Photo: Lev Dermen

Dermen tax fraud sentencing in U.S. raises questions on Saldivar campaign financing, assets in Belize

by Marco Lopez

BELIZE CITY, Wed. Apr. 12, 2023

Belizeans first heard of Lev Dermen in 2020 when damning text messages presented in a Utah Court named John Saldivar as the Belizean Cabinet minister who received cash payments of US$25,000 routinely from Dermen and his associate Jacob Kingston. Saldivar’s fall from grace—just three days after assuming the role of leader of the United Democratic Party in February 2020—occurred after the release of those messages and reopened the conversation of campaign finance reform in Belize. Last Friday, the 56-year-old Dermen was convicted of fraud and money laundering at the close of the seven-week trial in a Salt Lake City courthouse and was sentenced to 40 years in prison.

Additionally, Dermen was ordered to pay $442,615,520 in restitution to the IRS, in addition to a monetary judgment of more than $181 million. Jacob Kingston, the CEO and co-owner of the company, Washakie Renewable Energy, which was the vehicle through which the fraud was carried out, was sentenced to 18 years and ordered to pay $511 million in restitution to the IRS likewise. He pled guilty to the charges related to the scheme in 2019 and testified against Dermen.

Kingston’s entire family are members of a polygamous sect from Utah. He was born and raised within the Davis County Cooperative Society. His entire family was involved in the business affairs of Washakie. Isaiah Kingston, 42, was sentenced to 12 years in prison and ordered to pay $511 million to the IRS. Rachel Kingston, 67, their mother, was the “special project manager” and was involved with the backdating and creating of fake invoices; she was sentenced to seven years in prison. Sally Kingston, Jacob’s legal wife, was sentenced to six years earlier last week.

The US $1 billion bio-fuel tax scheme was an operation aimed at illegally profiting from a program that was meant to provide incentives to companies in an effort to curb greenhouse gas emissions. The company, Washakie Renewable Energy, promoted itself as an enterprise which converted used cooking fuel, cornstalks, and other biological materials into biofuel at its plant. Evidence shows that very little fuel was actually made by the company. From 2010 to 2018 that company was involved in multiple fraudulent schemes, creating false paperwork to claim it created biofuel from feedstock, when in fact that biofuel was produced by others who had already claimed fuel tax credit from the US government. They claimed IRS biofuel tax exemptions using the forged documents.  

They frequently obtained US$65 million in EPA renewable IDs, purchased millions of gallons of fuel, and created the impression that the fuel was being produced and sold by Washakie. They applied for and were paid over $300 million for claims in 2013 and $164 million in 2014. The fraud proceeds were laundered through more than $3 billion in transactions across multiple bank accounts.

“Money from the fraudulent claims were distributed to Dermen and the Kingstons and used to make lavish purchases in the United States, Turkey, and Belize,” a release from the US Department of Justice notes.

According to the release, “Dermen also caused Jacob Kingston to send more than $700,000 on behalf of Dermen to purchase land in Belize for a planned casino.”

It goes on to state that the US government is “seeking forfeiture” of those illegally attained proceeds.

This brings into question the proceeds received by Saldivar as alleged campaign financing. While there is no indication of exactly how many “tranches” were paid to Saldivar, we can confirm that payment started as early as June 2014 – six years before the scandal actually broke.

Since then, a chain of events – including a US State Department declaration of Saldivar as a corrupted politician, the removal and subsequent reinstatement of Saldivar from the UDP, and Saldivar’s unwelcome win in the UDP Belmopan consistency – has battered a far from battle-weary Saldivar. For his dealings with Dermen, the alleged Armenian mafia boss, Saldivar was removed from the Ministry of National Security and the Dean Barrow-led Cabinet, and stripped of the position as leader of the UDP.

In November 2022, the US Department of State designated the former minister as having “Involvement in Significant Corruption,” claiming that Saldivar, “accepted bribes for the improper acquisition of Belizean immigration documents and interfered in the public processes for his personal benefit during his tenure as a government official.”

At one point, Lev Dermen submitted an application to the government of Belize to be named as the country’s honorary consul to Las Vegas, Nevada. The application was vetted by the Special Branch and no infractions against Dermen were found; but when the Ministry asked the US if there were any objections to the appointment of Dermen as Honorary Consul, the reply was a firm rejection of such an appointment. Reports are that Dermen, prior to this conviction, had bested the US government in fraud and assault cases before.

Saldivar, in a press conference following the designation, doubled down on his position of innocence on the matter and challenged the US to provide the evidence to buttress their claims against him. No such evidence has been provided.

“Let me state, therefore, for the record, as I have stated many times before: I am innocent of any allegation that has been made against me. At no time have I participated in any corruption at the Immigration Department while I was the minister, even before or after, and there can never be any proof brought out against me in that respect,” Saldivar affirmed. He went on to challenge the US:

“I challenge the United States government to provide that proof. I have no difficulty in facing a trial (whether) here in Belize or abroad in the US,” Saldivar said.

“However, the work, in this case, is not over. Going forward, our office and the Tax Division will continue to work together to seek forfeiture of assets connected to this massive fraud scheme to recoup the losses it caused to the United States,” the release from the US Department of Justice states.  

With the Department of Justice now focused on recovering the funds siphoned from the US taxpayers’ pockets, Saldivar and any other persons in Belize involved in money dealings with Dermen may very well have their day in court.