A federal judge said Wednesday that two brothers with ties to a polygamous sect, who are accused in a $511 million biofuels fraud scheme, will remain in jail.
However, Judge Brooke Wells set hearings to weigh whether to release the men later. Wells will consider releasing Isaiah Kingston at a hearing Friday. Jacob Kingston will return to Wells' Salt Lake City courtroom Sept. 5.
The two were indicted earlier this month on counts of fraud and money laundering related to a biofuel company, Washakie Renewable Energy, they ran. A third man, Lev Aslan Dermen, also was indicted. A federal judge in Los Angeles ordered him held pending trial during a hearing Tuesday.
Isaiah Kingston’s attorney, Scott C. Williams, argued that Wells shouldn’t even hold a hearing. He contended a release pending trial is the standard for federal defendants such as his client — someone with no criminal record accused of white-collar crimes.
Williams told Wells that his client has been diagnosed with an unspecified form of cancer and mentioned that Isaiah Kingston has Crohn’s disease. Isaiah Kingston’s wife, who was in the gallery, is due to give birth in three weeks, Williams said. The lawyer also denied the two brothers have all the money prosecutors allege.
Williams described Washakie Renewable Energy as a failed company that is essentially worthless. He said Isaiah Kingston was complying with a subpoena to supply records when he was arrested last week.
Prosecutors argued in court filings that the brothers are a flight risk. A motion filed Tuesday accused the pair of somehow knowing federal agents were planning a raid in February 2016 and destroying evidence before the search warrants could be executed. The motion also alleged the Kingstons have considerable assets, including homes in Turkey.
Leslie Goemaat, a prosecutor with the U.S. Department of Justice in Washington, who traveled to Utah for Wednesday’s hearing, also pointed to evidence Jacob Kingston sought to intimidate and bribe witnesses through intermediaries. Those intermediaries were or became government informants, according to court records and courtroom discussion Wednesday.
Goemaat said one witness’s attorney called her recently to say the witness had received death threats and was moving to “a safe house.”
“Numerous witnesses in this case have expressed fear of reprisal,” Goemaat told Wells.
Even the president of Turkey received a mention in the hearing. Geomaat pointed to a statement by President Tayyip Erdogan saying his country would not extradite suspects to the United States unless the U.S. government hands over a cleric accused of orchestrating a failed 2016 coup in Turkey.
Jacob Kingston’s attorney, Tara Isaacson, made few arguments for release Wednesday and focused on scheduling a hearing for Wells to better consider the case. Jacob Kingston’s legal wife, Sally Kingston, who also worked at Washakie and has not been charged, was also in the gallery. Rachel Ann Kingston, mother of both the defendants, watched with her two daughters-in-law.
The family belongs to a polygamous sect, the Davis County Cooperative Society, also known as the Kingston Group. The prosecutors' motion accused that group of previously hiding members under suspicion by law enforcement.
If convicted, Jacob Kingston faces a maximum of 87 years in prison. His brother and Dermen could be sentenced to up to 20 years.
For a stretch in 2014 and 2015, Washakie Renewable Energy was one of the highest-profile companies in Utah. It advertised heavily during Utah Jazz games, gave college scholarships and donated $190,000 to Utah politicians and political committees.
The company was supposed to be manufacturing biofuels from grease, animal fat and other oil wastes at its production facility in Box Elder County, about 100 miles north of Salt Lake City. Under a program created by Congress, companies that made and sold biofuel were eligible for tax credits.
The indictment alleges Jacob and Isaiah Kingston weren’t manufacturing all the biofuel they claimed and falsified records to collect the tax credits. Dermen controlled Noil Energy Group Inc. and worked with the California-based SBK Holdings USA Inc., which the Kingstons allegedly funneled money through as part of the scheme.
In 2015, Washakie agreed to pay $3 million in civil fines to the Environmental Protection Agency, which administered the program. The indictment alleges the fraud continued even after the fines were issued.
Jacob and Isaiah Kingston are also defendants in a civil lawsuit accusing them of failing to live up to contracts and then hiding assets after they were ordered to compensate the other party.