The Case of the Polygamist with More Fraud Charges Than Wives

Warning: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Greg: If you were raised in a religious cult and you just barely escaped before you were forced to marry your cousin and you knew secrets about the cult that would most likely result in an FBI takedown, what would you do?

Caleb: Well, shit, I don't know. Would my cousin be okay? Jesus Christ, Caleb.

Blake: If you'd like to earn CPE credit for listening to this episode, visit Earmark Cpcomm. Download the app, take a short quiz and get your CPE certificate. Continuing education has never been so easy. And now on to the episode.

Greg: Hello and welcome to Oh My Fraud, a true crime podcast where our victims hemorrhage money instead of just hemorrhage. I'm Greg Kite.

Caleb: And I'm brother Caleb Newquist.

Greg: Caleb Big Four brother, Caleb. Before we get into it, I want to read a listener review real quick, if I may.

Caleb: Of course.

Greg: A listener who goes by the name Warmachine 470 gave us five stars. Thank you, Warmachine 470. And also said, truthfully, I might be the only one, but this podcast is amazing.

Caleb: Uh, I have a theory. The reason that Warmachine 470 thinks they might be the only one is because there aren't nearly enough ratings for this podcast yet.

Greg: Right. I totally agree with you on Apple Podcasts there. We only have like 40 reviews, fewer ratings than that, which, you know, fewer blurbs. All that to say we have fewer reviews for our podcast than most of my son's Instagram posts have likes And oh, I mean, I love my son to death, but still. But still. Come on, come on. Yeah, we should be. We should be taking him to the cleaners in terms of that stuff.

Caleb: Yeah. So if you like, Oh, my fraud. And hopefully you like it more than you like Greg's son's Instagram posts, please take a minute to rate the show or write a review. Who knows, it might help. War Machine for 70 feel a little less lonely. And wouldn't that be nice?

Greg: That would be so nice. We don't want any of our listeners to feel lonely.

Caleb: We don't. We don't. Okay, Greg, let's move on. We're going to look at a case today that happened in Utah, which is which is right in your backyard. That is your backyard. It is. It is your yard. Is it your yard or your backyard?

Greg: Yeah, front yard. It's probably more my front yard. Front yard. My back yard. Yeah.

Caleb: Yeah. Not only that, but this probably will come as no surprise, but it was perpetrated by some very religious people. Mormons, not Mormons, I guess I should say, but Mormon adjacent. Yeah. And you've lived in Utah a long time, right?

Greg: Yeah, a long time. Over 25 years now, actually.

Caleb: But you're but you're not Mormon, correct? And that is correct me if I'm wrong. I'm guessing that surprises lots of people.

Greg: Yeah. Yeah. I often when I when people find out I'm from Utah, I often say, yeah, I'm not Mormon. I'm the one guy in Utah who's not Mormon. Right.

Caleb: Right. That that raises the question, Greg, why? Why are you living in Utah? Are you being punished or is there some kind of like karmic debt or something? I'm just curious, like what got you to Utah and why are you still there?

Greg: Over the past 25 years, I've asked myself the question, Why do I live here a lot and am I paying off some sort of karmic debt? Fortunately, I have. I now embrace it and I love it. It's my home. It's a it's a beautiful, blowing. Beautiful. Yeah. My backyard looks like I live in the in the Swiss Alps. So, I mean, yeah, it's it's a wonderful place to live. The people here are amazing. But, yes, I may be paying off some sort of old karmic debt because the crazy story of how I live here is because because I came to Utah when I was a younger man. Back then, I was a very religious man, not Mormon, like you said, but I was a committed, even arguably a zealous evangelical Christian. And and listen, during my freshman year at the University of Washington, God parted the heavens and bestowed a mission upon me to transfer to Brigham Young University, the University of the Church of Jesus Christ of Latter day Saints, to convert all the Mormons from Mormonism to, uh, to real Christianity.

Caleb: Oh, yeah, that's. And that's.

Greg: The backstory. That's why I live here, like I said. So arguably, Yeah, I'm paying off a karmic debt for. For my my life now.

Caleb: Um, so how'd that go?

Greg: Oh, my gosh, Caleb. It went amazing. Amazing, as you'd expect. Amazing. Of course, I converted, I convert. I mean, just. I'm rounding to the nearest hundred. I converted zero people. Actually, that's to the nearest one. I converted zero people. And. And after several years, I realized, Oh, hey, we're all wrong. And so now, now I'm, I'm. I'm very comfortably an agnostic or as I prefer to call myself an atheist, but I still have some doubts.

Caleb: Uh, a doubtful atheist.

Greg: Yep, exactly.

Caleb: One of the. One of the few. Yep.

Greg: Right.

Caleb: Um, having. Having. Well, I've known people with many different belief systems, but I have probably over the course of my entire life, I have probably known more evangelical Christians than anything else. And I've known quite a few Mormons over the years. And I am not surprised by your failure at all. Right.

Greg: Right.

Caleb: No, evangelicals, evangelicals aren't very convincing and Mormons are. They're kind of stubborn. Yeah, they dig in pretty hard, too. Yeah. Um.

Greg: But but so here's here's the thing. My whole approach while I was trying to convert the Mormons is I was trying to show them, like, holes in their belief system.

Caleb: But that always.

Greg: Works. Oh, well, no, it never works. But. But, but. Well, sorry. It kind of worked once because. Oh, by but. But not on them. On me. Because by me continually saying, hey, here's some holes in your belief system. Like I, I still had to go, oh, I have very similar holes in my own belief system. And to this day I'll defend the fact that Mormons had more holes and bigger holes in their belief system than evangelical Christians had in our belief system. But at the end of the day, the the the quantity and the size of the holes in your belief system don't matter a whole lot. If everybody has a whole lot of holes in their belief system. So my whole effort to convert Mormons really was what ultimately I say, what really ultimately eroded my belief in my own my own religion.

Caleb: Far out, man. Yeah, far out. So, yeah, again, this is this is. I'm enjoying this very much.

Greg: Well, and again, that's why I say, yeah, it might be a karmic punishment that I'm that where we're like the universe is, oh you, you wanted to go to Utah to convert the Mormons and we'll, we'll make you we'll so here's what I'm going to do. I'm going to take away your belief system and make it so you can never leave Utah. Yes.

Caleb: So you will remain in this theocracy for the rest of your days.

Greg: But but like I said, I mean, so here's the thing. I've lived here 25 years. I, I, I think that, you know, I mean, obviously, there's.

Caleb: Got to be a rabid atheist community in Utah.

Greg: Oh, well, that yeah, that's a well, it's weird because the vibrant.

Caleb: Vibrant atheist community.

Greg: There's a sense that that Mormonism might be in its final days. There's a big.

Caleb: I've been reading I've just done some reading about that actually. Yeah.

Greg: So so that's so that's very interesting. And there's a lot of people and actually it's funny, this ties into what we're going to talk about later. There's a lot of people who have left and are very there's some bitterness when you the thing that you were putting all your, you know, all your hopes and dreams and 10% of your income into for your whole life when you are disillusioned, there's some bitterness that that results from that. So.

Caleb: Greg, let me ask you, do you think it's worth talking about how these two conservative religions that have you have been kind of immersed in during your life? Is it is it worth mentioning that they also happen to be these conservative faiths, They also happen to be conservative in their politics? Or maybe it's more accurate to say their followers aren't just really fond of government. Is it worth talking about that?

Greg: Yeah, I think that's that's definitely worth talking about, especially, again, in light of today's today's case that we're going to be talking about. But but I do have to preface, I guess, just in terms of my own my own history, religious history. I got out of evangelicalism before Sarah Palin showed up and made it weird. Yeah, but which is which is like, funny to say that, But I but I absolutely believe that Sarah Palin running for vice president was was literally like an inflection point for evangelicalism, because it's not that there was there was always kind of a we've got to make sure, you know, the Moral majority. We got to you know, we got to. Yeah, they.

Caleb: They started hijacking it in the 80s, if I remember. Right.

Greg: But it got but but up until I'm going to say before before Sarah Palin showed up on on the scene, it it like she turbocharged all of that and so you could have various like there could be like differences in political belief and you'd still be like, okay, we're all still on the same team. That feels like it's very, very different now. But it's.

Caleb: Quaint. It's a quaint idea, isn't it?

Greg: Yeah, it is. It it. Well, it's weird. And I have to say, a lot of my friends who my friends who, you know, obviously still well, we're going to the church that I stopped going to. A lot of them stopped going to that church during the pandemic because things just got so politically weird during the pandemic. But I also just want to say that I don't believe that evangelicals or Mormons are anti-government because you said like they're not fond of government. I'm going to say that they're they're very fond of government. As long as that government is conservative, which generally translates to Republican. And and the other thing is the common understanding of both conservatism and Republicans is that they want either less or smaller government. However, they also can serve. Both conservatives and Republicans also seem to want bigger government when it comes to things like military, the police and legislation that limits how and where drag performers can perform. So it's it's one of those things where.

Caleb: It's like where what books or what books you can read.

Greg: Or. Exactly. Exactly. So, so so even I'd say the less government thing doesn't necessarily track. I think maybe big picture, it's a little bit less government. But but when you look more granularly, even conservatives want want their type of government to be the government that prevails. But here's the thing that a lot of people at least don't know the details about this, and that is that Mormons abandoned the practice of polygamy in 1890 in order for Utah to gain its statehood. And even less people know this, and that's that. There are several Mormon sects that split away from the Mormon Church in order to continue practicing polygamy, because they you know, it's one of those things. It's like this is a sacred doctrine that God wants dudes to have lots of wives. And then all of a sudden the church says, Hey, that thing now will get you excommunicated from this church. So. Right. Yeah. So a lot of people were like, We don't like that. So we're going to break away from you and start our own thing where polygamy is still good even though it had to be secret. So those groups, these these polygamist cults that still exist to this day in Utah are those groups. They're anti-government. And that's because they see the government as being anti them.

Caleb: All right. So, Greg, I think it would be good to start this particular episode by understanding the three major polygamist I'll call them cults. Okay. Maybe people will take umbrage with that, but I'm going to call them cults. Yeah. Well, why don't why don't you lay it down for us? What are the three major polygamist cults that are kind of offshoots of the. The mainstream LDS Church? Right.

Greg: Well, let me let me put your mind at ease. No one's going to be offended by you calling them cults except the people who are in these cults. So you don't and likely they don't need a whole lot of credit. So they're probably not not avid listeners to our show. So so here's the thing. There are there are three major polygamist cults in Utah. It's the FLDS, the A.

Caleb: Are they just in Utah? Let me let me just stop you there. Are they just in Utah? They're not just in Utah, are they?

Greg: Primarily in Utah? It's one of those things where the biggest concentration is Utah. And then, you know, when you our neighboring states will have have Idaho. Idaho has got some you're going to find some in Nevada. You're going to find some in Colorado, and you're going to find some in in Arizona. But the further away from Utah you get, there's less and less. And really, their reach is not too great. But but, you know, I would assume that you could probably find somebody like this in, you know, in far flung areas. But it's going to be very, very, very, very uncommon.

Caleb: Right.

Greg: The further away from Utah that you get. And one of the things that we started looking at just a little bit is that it's not just, you know, Mormon offshoots that have polygamy. The Islam is A-okay with with polygamy up to a maximum of three wives. But polygamy is illegal in all 50 states and all the territories of the United States. And one of the things that I did find out is like, let's say you're a muslim, you have three wives, you're legally married to them in another country, that that does allow polygamy. You are you're prohibited from immigrating to the United States if you have if you have any multiple spouses. So that's just a that's just a no, that's a fascinating deal breaker.

Caleb: Fascinating stuff.

Greg: Greg. Yeah, for sure. So but but obviously, we're not talking about we're not talking about Islam in this. We're specifically talking about the groups that broke away from the Mormon Church the most. I feel like and this is from my experience living in Utah, I feel like the the most well known of those of those breakaway those offshoots of the Mormon Church who practice polygamy is the FLDS Church, which stands for the Fundamentalist Church of Jesus Christ of Latter day Saints. If you're thinking Big Love, have you you've watched the show Big Love, right? Caleb?

Caleb: Yeah, yeah, I watched most of it.

Greg: Okay? I didn't watch a single episode and I watched like seven minutes of it after preparing to this this show and Bill Paxton Yeah, I couldn't handle it. I was like, this This just isn't isn't working for me. But but here's the thing. If you're thinking big love, you're wrong. Oh, big Love is not the FLDS church. The thing that that again, people who don't live in Utah probably have no idea about this. Flds members are incredibly easy to spot. At least the women are incredibly easy to spot because I don't know the actual tenant of the faith, but all of the women and the girls who are FLDS, they wear these very plain little house on the prairie dresses. And they all have like this Martha Washington style hairdo as well. So like you like you'll be in Costco and you'll be like, oh, my gosh, there, right there. There. We just we just passed them by. The bacon crumbles. They were right there. And yeah, like my day job, I'm a controller for a group of medical office buildings. And it's not it's not all the time, but I'd say at least once or twice a year I'll just be walking through one of my buildings and I'll pass a little gaggle of of polygamist polygamist women who were in the building for some kind of health care. So and by the way, Warren Jeffs, does that name ring a bell for you? Because he's a big everybody who lives in Utah knows Warren Jeffs.

Caleb: It certainly does. I remember. Yes, I remember the name.

Greg: Well, he he he I.

Caleb: Remember his creepy ass face.

Greg: Yeah. Yeah. And I believe he still is considered the leader of the FLDS Church. And he is currently incarcerated for multiple counts of various super creepy sex crimes. And that dude, he's FLDS. So. Yeah.

Caleb: That's that one, too.

Greg: Yeah, He's in for a he's.

Caleb: He's going to die in.

Greg: He's not going to come out. Then then another sect is the is the. Which is also rather well known. Aiub stands for the Apostolic United Brethren. It's actually considered a more liberal offshoot of the FLDS Church. And have you and you're aware of the I think it was on TLC, the show Sister Wives.

Caleb: Yes. Aware of it? Aware of it? Barely.

Greg: Yeah, right. Yeah. So those guys there. And the difference is they're polygamist and you can't spot them. You can't pick them out of a crowd. We just we just recently found out that one of my fiance's friend's mom that that lady got divorced from the friend's dad, from this friend's dad. And after the divorce, the friend's mom married somebody and became one of multiple wives for somebody in the church. So it was like, what? So it's like. Sure, like it's it doesn't take there's not many degrees of separation if you live in Utah before you wind up with somebody who's been somehow involved in some of this polygamy going on. So so the the the rumors are the rumors are false because it's not all over the place, but also it's around. So but but all that to say the neither of those branches are the branches that we're talking about today. Today we're looking at an organization that's commonly referred to as the Kingston clan, which is also known as the Latter Day Church of Christ. It's also known as the Order and the Davis County Cooperative Society, which I think is hilarious.

Caleb: Wait a minute.

Greg: Yeah, No, listen. Because the order. Order!

Caleb: The order sounds like a death cult, right?

Greg: It sounds creepy and ominous. Exactly.

Caleb: And Davis County Cooperative Society sounds like a very nice community organization that would probably build houses or something, right?

Greg: Right. I was thinking it sounds like a farmers market, so. Yeah, Yeah.

Caleb: Right, right.

Greg: Right. But these are these are all the different names for the same polygamist cult that we have here in Utah. Well, I guess.

Caleb: It probably depends on what kind of vibe they want to put out at any given time.

Greg: Exactly. Yeah. It's like.

Caleb: Will we kill you? Yeah, we're the order.

Greg: Well, good. Well, and it's crazy when you dig. The deeper you dig into this stuff. There. That's not. Let's not spoil it. Let's not spoil it. Okay? Okay. All right. So if you're looking for pop culture places to find people who I guess are former members of the Kingston clan, there is a docu series on A&E that's called Escaping Polygamy. Not all of those people came out of the Kingston clan, but there's there are several former Kingston clans, Clansmen. I don't like that former Kingston members of the Kingston clan who are on that show. Um, the other weird thing and this this was, this was new to me for researching this case is the Kingston clan is actually apparently the largest polygamous polygamist cult in the United States, which still doesn't mean it's huge. It's estimated they have around 10,000 members. But that's the biggest of the the polygamous cults. But like I said, it seems like it's also the least well known of the of the three big ones that I know of. And and the Kingston clan controls more than 100 businesses, more than 100 businesses. Caleb and I found a Rolling Stone article from 2011. And in that article they estimated the total net worth of the Kingston clan at around $300 million. But if you just keep listening to this episode, listener, I'm sure that you'll agree with me that $300 million has to be a massive understatement of these people's wealth. And it gets weirder because the Kingston clan isn't just known for polygamy. It's also known for buckle up, incest and pedophilia. And it was officially labeled a hate group by the Southern Poverty Law Center. So and just to just to give a clear example of the creepiness of what's going on within the Kingston clan, the current leader of the Kingston clan is a guy named Paul Kingston, and he reportedly has 27 wives and three of them are his half sisters. One is his first cousin and two are his nieces. What the what the hell is.

Caleb: He probably needs to be locked.

Greg: Up. It's it's it's ridiculous. The Kingston clan, just to give a little bit more history about them. It was started by Charles Kingston in the 1920s because Chuck Kingston. Then, and a bunch of other dudes were pissed. Like I said, that the Mormon Church abandoned polygamy and in the 1930s, the Kingston clan began to relocate to Davis County. Hence the Davis County Cooperative Society, which is the area just a bit north of Salt Lake City. If you've ever heard of Bountiful, Utah or Ogden, Utah, where they have a big IRS center, that's that's their stomping grounds. Oh, yeah. So the IRS.

Caleb: Center is in Ogden.

Greg: It is? Yep. So which is funny because I used to do a lot of jokes in my standup set about the IRS, and I would do I would headline at the Wise Guys Comedy Club in Ogden. And invariably there would be IRS. Irs workers at my show who would want to talk to me after my show. So that was awesome.

Caleb: Are they are they real earnest types? Like, look, we don't do any of the bad stuff.

Greg: It was it was more like, hey, I worked there, but you're not wrong. That was more good vibe. Hey, they do.

Caleb: Have a sense of humor.

Greg: They do. They do? Yeah. They're a normal people. I mean, if they're coming to a comedy club. Come on. Fair. And here's another interesting fact. The Kingston clan was no stranger. Oh, yes, There's more. Yeah. Oh, yes, there's a lot more. The. The Kingston clan, they. The Kingston clan as a whole was not unfamiliar with fraud In in 1948, J o Kingston, that was the second leader of the Kingston clan, began to encourage women not.

Caleb: Okay. Kingston Nope. Okay.

Greg: Different guy. J. O. Kingston. He began to encourage women in the church to go to state welfare offices with their kids in tow and claim that they had no idea who the father of these children was, or to claim that the father was a truck driver who just like abandoned them and left them destitute. And they claim these things in order to get larger welfare payments from the welfare office. And like I said, that started in 1948 and the scam was exposed decades later in the 1980s, and the Kingston clan had to pay $350,000 in a settlement with the government for welfare fraud.

Caleb: So I love I love I love that this pious group of people.

Greg: Right.

Caleb: Would say, tell a woman like, oh, yes, please go to this government office and you are a you're a pious woman and yet you've had so much sex that you have no idea who the father of these children are. That is the the fucking like the logic there is astounding. Right.

Greg: Well, and never mind that because.

Caleb: We're after, we're after the we're after the handouts that's what.

Greg: And Well and he's encouraging them to break, I believe at least two of the Ten Commandments. So they got 20% of the of the commandments that they're breaking just right there with that one. Very impressive.

Caleb: Very impressive.

Greg: Very impressive. So there's a guy named Mark Shurtleff. He was the Utah attorney general from 2001 to 2013. He spent years investigating the Kingston clan. And he began to believe that they were guilty of a long list of crimes, including child labor, tax evasion, welfare fraud, obviously polygamy and the sanctioning of underage marriage marriages, and not just any old underage marriages, but underage marriages to blood relatives. Again, barf. Uh, even as recently as 2019, the Kingston clan had been sued for allegedly bilking the federal government out of tens, if not hundreds of millions of dollars through false Fafsa application. If if you haven't been to college for a minute, you might forget that the Fafsa application was the free application for Federal Student Aid. And what what they did, I guess, in mass, is they just were instructed to leave their dads off the application. And by keeping the dads off the application, that meant that the that the Federal Government would not take into account the Kingston clan wealth that included these hundreds of businesses and hundreds of millions, if not over $1 billion worth of businesses. And those those businesses included a gun manufacturer called Dessert Tech, a company called Standard Restaurant Supply, which is crazy because that's a store just south of Salt Lake City that I have personally shopped at myself. And it makes a lot of sense because I remember when I was in that store, I didn't have any idea that it was a polygamist owned business. But I do remember that I had a clear sense that the cashiers looked way too young to work at a business like a restaurant supply store. And I also noticed that. All the employees had super low morale, even for a restaurant supply store.

Caleb: Our story today is going to focus on a fellow named Jacob Kingston, who, unsurprisingly, was a member of the Kingston clan. In 2006, Jacob Kingston earned his doctorate in mechanical engineering from the University of Utah, where he learned about manufacturing biofuel. And he figured that this was an industry where he could make a lot of money. Biofuel, I guess. Maybe. Yeah. No, no, come on.

Greg: Sure. In the in the early 2000s, you know.

Caleb: Yeah, yeah, yeah, that's true.

Greg: It's blowing up. Everybody's trying to save the planet.

Caleb: That's right. In really terrible ways. Yeah, really. The really going about it the wrong way.

Greg: But that was really, but, but really in the, in the, in the early 2000s, that's when we're talking about if people who wanted to get in on the ground floor of something brand new that was clearly going to be around for a while, that's that's when you wanted to get in. Yeah.

Caleb: In terms of his personal life, Jacob Kingston is legally married to Sally Kingston. They have 13 kids together. Plus Jacob has seven other kids with two other women. He's a polygamist with only three wives. So I guess that makes him a loser. Yeah, kind of kind of a little starter family is what he's got.

Greg: There, Right.

Caleb: Just to put that in perspective, Jacob's dad, John Daniel Kingston, had about 100 kids with 14 different wives. So that's, you know.

Greg: So his dad had more wives than he has kids. That's shameful. Shame on you. Jacob Kingston.

Caleb: Yeah. In 2007, Jacob founded Washakie Renewable Energy. This company made biodiesel. But what's biodiesel? Great question. Almost all light, medium and heavy duty diesel vehicles are capable of running on biodiesel blends. So similar to your car if you have a diesel car, correct?

Greg: Well, it's similar to to really any car because if you remember, just regular gasoline.

Caleb: Are you talking. Well, yeah, because.

Greg: I remember this. I don't remember.

Caleb: I've never owned a diesel vehicle.

Greg: But. No, but if you've owned just a gasoline vehicle, I remember seeing this like at the pumps at Costco where because ethanol you've heard of ethanol. It's considered a biofuel. Yes. And it used to be, at least in Utah, they must have legally had to put a little placard on the pumps that said this gasoline has up to a certain percentage of ethanol for your car. And and again, I would see that and go, okay, because because I'm not a car snob. So and I never noticed a difference. And if you are a car snob, you you notice the difference. But it was just in in your brain. It wasn't there really wasn't a difference.

Caleb: You're just it was an imaginary. It was an imaginary. Exactly. Exactly. Yeah, yeah, yeah, yeah. So biodiesel is a it's manufactured from vegetable oils, soybean oil being a popular choice. Yep. Or animal fats, recycled restaurant grease, etcetera. Uh huh. A catalyst is used to make the oil react with a short chain alcohol. I don't know what a short chain alcohol is. Do you know what a short chain alcohol is? Usually it's a.

Greg: Methanol is is a short chain. And apparently that's what's usually used. And I hear that in a pinch, they'll use something shittier than methanol like Bud Light. Oh, yeah.

Caleb: And then you got yourself then bang, you got biodiesel.

Greg: It's just that easy.

Caleb: Yeah. Nothing to.

Greg: It. Why aren't we making biodiesel?

Caleb: I don't know what we're doing.

Greg: We're just money on the table.

Caleb: Man. Where did we go wrong? Started a podcast.

Greg: The list of poor life choices is exhaustive or exhaustive? Both.

Caleb: For quite a while now, there have been government programs in place to encourage the manufacture of biofuels, and the subsidies are a pretty big deal to biofuel manufacturers. For instance, around 2009, Washakie purchased a bunch of grease that would have qualified for federal subsidies if they had purchased it just a few months earlier. So to solve that problem, they simply. Here we go. Backdated the purchase.

Greg: Boom. So easy.

Caleb: So nothing to it. And bang! They qualified for the federal subsidies and thus Washakie renewable energy cracked the seal on corporate fraud.

Greg: In early 2012, Jacob Kingston found himself in the middle of a hell of a problem. Washakie Renewable Energies had shipped a tanker full of biodiesel to a client in India, and while the biodiesel was in route to India, the buyer backed out and Jacob was confident. What a bitch. That's right. Well, this.

Caleb: Is all the way around the world.

Greg: Yeah. I mean, I think about that and I go, Yeah, that's a bitch. But also maybe have a, you know, maybe get paid up front. I don't I don't know what the terms are in this, but it does seem like maybe he made some poor business choices to get stuck. This wasn't this wasn't not his fault. So. Right. There's that, too. But but one of the things that made this especially difficult is that Jacob was confident that both the heat and the cold that the biodiesel would be exposed to in the conditions of an ocean tanker ride that was way longer than it was supposed to be, that those conditions would actually degrade the biodiesel. So in desperation, Jacob went to this dude named Lev Derman. Now, Lev Derman was the owner of a chain of gas stations. And I believe there was some other investments and assets that he had in a company called Noble Energy. And Jacob had actually just met this dude like a month or two prior to this whole tanker fiasco that he was facing right now. And surprisingly, when he went to Lev, Lev said, Yeah, I'll buy all of the biodiesel in the tanker no matter what its quality. But then he also was like, Hey, and if I buy that, is there any way that we could double dip with this tax credit for this tanker full of biodiesel that maybe isn't the greatest quality that I'm purchasing? And and now ask him a question.

Caleb: Just asking questions here. Just spitballing. Yeah.

Greg: Just off the top of the dome. Just a just a question. But but the the credit was only and this is important to keep in your brain. The credit is only for the manufacturing of new biodiesel. So legally, the answer was no, because this biodiesel was already made. It wasn't making biodiesel. He was just buying biodiesel. But it's also clear that the deviant answer was, yes, I think we can do that.

Caleb: Yeah.

Greg: Come on. He's a problem solver. I'll make this. That's right. That's right.

Caleb: So make things happen.

Greg: Exactly. Yeah. Potentially fraudulent things don't take no for an answer. So. So here's what they did. The tanker of biodiesel went to Lev Derman in California, and then Lev shipped it by train to Jacob in Utah. And then Jacob shipped that biodiesel back to Lev in California to create the illusion that Washakie had created new credit eligible biodiesel fuel.

Caleb: Nothing to it.

Greg: Piece of cake.

Caleb: Because of their success with the tanker, Lev and Jacob went in hard with biofuel tax credit fraud. Later that same year, 2012, they hatched a new plan where they purchased biofuel from the East Coast and shipped it to Panama, where it was relabeled cooking grease. Of course.

Greg: That kills me. They just like, I just see, like this. Like. Like a like a train tanker where they just. They just slap a sticker on the side that says cooking grease. Yeah.

Caleb: Anyway, then the mislabeled biofuel was shipped by truck to another port in Panama and then shipped by tanker to Levin, California. Lev then sent the cooking grease to Washakie in Utah, where it was converted into biofuel, which was really easy because it was already biofuel. Right. Right. In case in case you missed that part. Then Jacob claimed the refundable tax credit as if he had been the original manufacturer, and he split the proceeds of the tax credit with Lev. So essentially. Costs of goods sold equaled revenue.

Greg: Right. Which is generally horrible. Terrible means your gross profits is zero.

Caleb: Right. But that was okay in this case because the refundable tax credit was all profit. Now refundable means that the government will cut you a check if the credit eliminates your tax burden. And then there is excess, right? Yes. That excess they will cut you a check for if it's non refundable. Sorry. You know, you don't you don't get a check. Yes.

Greg: Another way to say that is a non refundable tax credit can bring your tax liability to zero but it can't take it below zero. A refundable tax credit means that you could actually end up with a negative tax liability where the government essentially owes you money. And then we'll write you a check for like the negative tax that they owe you back for, in this case, producing the biofuel, right?

Caleb: A refund, essentially. Yeah.

Greg: So since this biofuel refundable tax credit fraud was clearly scalable, Lev and Jacob scaled the hell out of it. They purchased millions of gallons of biodiesel, not the raw materials, but again, actual biodiesel that other manufacturers had already taken the tax credit for, and they rotated it through the US shipping system to create the appearance that was Shockey was receiving raw materials and then producing and selling qualifying biodiesel for which they would again claim the tax credit for for every gallon of biodiesel purchased again, not manufactured but purchased. And they'd they'd take the credit for that. And just to give an idea of Lev's involvement of this, he wasn't an equal in the fraud. He was more a cheerleader and a facilitator of the fraud for Jacob, and he was paid handsomely for his assistance. Part of what Lev claimed to bring to the table also was what he called his umbrella, which was a group of corrupt law enforcement officials. He's like, I got people who are going to protect us, you know, when if things go wrong. I got I got some moles who are going to take care of us. So nothing bad's going to happen to him, which sounds like bullshit, but it wasn't. But also in hindsight, it doesn't look like it was actually an empty promise. Because listen to this. Washakie was audited by the IRS in 2012, and the audit did find some of this fraud, but not all of it, but some of it. And the auditors apparently wanted to impose a $100 million penalty on Washakie. But when the actual penalty came through, it was only $5 million. So Jacob's assumption was that this must have been the doing of Lev's umbrella. And then again in 2016, the Kingstons were tipped off about a raid on the Washakie business offices and because of the tip, the kingstons removed hard drives and they removed documents prior to the raid. But we'll get to that raid more in just a little bit.

Caleb: According to court records, Washakie applied for over $1.1 billion of false biofuel tax credits and received 511 million of that amount. Lev Derman received $134 million. Most, if not all, of which was sent to Turkey. Some of Lev's money was spent on a 150 foot yacht and some bought land in Belize where Lev was going to open a casino. The bromance between Jacob and Lev reached its climax when Kingston gave Derman a $1.8 million 2010 Bugatti Veyron.

Greg: I can't believe that any car is worth $1.8 million like that. That's I mean, I guess you can spend whatever on whatever, but that that's just mind boggling.

Caleb: I mean, that's an expensive car. Yeah. Again, Yeah, I I'm, I'm from I'm from the center of Nebraska. So to me, that seems absurd. Our producer Zach is from Los Angeles, and he's like, no, I see him around, right?

Greg: I have I have a I have a 2007 Honda Civic right outside my window in my driveway that I paid $15,000 for. And in 2007. So that's, that's that's my that's my lane.

Caleb: Slightly used or brand new. Yeah.

Greg: No, no, it was a it was a a salvage title so. Oh wow. So it was very used even. I think that whoever my the story I made in my in my head was that someone bought that for their 16 year old who just got his license and that 16 year old backed it out of the car right into a semi truck and now it's mine.

Caleb: Oh, that's fantastic.

Greg: Yeah.

Caleb: Derman then gave Kingston a chrome, Lamborghini and gold Ferrari to show his appreciation. Why not? Why not?

Greg: That's what. That's what people do. That's what friends do.

Caleb: And because as a religious man, when Jacob Kingston looked at his What would Jesus do? Bracelet? He was like, Jesus would totally drive a gold Ferrari.

Greg: Totally. Of course. I think that's in the gospel of Bugatti. Okay, Caleb, buckle up, because this next part is wonderful. While all of this biodiesel tax credit fraud was going on, a normal life continued for the rest of the Kingston clan, most of whom was living near the poverty line. And and just to clarify, when I say normal life, I mean normal for polygamists. Crazy fucking weird for the rest of humanity. Uh, yeah. For instance, here's an example. There was a young woman named Mary living her normal polygamist life of going to Salt Lake Community College and being ordered to marry her 17 year old cousin. What the fuck? What is this? What? What is this case? It's fucking.

Caleb: Weirdos, you fucking sick.

Greg: Fuck. The weirdest. The whole thing makes no sense. So while she's at Salt Lake Community College, Mary met a fella named Brian Nelson. And Brian helped Mary escape from polygamy, escape from the Kingston clan and escape from marrying her cousin. And in fact, Mary married Brian instead of marrying her barely legal 17 year old, I guess not even barely legal 17 year old cousin. Now, as you might imagine, people who get out of cults are hatefully bitter towards the cults from which they escaped. And and for good reason. I mean, again, if you've watched if if you if you have even watched a trailer for escaping polygamy, it's it's what their leaving was traumatic so I 100% get it and this was absolutely true for Mary and Brian her her husband was obviously right there with her in her rage. And as Mary shared with Brian more and more about her life as a polygamist cult member, she started telling him about some just sketchy shit that she did while as a child she was working for the Kingston Clan's own private bank. And one such sketchy thing that she did was forging checks, stacks and stacks of checks. That's her own words, as she described it, that she was forging stacks and stacks of checks. And when Brian heard this, he was like, oh, we got him because Brian wasn't going to let anything stop him from taking down the Kingston because his wife's life had been ruined because she was unlucky enough to be born into a polygamous cult. And so Mary and Brian, they wanted to hurt the Kingston clan. I mean, I'm sure they also wanted to take the Kingston clan down to help free some of Mary's 200 siblings. Yes, she she had Mary had 200 siblings, Caleb 200. And I guess probably the majority of those 200 were half siblings. But it doesn't matter.

Caleb: That's it doesn't matter that like.

Greg: Okay, here's when I first my first class that I went to at BYU, the or at least it was in the first week of classes. I remember we had a teacher's assistant who on the first day that she was teaching, she was she was like, Hey, just a little about me. My favorite color is green, and I love the movie The Notebook, and I'm the 13th of 15 children, and I grew up in Santaquin, Utah. And it was like, Wait, what was that last part? The 13. Like, I was like, Huh, what's that? But that's not 200 siblings. That's I mean. That's a that's like what, the Duggars times ten.

Caleb: Correct?

Greg: Times 11. That's a lot.

Caleb: So former former former math teacher, ladies and gentlemen.

Greg: Yeah, there he is. I didn't didn't use my. It's about anyways, so Marion Bryan, armed with his information about all the forged checks, the stacks and stacks of forged checks, they contacted the FBI and the IRS and they raided the Washakie offices. This was the 2016 raid where they hid the hard drives and the various documents, but apparently they didn't hide enough hard drives or enough documents because while the FBI was looking for evidence of a money laundering scheme, they also found the biofuel tax credit scam that produced all of the money that needed laundering.

Caleb: Jacob Kingston was arrested in August 2018. He pleaded guilty to 41 charges in July 2019 and in April 2023, he was sentenced to 18 years in prison, ordered to pay $511 million in restitution, and a $338 million money judgment was imposed on him. I don't know if I understand the difference there, but.

Greg: I don't either. That's the that's what the DOJ said, and I'm not going to argue with them.

Caleb: I yeah, fair.

Greg: But it does sound like, you know, combined again, as a former math teacher, we're talking about, what, 849 million bucks? Mm hmm. I don't think he's going to be able to pay all that back.

Caleb: No. Isaiah Kingston, who up to this point, I don't think we've mentioned. Correct?

Greg: Not yet. Yeah.

Caleb: Isaiah Kingston, Jacob's brother and the CFO of Washakie Renewable Energy was sentenced to 12 years in prison and also ordered to pay $511 million in restitution. Woo! Yeah. Rachel Kingston, Jacob's mother who worked.

Greg: I think it makes I think it is kind of funny that Lev Lev Derman wanted to double dip on the tax credit, and that's against the law. But the Department of Justice can totally double dip on the restitution being ordered to be paid back to them by the defendants.

Caleb: That's some lovely irony.

Greg: Yeah, a little. A little two faced federal government, don't you think?

Caleb: Mm hmm. Rachel Kingston. Jacob's mother. Jacob's mother?

Greg: Yeah. His actual mother. Not his. Not his fake polygamist mom, but the real birth mother.

Caleb: Not his sister. Mother.

Greg: Not his sister. Mother? No.

Caleb: She was sentenced to seven years in prison. Sally Kingston, Jacob's wife, who also worked for Washakie, was sentenced to six years in prison. Both of these ladies backdated documents and created false invoices that supported the false claims on the tax returns. Yeah, Not good. Can't do that. Yeah. People familiar with the Kingston clan speculate that Jacob, Isaiah, Rachel and Sally all pleaded guilty because that's what would be best for the clan. A court trial is not exactly the right place to keep the clan's secrets secret. Lev Derman was convicted in March 2020 and sentenced in April 20th 23 to 40 years.

Greg: Yeah, man.

Caleb: And ordered to pay $442 million in restitution and imposed a money judgment of another $181 million for what? Special Agent Albert Childress said was, quote, one of the most egregious examples of tax fraud in US history. A couple of law enforcement officials who were part of Levy's umbrella have also pleaded guilty to corruption charges. So, Greg, did we learn anything?

Greg: Yeah, we learned a lot of things that were a little bit disturbing. But I think if we're just talking about the crime itself, I think that there's a few things that that are worth noting that that that stand out to me about this particular case. Okay. The the first of which is that and we and we alluded to this at the beginning of the show, the Kingston clan was not a fan of government in general because the government outlawed the Kingston Clan's way of life. Polygamy is and and that's one of the interesting things, the difference between polygamy for these polygamist cults in Utah and polygamy within Islam is that in Islam, polygamy is it's permitted. They're kind of like, yeah, if you want more wives, have more wives. If you don't, then don't. And actually, one of the other tenets of Islam is that like if you have multiple wives, you have to make sure that you are treating each of them equally. So it's kind of like, you know, again, it's it's not discouraged, I don't think, in Islam, but it's definitely not like, yeah, go get more wives. But in these polygamous cults, it's like if you want to get to the top level of heaven, you need to be a polygamist, you need to have multiple wives or else you're not going to get to the top level of heaven. And so so it's not just that. It's that it's accepted, it's encouraged, and it's seen as like virtuous or like righteous to have multiple wives.

Caleb: I mean, how how much better could that top level of heaven be?

Greg: So dude, so much better. You don't even know.

Caleb: Like. I mean.

Speaker4: Hell.

Caleb: I mean, it's like.

Greg: It's like, okay, the lower level, that's like a motel six. The the, the top level we're talking Hilton or better. So that's that's really the difference that we're getting to.

Caleb: Always, always, always the, you know, the, the mini fridge is like legit at the top level.

Greg: It's so it's so legit. You have, you know, the carpets are cleaned and the linens are washed. It's just a real.

Speaker4: So it's a whole new thing.

Greg: It's a whole new ball.

Caleb: As many drink as drink as many drink as many, you know, Cokes as you want. And you won't get charged, right?

Greg: Exactly. Free. Free. Yeah. Free mini fridge.

Caleb: So turn down service.

Greg: Yeah, yeah, but but but to but but also to. I mean, this is probably saying it. This is probably hyperbolic, but. But it's at least it's not completely in the wrong ballpark. Is that for these clans? The government was kind of seen as like the antichrist because. Yeah. If because again, if it's like if if God said you guys need to be polygamists and the government is saying we will put you in jail if you're polygamist, then obviously you don't have any respect for the government. And so and we saw and again, we see that just in terms of all the different ways that they that they defrauded the government over time. So if you live in that situation, you're you're you're likely not. I mean, forget being discouraged from from taking advantage of things like this biodiesel tax credit. There's probably, if not unsaid encouragement to do that. Likely. There's very explicit encouragement to do that kind of thing because they're probably saying, hey, we have to pay taxes to this government that's against our way of life. So any way that you can take some of that back, that's just that's just justice being served. So so so that's I think that's a very interesting aspect of this fraud that we don't see in other frauds, because obviously there's greed involved in it.

Greg: You're not going to end up with a gold Ferrari without without there being some aspect of greed. But it's almost like greed that can be justified as as, you know, as righteousness, as righteous as being, you know, as being prudent, as being, you know, following your religion and its teachings. So very interesting. And it reminds me of something that we've talked about in different ethics courses that we've talked where, where, where dishonesty can almost be like like infectious. And and we talk about where if you want to be ethical in arena A, you need to be ethical in arenas B through Z. So the fact that your church that leaders of your church had promoted welfare fraud in the past, that's definitely going to prime you to do something like take advantage of a biofuel tax credit to the tune of, you know, asking for $1.1 billion of unearned tax credits. Another thing that stuck out to me about this case is, is that if you're truly committed to zero fraud within your organization, listen, Caleb, you got to listen closely to this.

Caleb: If you're very closely.

Greg: If you are truly committed to zero fraud within your organization, you will make every exit interview with an employee. A reason for that former employee to hate you and to hate your company. Because. Because if you have if all of your former employees just hate your company than if you have any fraud within that company, they will gladly expose it after they leave your company. That's I think that's arguably the biggest takeaway of this entire case.

Caleb: Well, well done, Greg. This is like there's like you like you've transcended the thinking about fraud prevention. I think so, yeah. I mean, we're. We're like, breaking new ground here. Yeah. I mean, yeah.

Greg: And again, you know, be be wise about this. Don't make them hate you before they leave. But yeah. On the way out. Ideally not. Yes. On the way out the door. Just do everything you can because again, the only reason why Washakie got got taken out is because these, you know, Disenfranchized former members of their community ratted him out to the FBI and to the IRS for revenge. So, yeah, I'm just saying it.

Caleb: Kind of helps that it kind of help. Yeah, I'm just saying. I mean it. I mean, but if you're like, Yeah, if you're a monster, then you're. Somebody's gonna.

Speaker4: You know. Yeah.

Caleb: So, yeah, maybe, maybe don't, don't, don't also be a fraudster.

Speaker4: Right.

Greg: Right.

Caleb: Try to keep the monster stuff monster.

Greg: Wraps so that you're not a fraudster. That's. That's a that's a bumper sticker. That is the the the other two things that that this fraud makes me wonder kind of some questions that come to my mind about this is and Caleb I'm interested to see what you think about this. Do you think that the Kingstons could have gotten away with this fraud if they'd been more measured in their approach? And what I mean by that is it seems like $1.1 billion of fraudulent tax credits is like they were they were shooting the moon with that amount. But if they had, if they'd been like, maybe we'll stick to $200 million of tax credits, maybe, maybe they would have got away with it. What's your opinion on that?

Speaker4: I don't.

Caleb: Know. Like. I mean, it's a lot of money. So when you're when you're qualifying for that many credits, like the IRS is probably going to notice. So I don't know if if they could have I don't know if they had scaled it back by 80%, like, say, if it was 200 million instead of 1.1. Yeah, I don't know. It's it's one of those things where tax credits because of the nature of the credit, because it's a refundable credit. My hunch is that the IRS probably looks at that stuff pretty closely anyway, just like, for example. Uh, earned income tax credit. Right. It's popular for individuals, right? Yep. And it's and it and it's a refundable credit. And there is there is there is fraud present in the Eitc. And so that's one of the areas where the IRS is always looking closely at stuff. So my hunch is, yeah, yeah, highly scrutinized. So my hunch is that, I mean, it probably would have helped him maybe get away with it a little longer. But like, you know, when you're talking about hundreds of millions, like, I don't know, this fucking they're just these guys like a fucking gold Ferrari and the $1.8 million Bugatti, like, these are just greedy motherfuckers, man. Just. They're just greedy and so and that.

Greg: Yeah, and that is. I mean, and it's absolutely true that generally speaking, when you're, I mean, as, as someone who lives in Utah, when you're talking about polygamist families, they're generally they generally like make a decent living because it's like, yeah, it's a very, again, conservative traditional family structure. So you've got the one husband who and father who's who. It's his job to support his, what, up to 200 children that he has. So so a lot of times these guys are making a lot of money doing it right.

Caleb: If he's doing it right, if he's really if he's really shooting for that top tier heaven slot. Yeah, he's got 200 kids again.

Greg: Think about it. You're going to have to make a pretty decent living to be able to keep 200 kids fed and clothed and 200 too. Even if you make a really good living, your family's probably not going to be living large on that. So then, like you said, superimpose gold Ferraris in $1.8 million bugattis into that community. And that's going to stand out. And apparently that is one of the things that the IRS looks for. Yeah, the other thing.

Speaker4: Living beyond your means.

Greg: The other thing that I think about with this is, is I kind of think of like, because this happens to everyone, you're on the freeway and at least this happens to me a lot and I'll be speeding by a significant amount. But when I see the people but, but, you know, I'm not in the far left lane. I'm in the lane next to that. And there's people passing me in that far left lane and I go, okay, I'm not the one who's going to get in trouble for this. So that's kind of what I what I'm thinking about with the measured approach. And the thing is, I haven't seen any other cases about people taking advantage of the biofuel tax credit. No, but I don't know if that's solely because the Kingston clan and Washakie renewable energy was the car in the fast lane. And I wouldn't be surprised if there's other biofuel companies that are committing similar fraud. But but again, the IRS has limited resources. They can only go after so many people. And so they're going to only go after the most egregious cases. But that said, there was also the aspect of a whistleblower in this case. And so I think if the IRS also knows even so, again, if they cut their if they cut the fraud down to 20% of what they asked for, like you said, that's still a ton of money. And if they got a whistleblower where they know this is a slam dunk for us to to, you know, squash some fraud, I still think that my my opinion is they still would have gone after him and still would have taken him down.

Speaker4: Yeah.

Greg: Well, that's it for this episode. And remember, biodiesel and your soy latte are basically the same thing.

Caleb: And also, remember, if you're perpetrating a massive fraud, it's best for you to not force your niece to marry her cousin.

Greg: If you want to drop us a line, please do. We'd love to hear from you. You can send us an email at Omi Fraud at Earmark Cpcomm. And Caleb, where can people reach you if they'd like to connect with you?

Caleb: I'm still on Twitter.

Speaker4: At.

Caleb: Newquist and LinkedIn. Full name backslash. Caleb Newquist. Greg, are you off the internet? Can people find you anywhere?

Greg: I was the first guy to sign up for Meta's new competitor. With Twitter and.

Caleb: Threads. You're on.

Greg: Threads. I'm on. I'm on threads. You can reach me there at by going to threads. And then from there linking over to Twitter and finding me at Greg Kite.

Speaker4: Um.

Greg: You can also, if you, if you want to be more effective, actually just send me an email. Greg at Greg That's how you can that's the best way to reach me.

Caleb: Oh, my Fraud is written by Greg Kite and myself. Our producer is Zach Franc. If you like the show, rate it, give it a rating. Leave us a review. What was that guy's name.

Greg: Up at the top? War Machine 470.

Caleb: War Machine 470. He did it. He wants some company.

Greg: Get on it.

Caleb: Get on it. It helps people find the podcast. If you're enjoying this podcast, why wouldn't you want other people to find the podcast? You do want other people to find the podcast.

Greg: And like we said, War Machine 470 will feel a little bit less all alone in his appreciation for the show.

Caleb: That's that's right. Also, remember, subscribe to the show wherever you get your podcasts and for the accountants, listen on earmark and get some free CPE.

Greg: It's so easy.

Caleb: All all faiths are welcome. Yes. Join us next time for more average swindlers and scams from stories that will make you say, Oh my.

Greg: Oh my goodness. I can't believe someone has 200 children and 14 wives.

Creators and Guests

Caleb Newquist
Caleb Newquist
Writer l Content at @GustoHQ | Co-host @ohmyfraud | Founding editor @going_concern | Former @CCDedu prof | @JeffSymphony board member | Trying to pay attention.
Greg Kyte, CPA
Greg Kyte, CPA
Mega-pastor of @comedychurch and the de facto worlds greatest accounting cartoonist.
The Case of the Polygamist with More Fraud Charges Than Wives
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