Tip about 2016 federal raid came from IRS office, former Washakie CEO Jacob Kingston testifies

(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.

On Feb. 3, 2016, Jacob Kingston was in a meeting with a brother and their father. Then a cousin came into the office.

The cousin— an information technology worker for Washakie Renewable Energy, Kingston’s company — had received a phone call from an Ogden phone number. He relayed a message to Kingston.

“There would be a raid on our office the next Wednesday, February 10,” Kingston told a jury Tuesday.

When Kingston called back that number — the caller had rung his cellphone and his brother Isaiah’s minutes earlier, and they both ignored it — it went to a main line at the IRS office in Ogden.

Kingston testified that by the time that raid happened, as warned, he and Washakie already had moved account ledgers and hidden or destroyed computer hard drives.

That wasn’t enough to keep Jacob Kingston and his one-time co-defendant, Lev Aslan Dermen, out of legal trouble. Kingston has pleaded guilty to fraud and other charges related to Washakie — where he was CEO — and was on the witness stand for the fourth day Tuesday to testify against Dermen.

Francisco Kjolseth | The Salt Lake Tribune IRS agents raid the property of several Kingston Group businesses, including the offices at 2950 S. Main Street in Salt Lake City on Wednesday, Feb. 10, 2016.

Much of the day’s testimony focused on public corruption — or what Kingston saw as public corruption. Then, in the afternoon, when defense attorney Mark Geragos had a chance to cross-examine the witness, the Los Angeles lawyer focused on Kingston’s polygamous family.

“You have three wives, is that right?” Geragos asked.

“That’s right,” Kingston replied.

Geragos pressed Kingston on how many wives his father has (14, he said) how many siblings he has (he doesn’t know) and how many times he has met with government lawyers (he couldn’t remember).

“More or less than the number of kids you have?” Geragos replied.

Kingston said he has 20 children but that it doesn’t help him remember how many times he met with the government.

(Courtesy Davis County jail) Lev Aslan Dermen, also known as Levon Termendzhyan, a suspect in a fraud scheme, poses for this mug shot from 2018

Dermen, who has gone by the name Levon Termendzhyan, is charged with 10 counts: two counts of conspiracy and eight counts of money laundering. Kingston has said under oath that he and Dermen operated a fraud that sought biofuel tax credits. Prosecutors say they illegally received $470 million.

Kingston and his family associate with the polygamous Davis County Cooperative Society, also known as the Kingston Group or The Order. Dermen allegedly operated what Kingston has called an “umbrella” of protection by making payments to law enforcement — called “the boys” — in the United States and abroad.

Kingston testified Monday that his mother, Rachel Kingston, had told him in 2014 about a grand jury investigation into C.W. Mining, a coal operation near Huntington that had been associated with the cooperative society. Jacob Kingston believed federal prosecutors looking at the mine were pursuing sect leaders, including his uncle and the group’s top man, Paul Kingston, and Bill Stoddard, then the head of sect’s incorporated church.

On Tuesday, Jacob Kingston, told jurors how he informed Dermen of the federal inquiry into that company and the mining operation. To stop the grand jury from scrutinizing the mine, Dermen “said I had to pay $4 million,” Kingston testified.

These undated file photos released by the Weber County Sheriff's Office show Jacob Kingston, left, and Isaiah Kingston. (Weber County Sheriff's Office via AP, File)

He went on to testify that he never told his uncle or other family members about the payment. No one associated with the coal mine was indicted.

Also during that time, Washakie needed money to fulfill contracts with legitimate biofuel companies. Kingston testified he never told Paul Kingston about the biofuel scheme but that he told Dermen that the uncle was pushing for a share of money from the scam.

“Levon indicated he had the power or ability to put my uncle in jail,” Kingston said.

That same month, the U.S. Treasury paid Washakie about $164 million in biofuel tax credits. Jacob Kingston testified he and Dermen had expected to receive $140 million and agreed half of that would go to “the boys.” The witness and defendant were to split the rest.

Later in 2015, Kingston testified, he bought Dermen a house in Huntington Beach, Calif., for about $3.5 million as a protection payment for Paul Kingston. Dermen called it the “Obama House,” Jacob Kingston said, for the biofuel tax credit President Barack Obama signed into law.

(Image via Belize Ministry of National Security) Belize Minister of National Security John B. Saldivar inspects security facilities according to a press release Dec. 14, 2019.

Also Tuesday morning, Kingston elaborated on his interactions with John Saldivar, the Belize security minister who over the weekend won an election to lead that nation’s ruling party. That put him in line to become the next prime minister. The witness said he remembered meeting with Saldivar in 2014 and 2015 and discussing money for political campaigns.

“He told us he had three or four individuals,” Kingston said, “part of his party and their intent to get reelected.”

Dermen offered to pay money to Saldivar to finance the campaigns, Kingston said. Then, in a series of text messages from Feb. 11, 2014, and shown to the jury, Saldivar reported Dermen wasn’t paying the $25,000 a month he said he would.

“Really need the February tranche,” Saldivar texted.

Kingston agreed to pay $50,000 to cover two months. He offered to wire the money, but Saldivar wrote that wasn’t a good idea. Kingston said he would send a business partner to Miami with the money.

“OK," Saldivar wrote back, “I will head to Miami thursday.”

Saldivar has denied taking any bribes.

Kingston testified he didn’t know whom the tipster at the IRS was, though he was told the person went by the name “Mr. Green.”

An IRS representative in Utah did not return a message seeking comment Tuesday. A spokeswoman for the U.S. attorney’s office in Utah declined to comment on the coal mine case or whether there was any obstruction, citing the Dermen trial.

Geragos’ cross-examination will continue Wednesday.