Polygamist says partner in fraud scheme offered protection

SALT LAKE CITY —
A Utah polygamist who pleaded guilty for his role in a nearly $500 million biodiesel fraud scheme said Thursday that a California businessmen who helped carry out the plan offered protection from prosecution from law enforcement.

Jacob Kingston said he and Lev Dermen had meals with law enforcement officials, including two who have since pleaded guilty to corruption charges, The Salt Lake Tribune reported.

“He called them his boys or his umbrella,” Kingston said.

When the Internal Revenue Service began auditing Kingston's renewable energy company, Dermen claimed to have government contacts who would help, Kingston said during his second day of testimony as a witness for the U.S. government in its case against Dermen.

Kingston said he though Dermen's umbrella of protection was working after the U.S. government imposed a $5 million penalty against Kingston's company instead of a $100 million one they first threatened.

Dermen has pleaded not guilty to 10 counts including money laundering and mail fraud. His attorney contends that Kingston was the mastermind in the scheme and that Dermen is a reputable businessman who owns a chain of gas stations in California.

Kingston agreed to testify against Dermen after he pleaded guilty last year to money fraud and other charges.

During his time on the stand in the Salt Lake City courtroom, Kingston recalled that he and Dermen had so much cash from the scheme to launder that it became difficult.

“It took us a long time to use it,” Jacob Kingston said of the currency. “We paid for things in cash.”

Kingston, 43, has said he is a lifelong member of a northern Utah-based polygamous group called the Davis County Cooperative Society, also known as the Kingston Group. He said they practice communal living, where people share resources and report their incomes to group leaders.

Dermen's lawyers, Mark Geragos, hasn't started cross-examining Kingston. Geragos made sure polygamy would be central to the case when he said during opening statements last week that Kingston comes from an “incestuous” polygamous group that is always scheming to defraud the U.S. government in what the group calls “bleeding the beast.”

A spokesman for the group, Kent Johnson, has called the allegations “categorically false.”

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The trial is scheduled to resume Monday.