony counts of conspiracy and money laundering.
The defendant went from smiling to stroking his beard and rocking back and forth in his chair as the verdicts were read in downtown Salt Lake City’s federal court. He faces up to 180 years in prison. Sentencing has not yet been scheduled.
The 53-year-old Dermen, whom witnesses throughout the seven weeks of testimony referred to by his former name of Levon Termendzhyan, was convicted of two counts of conspiracy and eight counts of money laundering. A 2018 indictment accused him of working with Washakie Renewable Energy CEO Jacob Kingston to apply to a federal program that gave up to $1 for each gallon of biofuel manufactured.
(Francisco Kjolseth | The Salt Lake Tribune) L.A. Attorney Mark Geragos, who has represented music stars Michael Jackson and Chris Brown, arrives for the final day of jury selection at the federal courthouse in Salt Lake City, Wednesday, Jan. 29, 2020, in the trial of Lev Dermen, who is charged with 10 felonies related to fraud at Washakie Renewable Energy.
The bizarre trial featured testimony about polygamy, fraud, foreign corruption and included some all-star lawyers. Even the trial’s last days had drama.
Defense attorney Mark Geragos — who has represented music stars Michael Jackson and Chris Brown and actors Winona Ryder and Jussie Smollett — filed a motion Sunday for a mistrial, arguing that COVID-19 concerns would impact the jury’s deliberations and affect his client’s right to a fair trial.
Federal Judge Jill Parrish had not yet ruled on the motion when she received notice of the verdicts about 1:30 p.m. Monday. Jurors deliberated about eight hours over two days and returned with their decisions much faster than even some court staff anticipated.
After the verdicts, Parrish indicated she would still rule on the motion. Mistrial motions seldom succeed without proof of jury misconduct or unfair circumstances.
Even so, the coronavirus will play a role in the case. Parrish told the jurors their nearly two-month-long service is not yet finished. They will be needed to decide a related civil matter about which assets Derman must forfeit.
Parrish told the jurors, however, that those proceedings will be postponed because of the pandemic. She did not set a date.
“The only thing that’s prudent in light of what’s going on in the community is to thank you for your service in the criminal portion of this case,” Parrish said. She then reminded the jurors that they still could not read or watch news coverage of the case. They thus were forbidden from speaking to reporters.
Kingston testified at Dermen’s trial that Washakie made little biofuel and instead bought it from elsewhere or relabeled old biofuel and then falsely applied for the subsidy. Prosecutors at trial said Washakie stole $471 million and applied for $1.1 billion from the program.
Geragos contended the real fraudsters were Kingston, his family and the Utah polygamous sect to which they belong, the Davis County Cooperative Society, also known as the Kingston Group or The Order. Geragos pointed out that it was Kingston and his companies — not Dermen or his companies — that filed the applications to the federal government.
Geragos portrayed Kingston as the scheme’s real boss and argued he was trying to hide money from Paul Kingston, the sect’s leader and Jacob Kingston’s uncle.
Outside the courthouse, a dejected-looking Geragos vowed to appeal. He said the jury should not have been deliberating Monday — a reference to his mistrial motion.
“A lot of things beg questions in this case,” he said.
(Nate Carlisle | Salt Lake Tribune) Federal law enforcement gathers outside the federal courthouse in Salt Lake City on March 16, 2020, following the conviction of Lev Aslan Dermen, a defendant in the Washakie Renewable Energy biofuel scheme. From left, federal prosecutors Richard Rolwing and John Sullivan, U.S. Attorney for Utah John Huber, prosecutor Arthur Ewenczyk, Assistant Special Agent In Charge Tyler Hatcher, of IRS criminal investigations in Utah, and prosecutor Leslie Goemaat.
U.S. Attorney for Utah John Huber, standing beside the trial attorneys from the U.S. Department of Justice tax crimes offices in Washington, D.C., who tried the case, referred to the Kingston family as “a criminal syndicate” that worked with Dermen.
Out of a sect thought to have thousands of people, only Jacob Kingston, his legal wife, his brother and his mother pleaded guilty crimes in the scheme, yet Huber spoke in broad terms.
“When I started my career as a prosecutor some 25, 26 years ago," Huber said, "I remember sitting in the office listening to veteran prosectors in 1995 talk about the suspicions the Utah law enforcement had about the Kingston family crime syndicate.
"But in an insular community like that, a tight-lipped, disciplined community, law enforcement has never been able to bring a case forward against the Kingston clan until now.”
A spokesman for the Davis County Cooperative Society has repeatedly said members are encouraged to follow the law.
Huber declined to discuss any investigation into who tipped off Washakie executives to a 2016 raid of their offices by federal agents. Jacob Kingston testified even he didn’t know the caller but said the number rang back to IRS offices in Ogden and that he was told the person identified himself or herself as “Mr. Green.”
(Courtesy U.S. District Court for the District of Utah) Lev Dermen, left, stands with Jacob Kingston at a banquet hall in Southern California in 2014. Federal prosecutors say this photo is evidence of how Kingston purchased the 2010 Bugatti Veyron, left, for $1.72 million to give Dermen, and Dermen purchased the Ferrari, right to give to Kingston to launder money from a biofuel fraud. Kingston has pleaded guilty to crimes. Dermen has pleaded not guilty. Behind the men is a sculpture of a lion's head, the animal Dermen associates himself with.
Dermen was never part of the Kingston Group.
Over six days on the witness stand, Jacob Kingston acknowledged starting the fraud before he met Dermen in late 2011 through contacts in the biofuel industry but said Dermen quickly became the driver of the scheme — telling Kingston how to commit more of it, where to wire the proceeds and offering to protect Kingston and his family from law enforcement.
Dermen owned a chain of gas stations in Southern California under the name NOIL Energy. Kingston and other witnesses described $72 million in fraud proceeds being transferred to Dermen and his businesses, though not always directly.
One money laundering count accused Dermen of receiving funds via a bank account in Turkey. Another count described a $3.5 million wire transfer so he could buy a home in Huntington Beach, Calif.
Five money laundering counts accused Dermen of using a $11.2 million loan to another businessman as a way to conceal the fraud proceeds. A final money laundering count alleged Dermen sent Kingston $3.1 million to buy a house in Sandy.
Kingston pleaded guilty in July to more than three dozen counts and agreed to testify in exchange for prosecutors seeking a prison sentence of no more than 30 years. His sentencing date has yet to be set.
Dermen has been in custody since he was first indicted in August 2018. After Parrish ended the day’s proceedings, bailiffs handcuffed him one more time. His lawyers hugged him, and Dermen leaned over the gallery railing to take a hug from his son before being marched away.
