Virus-panicked jury rushed polygamist tax case, defense says

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A fearful federal jury issued a “sham” verdict in less than eight hours because it feared deliberating during the coronavirus outbreak, according to a lawyer for a Los Angeles businessman convicted of leading a biofuel conspiracy with a Utah polygamist group.

It may be the first instance of a U.S. defendant claiming that the coronavirus pandemic interfered with a criminal verdict. The outbreak has halted the murder trial of New York real-estate heir Robert Durst, led to a four-month delay in the trial of former Goldman Sachs banker Roger Ng and was cited in a trade-secrets case against Huawei Technologies Co.

Businessman Lev Dermen, 53, was found guilty Monday in Salt Lake City, where four members of the Kingston family admitted their role last year in a scheme to cheat U.S. tax authorities of $512 million through a program designed to promote clean fuels.

In a court filing after the trial ended, Dermen attorney Mark Geragos called the verdict a “complete travesty of justice.” He said the jury asked no questions of the judge in less than eight hours of deliberations that began last week. Dermen was convicted after a seven-week trial of all 10 counts including money laundering and conspiracy to commit mail fraud. He faces 20 years in prison each for several of the counts.

“The verdict was clearly not based on any reasoned consideration of the evidence or discussion about the case; rather, it was unfairly influenced by passion or prejudice as a result of panic and fear,” Geragos wrote.

Geragos wrote that the “ultimate confirmation of what a travesty and sham this verdict was” came when U.S. District Judge Jill Parrish asked the panel to identify the foreperson.

“Juror #11 pointed to the empty chair of the former face-mask wearing, pneumonia-diagnosed Juror #10, whose seat no juror would sit in after he was excused,” the lawyer wrote. “While pointing at the empty seat, Juror #11 said ‘him,’ identifying the excused juror as the foreperson.”

Prosecutors countered in a filing that there was “absolutely no basis” to Dermen’s claim that he was denied a fair and impartial jury. Jurors, they said, “did not send any notes regarding the Covid-19 epidemic and accordingly there is no basis to conclude that it played any role in their deliberations.”

Deliberations began March 12 and resumed Monday, so “the jury did not feel they were under any undue time pressure to render a verdict,” prosecutors wrote. “It has been seven days since Juror No. 10 was excused on account of pneumonia and fourteen days since Juror No. 1 was excused on account of the flu. These conditions do not appear to have spread to any other members of the jury.”

Over the weekend, Geragos had unsuccessfully sought a mistrial, citing the outbreak. After the verdict, the 10th Circuit Court of Appeals said that the courthouse would be closed to the public because of the virus pandemic.

“I can’t overstate the significance of this case in Utah,” John Huber, the U.S. attorney in the state, said at a news conference after trial. He said the Kingstons are a “close-knit, insular community, practicing polygamy” who were suspected of breaking the law for decades but had long flummoxed authorities.

The Kingstons, he said, engaged in tens of millions of dollars of fraud, but Dermen “took them into a new stratosphere.” The group cheated the Internal Revenue Service out of more than $500 million and tried to defraud taxpayers of more than $1 billion, Huber said.

Dermen and the Kingstons were the most significant of dozens of convictions around the U.S. of those who defrauded the IRS, which administers refundable federal tax credits that are intended to increase renewable fuel used and produced in the U.S. The Environmental Protection Agency established a renewable fuel standard program.

Bloomberg News
Tax crimes Coronavirus Tax-related court cases IRS Tax evasion