L.A. Petroleum Magnate Convicted in Sprawling Biofuel Tax Scheme

by Matthew Ormseth (Los Angeles Times) ... The verdict — guilty on 10 felony counts — was not just a courtroom defeat for (Lev Aslan) Dermen, one that will likely result in a significant prison sentence. It brought to an end the impression, earned after a string of acquittals and fizzled investigations, that Dermen was untouchable. Until Monday, he had never been convicted of a felony.

Crowded in “a potentially life-threatening environment,” the jury considered the complicated case for less than eight hours before reaching a verdict that “was not deliberated fully and fairly,” he (Derman's attorney, Mark Gerago) said.

Geragos asked U.S. District Judge Jill N. Parish to declare a mistrial, writing in a motion that Dermen deserves to have his guilt or innocence determined by “jurors free from concerns of life, disease, and death.”

Throughout the seven-week trial, prosecutors brought evidence of a brazen scheme to loot a half-billion dollars in subsidies from the U.S. Treasury. Dermen, they alleged, conspired with Jacob Kingston, the leader of a polygamist sect in Utah and chief executive of Washakie Renewable Energy, a company that claimed to convert cooking oil and similar materials into biofuel but in fact made hardly any renewable energy at all.

Kingston, who pleaded guilty to several dozen felonies and testified against Dermen, has admitted playing a shell game with the federal government, shuttling batches of fuel between companies and falsifying paperwork to claim the $1-per-gallon subsidy earmarked for biofuel producers. He pleaded guilty in exchange for a sentence not to exceed 30 years in prison.

Once Kingston met Dermen in 2012, prosecutors said, the fraud accelerated. READ MORE

Excerpt from U.S. Department of Justice/Biobased Diesel Daily: A Turkish businessman was extradited from Austria to face money laundering, wire fraud and obstruction charges. Sezgin Baran Korkmaz arrived July 15 in Utah in the custody of the U.S. Marshals Service. Korkmaz was indicted in Salt Lake City, Utah, with laundering more than $133 million in illegal proceeds through bank accounts he controlled in Turkey and Luxembourg. According to an April 2021 superseding indictment, the proceeds relate to a scheme orchestrated in Plymouth, Utah, by Jacob Kingston, Isaiah Kingston and Levon Termendzhyan to defraud the U.S. Treasury by filing false claims for more than $1 billion in tax credits allegedly for the production and sale of biodiesel by their company, Washakie Renewable Energy LLC.

Korkmaz and his co-conspirators allegedly used the biofuel-fraud proceeds to acquire luxury homes and assets, as well as businesses such as Biofarma, the Turkish airline Borajet, a yacht named the Queen Anne, a hotel in Turkey and a villa and apartment on the Bosporus River in Istanbul. In coordination with authorities in Lebanon, the U.S. Marshals Service took the Queen Anne yacht into custody last July and sold it earlier this year for $10.11 million pursuant to an October order of U.S. District Judge Jill Parrish of the U.S. District Court for the District of Utah, who is presiding over the Korkmaz case. Other assets of Korkmaz-related companies in Turkey and Europe are the subject of forfeiture claims by the U.S. and Turkey.

According to the superseding indictment, Korkmaz also devised a scheme to defraud Jacob and Isaiah Kingston in early 2018 by falsely representing he could provide them with protection, through unnamed government officials, from a federal grand-jury investigation and civil lawsuits. In exchange, the Kingstons sent him $6 million over several months.

Additionally, Korkmaz allegedly made false statements to federal agents in an attempt to obstruct the pending criminal trial against Kingston and Termendzhyan. Among other misstatements, Korkmaz allegedly lied about $38 million in wire transfers sent to a bank account controlled by Termendzhyan.

“The successful apprehension and extradition of Baran Korkmaz demonstrates the department’s commitment to working with our international partners to pursue, capture and return those who seek to defraud the American people,” said Stuart M. Goldberg, acting deputy assistant attorney general of the justice department’s tax division. “Thanks to our law-enforcement partners and their counterparts in Austria and Lebanon, we are now able to bring Korkmaz to trial on the pending charges and have recovered significant forfeiture proceeds.”

“We commend our partners from the tax division and the Department of Justice for pursuing Sezgin Baran Korkmaz on behalf of the American taxpayers and ensuring his return to Utah to face justice in U.S. District Court,” said Trina A. Higgins, U.S. attorney for the District of Utah. “We are also thankful for the efforts of our foreign partners in Lebanon and Austria, and in particular, the Austrian Bundeskriminalamt Fugitive Active Search Team, for locating Korkmaz overseas.”

In July 2019 Jacob and Isaiah Kingston both pleaded guilty to federal charges, and in 2020 both men testified at the trial of Levon Termendzhyan in Utah. The federal jury convicted Termendzhyan of all charges. The Kingstons and Termendzhyan all await sentencing.

If convicted, Korkmaz faces a maximum penalty of 20 years in prison for each count of money-laundering conspiracy, wire fraud and obstruction of an official proceeding. A district-court judge will determine any sentence after considering the U.S. sentencing guidelines and other statutory factors.

The justice department’s Office of International Affairs and FBI Legal Attaché in Vienna, Austria, played key roles in securing the arrest and successful extradition of Korkmaz. READ MORE