An IRS agent testified in August that two defendants accused of fraud and money laundering, including one from Utah's polygamous Kingston Group, built a relationship with Turkey’s president and used cash to ensure they would not be extradited from there if they ever fled the United States.
Jacob and Isaiah Kingston, through their biofuel company called Washakie Renewable Energy, sent $134 million to Turkey from September 2013 through the end of 2015, according to records submitted in the criminal case.
At an Aug. 28 hearing for a co-defendant Lev Aslan Dermen, also known as Levon Termendzhyan, in a federal courtroom in Los Angeles, IRS agent Tyler Hatcher made what is thus far the only suggestion by the U.S. government that some of that money was intended to buy influence from Turkish President Recep Tayyip Erdoğan himself, though prosecutors had previously argued the defendants had connections within the Turkish government.
Under questioning from U.S. Department of Justice prosecutor Richard Rolwing, Hatcher described how the defendants used companies started by a fourth person, Sezgin Baran Korkmaz, a Turkish businessman, to make investments in Turkey.
“Has your investigation revealed,” Rolwing asked Hatcher, “that Mr. Dermen and Mr. [Jacob] Kingston have, through Mr. Korkmaz, some sort or relationship with the president of Turkey, Erdoğan?”
“Yes,” Hatcher replied.
Rowling then asked if witnesses discussed whether Erdoğan would extradite Jacob Kingston and Termendzhyan.
“Witnesses have told us,” Hatcher answered, “that Mr. Baran and Mr. Termendzhyan have used their wealth to ensure that their money would be a safe haven in Turkey as well as protect them against extradition.”
Hatcher did not specify if funds went to Erdoğan himself. Hatcher gave the testimony in a hearing to determine whether Termendzhyan should be held in jail pending trial. No journalists covered the hearing. The Salt Lake Tribune purchased a transcript.
Representatives at the Turkish Embassy in Washington and the consulate in Los Angeles did not return messages seeking comment. Neither did lawyers for the three defendants, all of whom have pleaded not guilty in federal court in Salt Lake City.
While Turkey is an integral part of the scheme alleged by prosecutors, Erdoğan has come up only in the context of whether to allow the defendants to go free pending trial. Prosecutors have said the Kingston brothers and Termendzhyan will flee to Turkey if released.
Prosecutors have pointed to how Erdoğan has threatened to not extradite suspects to the United States until the U.S. government extradites Muslim cleric Fethullah Gulen, who is living in Pennsylvania. Erdoğan blames him for a 2016 coup attempt in Turkey.
Federal lawyers have said there also is evidence Jacob Kingston has received preferential treatment from the Turkish government.
Erdoğan, Korkmaz and Jacob Kingston met in September of last year when the Turkish president was in New York to visit the United Nations. In one court filing, prosecutors said a witness told investigators Jacob Kingston was able to enter Turkey without a passport. That same filing cites another witness who said Jacob Kingston showed a video of himself leaving a Turkish airport with a police escort.
Abdullah Bozkurt, a Turkish journalist living in exile, wrote in a Sept. 13 column that the Kingston brothers’ and Termendzhyan’s Turkish connections sound much like other recent corruption cases there.
“This perfectly fits the pattern we see in the Erdoğan government,” Bozkurt wrote on the website of the Stockholm Center for Freedom, “which used similar unlawful practices for other high-profile suspects who were conspiring with the Turkish president in corruption schemes.”
Bozkurt pointed to one Iranian and one Saudi, accused of corrupting Erdoğan’s government, who were allowed to enter Turkey without passports and received VIP-like security escorts from airports.
The federal government has a law against bribing foreign government officials, but neither the Kingston brothers nor Termendzhyan have been charged with such a crime.
In August, a grand jury in Salt Lake City indicted Jacob Kingston, 42, on nine counts of fraud and six counts of money laundering. Isaiah Kingston, 37, has been indicted on two counts of money laundering. Termendzhyan has been indicted on five counts of money laundering. All three men have lost multiple efforts to be released pending trial — Termendzhyan even offered to post a $25 million bond — and are currently in the Davis County jail.
Washakie was advertised across Utah as a producer of biofuels, for which the federal government paid the company a tax credit. But the Justice Department alleges the operation made little or no biofuel. Instead, it was buying and selling the fuel, the indictment alleges, and forging documentation so it could collect the credits. The U.S. Treasury paid Washakie more than $511 million, according to the indictment.
Termendzhyan was arrested in Los Angeles, and his Aug. 28 hearing to determine whether he should be released until trial was held there.
Hatcher, the IRS agent, also explained how the defendants, via Washakie, moved what he said was about $130 million to Turkey. Other court documents place the figure at $134 million.
Jacob Kingston held a partnership in a Turkish company called SBK Holdings AS, Hatcher testified, as well as other investments in Turkey that Hatcher didn’t specify. (“SBK” matches Korkmaz’s initials.) Sometimes Washakie sent money directly to SBK or those other Turkish investments.
Other times, Hatcher testified, money first went to a company in California called SBK Holdings USA, and then the money was sent to the enterprises in Turkey. Some of that $134 million was used to buy what’s been described as a waterfront mansion in Turkey.
Isaiah Kingston authorized a $483,000 payment from Washakie to cover the mansion’s value-added tax, documents show, leading to one of the counts in his indictment.
It’s unclear from testimony and court filings what became of the remaining millions the U.S. Treasury paid to Washakie.