Do you think the FBI will investigate the BCC??
The Federal Bureau of Investigation has announced that they are seeking tips on public corruption related to the cannabis industry. In the short audio clip released in the form of a podcast, FBI Public Affairs Specialist Mollie Halpern states, “States require licenses to grow and sell the drug—opening the possibility for public officials to become susceptible to bribes in exchange for those licenses.” The FBI podcast requested that if you “suspect a dispensary is operating with an illegally obtained license, or suspect public corruption in the marijuana industry” to contact a local FBI office.
In the clip, Intelligence Analyst David Kirschner stated, “It’s our role as the FBI to help to ensure that the corruption doesn’t spread in this new industry.” Public Affairs Specialist Halpern also stated, “The corruption is more prevalent in western states where the licensing is decentralized—meaning the level of corruption can span from the highest to the lowest level of public officials.” Candid Chronicle asked Alex Traverso, Assistant Chief of Communications of the Bureau of Cannabis Control, whether there were any instances where action has been taken against a California cannabis business permit holder, or a permit revoked, for involvement in public corruption or bribery. Traverso wrote, “None that I’m aware of.”
Halpern’s statement about western states at least rings true in California, where there are countless reports of public corruption seeping into the cannabis industry.
In 2017, eight medical marijuana companies in Huntington Park sued their local governing body for rigging the dispensary permit process and defrauding applicants of their $5,000 application fees. The complaint alleged that Mayor Graciela Ortiz, Vice Mayor Marilyn Sanabria, and City Council Member Karina Macias conspired with private companies to award the city’s three medical marijuana dispensary permits to predesignated companies. Allegedly, the agreement between the Huntington Park officials, C4EverSystems, and MJIC, Inc. entailed that Ortiz, Sanabria, and Macias would only vote to approve cannabis businesses that were represented by MJIC. According to Los Cerritos News, the three dispensaries which were awarded permits had ties to C4Ever and MJIC, including the C4Ever’s VP of Operations Tuccelli-Margolin and CEO Greg Hodge, as well as the Chairman of the Board of MJIC, Larry Horowitz. A judge dismissed the claims against the City and its councilmembers.
Five men claim that Rohnert Park Police stole cannabis and cash from them during traffic stops near the Mendocino-Sonoma County border. The corruption case is the third of its kind in the area within the past nine months, and names former Rohnert Park officers Brendon Jacy Tatum and Joseph Huffaker. Attorney Izaak Schwaiger said the complaint alleges that they believe the worst to be true, that the entire Department of Public Safety is “an outright criminal enterprise that needs to be shut down.” On August 20, 2019, the City of Rohnert Park settled a lawsuit filed by Zeke Flatten. Flatten told blogger Kym Kemp that the settlement amount was $415,000. Flatten was stopped by two men who claimed to be ATF in 2017; the men confiscated three pounds of cannabis from Flatten and left him free to go. The men were wearing green uniforms, driving an unmarked car, did not name themselves to Flatten, and presented no badges. The men who posed as ATF were Hopland Tribal Chief of Police, Steve Hobb, and Rohnert Park public safety Officer Joseph Huffaker.
In January 2018, Apothecarium sued the city of San Francisco for allegedly favoring a competitor who contributed thousands to board members’ political campaigns. Apothecarium was denied a permit on October 3rd, 2017. One month later, Barbary Coast Collective was approved in the same district by a 10-1 vote. An independent review from the SF Chronicle showed that the 11 supervisors who voted took more than $27,000 total from Barbary Coast Collective owners and employees.
A Humboldt County Planning and Building Department Inspector, Patrick William McTigue, was arrested and charged with bribery. McTigue allegedly received over $100,000 in bribes, as he promised that he would expedite cannabis permit approvals and grading projects. McTigue was prepared to plead guilty to one of the felonies earlier this year, however, the plea deal was called off as more evidence unraveled. McTigue’s updated trial date is set for February 10, 2020.
In May 2018, a Californian mayor’s home and office were searched by the FBI. The Adelanto mayor, Rich Kerr, was investigated by FBI after charges were pressed against Mayor Pro Tem Jermaine Wright for accepting bribes to fast-track cannabis business permits. Adelanto Councilman John “Bug” Woodard reportedly acted as a broker for a dispensary property. The dispensary, The Jet Room, was later raided by the FBI. Currently, neither Kerr, Wright, nor Woodard work for the city of Adelanto.
Last year, the FBI got involved in a bitter battle between cannabis dispensary owners. Federal charges were pressed against three people in San Diego for a conspiracy to kill scheme. Reportedly, Salam Razuki, Sylvia Gonzalez, and Elizabeth Juarez inquired to an individual about having their business associate Ninus Malan kidnapped and killed. The plot was hatched after an onslaught of lawsuits between Malan and Razuki concerning their cannabis businesses in San Diego. Unbeknownst to Razuki, Gonzalez, and Jaurez, the individual they have been accused of hiring to carry out the murder was a confidential FBI informant. According to the criminal complaint, Razuki has been an FBI informant since May 2014. In 2014, Razuki was charged with housing an unlicensed dispensary at one of his commercial properties, in the settlement, he paid $10,000 fines and did not admit to guilt. Based on civil complaints, Razuki and Malan are still actively involved in cannabis businesses in San Diego. The string of litigations has recently continued as Malan has sued Razuki et all for damages resulting from their alleged attempts to have him murdered. It is still unknown what will happen to any of the cannabis licenses issued by the states for those convicted of bribery, corruption, fraud or other charges. Jared Mancinelli Esq and Chief Content Officer for Cannabis Law Digest told Candid Chronicle, “How the state responds to a licensee getting convicted in federal court really depends on what the state regulations say. But in most states, having a federal conviction on your record bars you from a lot of professional licensure.”
Although the legal cannabis game has a longer history in states like California, cities are experiencing shocking cannabis-related allegations from coast to coast.
On July 19, 2019, three South Florida men were arrested by the FBI, they are accused of orchestrating a cannabis penny stock scheme. Charles Vaccaro, Eli Taieb, and Dror Svorai were all federally charged with wire fraud, conspiracy, and securities fraud. Two FBI agents went undercover posing as manipulators willing to funnel the the group’s illegal money back into their U.S. bank accounts. The cannabis stocks involved in the scheme include PotNetwork Holdings ($POTN), Vaper Group ($VPOR), and White Label Liquid ($WLAB). Initially, the case was sealed by the judge; a week later the case was unsealed. The investigation is ongoing.
Mayor Jasiel Correia was indicted for accepting some $600,000 in cash bribes from cannabis business permit applicants. Correia supplied state required non-opposition letters in exchange for the bribes. The letters approved the cannabis business locations for zoning clearance approval. Correia was arrested on September 6th, stating that the charges are politically motivated. The 27 year old mayor is up for re-election, the city’s primaries take place on September 17th. Read more about Correia’s indictment here.