Asset Forfeiture

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In Profit-Sharing Scheme, Oklahoma DA Used Contractor for Highway Drug Stops

An asset forfeiture scheme that utilized a private security contractor to stop vehicles on Interstate 40 in Caddo County, Oklahoma, has been shut down after garnering strong criticism. Caddo County District Attorney Jason Hicks suspended the stops earlier this month after getting a tongue-lashing from a local judge.

highway drug interdiction search (ncjtc.org)
Hicks got the bright idea of hiring the private security contractor Desert Snow LLC to do on-site training with his local drug task force. Desert Snow claims to have trained more than 30,000 police across the country in interdiction techniques. "Providing criminal and terrorist interdiction training since 1989,"it boasts on its web site, and "20+ years of high quality 'no nonsense' instruction in the pursuit of America's worst criminals."

But beyond paying the private operators to train police, the contract DA Hicks agreed to in January gave Desert Snow 25% of all assets seized during training days and 10% of all assets seized even on days the contractors were not present.

Hicks told The Oklahoman he hired the contractors "because his drug task force had little success on drug stops" and because "he hoped to make money for his office from the drug stops because of a loss of federal funds."

Stops were made on a stretch of I-40 in Caddo County, and on some occasions, no drug were found and no one was arrested, but police seized money anyway after claiming that a drug-sniffing dog had alerted. Desert Snow had earned $40,000 so far this year from its share of seizures and was in line to receive another $212,000 from an $850,000 seizure before the program blew up in its face.

Under Oklahoma law, asset forfeiture funds are to be split among law enforcement agencies that took part in the operation. But in the deal brokered with Desert Snow, the private contractor gets its cut off the top.

The sweet deal came to an end earlier this month at a hearing where a local judge learned that Desert Snow owner Joe David had pulled over a pregnant driver on I-40 and questioned her even though he is not a state-certified law enforcement officer. David was wearing a gun and possibly a shirt that said "POLICE" on the back, according to his testimony. The stop was one of 400 conducted over a five-day period with Desert Snow in February.

"I'm shocked," said Caddo County Special Judge David Stephens at a July 2 hearing. "For people to pull over people on I-40 without that license is shocking to me."

Stephens urged David not to do it again. "If you do, I hope to see you soon, wearing orange," he said, referring to the color of jail uniforms in Caddo County.

The pregnant woman and her passengers were found to be carrying 25 pound of pot, but the criminal charges against her have been dismissed. Her attorney, Al Hoch, called for reform of the state's asset forfeiture laws, saying seized money should go to the state general fund instead of directly to law enforcement.

"Law enforcement is supposed to be a public service function, not a for-profit enterprise," he said.

Those remarks were echoed by well-known Oklahoma defense attorney Irven Box, who is representing a Colorado man charged with marijuana possession after he was pulled over for a cracked windshield. Private companies shouldn't be getting paid with funds from drug stops they are involved in, he said.

"That at least gives the appearance that these seizures are done for profit and not to protect the citizens," Box said.

Anadarko, OK
United States

This Week's Corrupt Cops Stories

Two Virginia top cops copped to drug corruption offenses this past week, and that's just for starters. There is more as well. Let's get to it:

In Halifax, Virginia, the former Halifax County sheriff pleaded guilty last Friday to ripping off drug task funds and asset forfeiture funds for his own personal use. Former Sheriff Stanley Noblin copped to five counts of embezzlement in connection with the thefts. According to prosecutors -- and uncontested by Noblin -- Noblin ripped off at least $48,500 from the department's asset forfeiture fund and $32,500 from the drug task force fund. He cited financial hardships. He will be sentenced in October.

In Milwaukee, a Milwaukee police officer pleaded guilty last Friday to conducting illegal strip searches of drug suspects. Officer Jack Knight, 32, also agreed to resign from the department. He is the second officer convicted in the case. Michael Vagnini was sentenced to 26 months in prison last month, and two other officers face similar charges and are scheduled for trials. Vagnini appears to have been the active perpetrator of the strip searches, which included rectal probes, but the other three officers are being charged because their presence without objection asserted to victims that they were not free to leave and had to consent to the searches. Some of the victims have now filed a civil rights lawsuit against the department and individual officers.

In Abingdon, Virginia, the former Marion police chief pleaded guilty Tuesday to dealing meth, cocaine, and pain pills. Michael Dean Roberts, 54, copped to one counts of conspiring to distribute controlled substances. He conceded selling at least 7,331 hydrocodone pills, 365 grams of methamphetamine, and small amounts of cocaine and oxycodone from 2006 through June. A confidential informant bought hydrocodone pills from the police chief on three separate occasions in May and June. Some of the drugs came from the department's evidence room. He's looking at up to 20 years in federal prison when he's sentenced in October.

In San Diego, a former Calexico-area Customs officer was sentenced last Tuesday to 12 years in federal prison for taking tens of thousands of dollars in bribes to allow drugs to be smuggled into the country. Oscar Osbaldo Ortiz-Martinez had been convicted of bribery and conspiracy to import controlled substances in September 2012 after he went down in a sting. Undercover agents and cooperating witnesses posed as drug traffickers seeking free entrée through Customs inspection lanes and paid Ortiz-Martinez $22,000 to clear the way. He also agreed to allow kilograms of cocaine through his lane in exchange for another $30,000 and 15 kilograms of meth, but was then busted.

In New York City, a former NYPD officer was sentenced last Friday to six months in prison for lying about a supposed drug deal he said he witnessed. Isaias Alicea had said he saw two men involved in a drug sale in the lobby of the Manhattanville Houses housing project, but surveillance video from the lobby that showed the two men never coming into contact with each other. The drug charge against the suspect was dropped, and Alicea was charged instead. Known as an aggressive cop with a lot of arrests, Alicea had earlier pleaded guilty to administrative charges of violating someone's constitutional rights by unlawfully entering and searching a Brooklyn home.

This Week's Corrupt Cops Stories

If it weren't for crooked cops in the Land of Lincoln, this space would be blank this week. Instead, we have an Illinois corrupt cops twofer. Let's get to it:

In Caseyville, Illinois, the Caseyville police chief was arrested last Wednesday on charges he kept a seized drug vehicle for his own use. Chief JD Roth faces two felony counts of official misconduct, and prosecutors have told town officials to keep him away from criminal investigations because his lack of credibility would hurt cases. Casey had been suspended in March after village records showed he had not sold the seized 2003 Dodge Ram pickup, but instead kept it for his own personal use. To add insult to injury, Roth also billed the village $6,000 for maintenance for the truck.

In East St. Louis, Illinois, an East St. Louis police detective was indicted last Friday, one of seven people accused of operating a cocaine distribution ring. Detective Orlando "Monte" Ward is charged with possession and conspiracy to possess more than five kilograms of cocaine. The 12-year police veteran was being held in jail pending a bond hearing set for Wednesday.

Caswell Motel Case Marks a Victory Against Federal Forfeiture Abuse [FEATURE]

special to Drug War Chronicle by investigative journalist Clarence Walker, cwalkerinvestigate@gmail.com

In a major victory for property rights advocates, a federal judge in Massachusetts last week struck down a scheme by federal prosecutors to seize a motel owned by the Caswell family on rundown Main Street in Tewksbury. The ruling in US v. 434 Main Street, Tewksbury, Massachusetts should make it more difficult for the government to seize a person's property if third parties committed criminal offenses on that property without the property owner's knowledge.

The ruling reinforced longstanding complaints that the use of asset forfeiture statutes -- both federal and state -- is so broad as to be tantamount to an abuse of power. Under such laws, prosecutors file civil actions seeking to seize the property of accused criminals as the fruits of crime, but they often result in citizens being deprived of their property without ever being convicted of a crime, sometimes even without ever having been arrested.

"People better wake up to what's going on with the government taking property under this federal civil forfeiture law," said Russ Caswell, 69, longtime owner of the Caswell Motel. "I was never charged with a crime and I never participated in no drug crimes on my property," he told the Chronicle Sunday. "Neither did the police tell me that my business was a problem, plus we often reported to police about criminal activity on the premises, but they still tried to take my property. I am thankful to God and my attorneys that this nightmare is over."

The Caswell Motel isn't the Hilton -- like countless thousands of other low-end motels on gritty streets across the country, it offers rooms by the week, and its clientele includes itinerant construction workers, traveling salesmen, the just-up-from-homeless, and, yes, the occasional drug user or peddler.

US Attorney Carmen Ortiz had sought to seize the Motel Caswell from the Caswell family under the theory that the motel allegedly facilitated drug crimes. The government provided evidence of 15 drug-related incidents between 1994 and 2008, rousing US Magistrate Judith Dein to note tartly in her opinion that "it should be noted that during this 14 year period, the Motel Caswell rented out approximately 196,000 rooms."

Dein found that Caswell "did not know the guests involved in the drug crimes, did not know of their anticipated criminal behavior at the time they registered as guests, and did not know of the drug crimes while they were occurring."

The government argued that the Caswells had failed to cooperate with police to alleviate drug problems at the property, but Dein cited numerous examples of the motel's cooperation with Tewksbury Police, and also noted that "there is no contention in this case that anyone from the Caswell family has been involved in any criminal activity either at the Motel or elsewhere. It is undisputed that they are a law-abiding family. Mr. Caswell testified that he had never been charged with any crime in his life."

Then Dein blistered the prosecution.

"It is rather remarkable," she wrote, "in this court's view, for the Government to argue in this case that the Property owner should lose his property for failure to undertake some undefined steps in an effort to prevent crime, while putting on evidence that the police drove through the Property routinely, knew the Property owner's identity and that he lived next door to the Motel, and never contacted him in an effort to work together to control crime at the Property. No comparable cases have been cited by the parties, and none have been found. Having failed to notify Mr. Caswell that he had a significant problem, and having failed to take any steps to advise him on what to do, the Government's resolution of the crime problem should not be to simply take his Property."

The federal magistrate then flatly dismissed the government's case. "The Government has failed to meet its burden of establishing that the Motel is subject to forfeiture," Dein found. "In addition, this Court concludes that the Claimant has met his burden of proving that he is the innocent owner of the Property."

Attorneys and asset forfeiture critics applauded the decision. Darpana Sheth, a Virginia-based pro-bono attorney who assisted with the defense of the Caswell Motel called the verdict "very important" and said it could have wider implications if other judicial districts and lawyers pick up on it.

"This decision will make it tougher for the government to initiate forfeiture proceedings or file complaints based on the actions of third parties," she said.

https://stopthedrugwar.org/files/scott-bullock.jpg
Scott Bullock (ij.org)
"This is a complete victory for the Caswell family and for the protection of private property rights," said attorney Scott Bullock, after Dein's ruling. Bullock, who represented the family, is a senior attorney for the Institute for Justice (IJ), a Virginia-based public interest law firm specializing in fighting federal and state forfeiture abuse nationwide.

Caswell definitely needed the Institute's help, his family's limited resources having been eaten up in earlier stages of their battle with a relentless federal prosecutor.
 

"After running out of money after spending over $100,000, my local attorney discovered the Institute for Justice on the Internet," said Caswell."Had it not been for the Institute representing me pro-bono, I would have lost the motel and my livelihood."

While the Institute is a bulwark of the fight against asset forfeiture abuses, it is perhaps best known for its David vs. Goliath victory over billionaire Donald Trump in an Atlantic City eminent domain case in the 1990s. In that case, the Institute successfully represented a property owner whose land Trump wanted for a parking lot for his casino and hotel, blocking Trump's plan and saving the property.

The Caswell Motel case also opened a window on unsavory practices around asset forfeiture and raised questions of "policing for profit." Although Caswell attorneys argued -- and the court agreed -- that the family had cooperated with police to alleviate the drug problem, someone tipped the DEA to a potential target. The property had an estimated value of between $1.5 million and $1.8 million. Through the federal asset forfeiture "Equitable Sharing Program," state and local law enforcement agencies involved would have received 80% of the value of the Caswell property, with the feds reaping the other 20%.

"What the government did amounted to a grab for quick cash under the guise of civil forfeiture," said attorney Larry Salzman, another IJ attorney.

The workings of the asset forfeiture machine were partially revealed in the deposition of Vincent Kelly, DEA Special Agent in the New England office asset forfeiture unit. He testified under oath that his job was to look for high-dollar property with no mortgage to be forfeited. Kelly explained clearly how he checked the Registry of Deeds "to find out who owns the property and how much equity is on the property." Then, the DEA would contact local police to see how many drug arrests or other serious crimes been committed on the property.

Kelly said it was DEA policy to deal only with property worth at least $50,000.00. With Caswell Motel's worth between $1.5 and $1.8 million dollars, it was ripe for forfeiture since many drug arrests had occurred there.

In another sign that the motel had been the target of selective prosecution, defense attorneys and the Lowell Sun also uncovered evidence that at one point, narcotic officers and police made more arrests on the premises of Walmart, IHop, and Home Depot, nearby businesses also located off I-95 on Main Street. From 2010-2012, the attorneys said 19 drug arrests were made at Caswell Motel, with 24 drug arrests on Walmart's premises, 14 at Home Depot and five each at Applebee's and Burger King. But those are all deep-pocketed corporations with legions of lawyers; the Caswell family and its motel was not.

The Caswell Motel case is only an especially egregious example of asset forfeiture abuses. For years, attorneys, community activists, and advocacy groups, such as Forfeiture Endangers Americans Rights (FEAR) and Americans for Forfeiture Reform have been fighting to reign in such prosecutorial misconduct, and some progress has been made.

Some states implemented higher burdens of proof for police to seize property or acted to reduce the incentive to police for profit by directing that all or some seized funds go to the state general fund or education fund -- not straight into police coffers. And some states require an actual conviction before civil asset forfeiture can proceed.

But facing increasingly tougher standards and regulations, state and local law enforcement have learned to hand their cases over to the feds, ensuring that the cops get their cut under the equitable sharing program, but in effect robbing state governments of funds that should have gone to them. According to a Cato Institute study, as of 2008, the Justice Department's forfeiture fund reached $3.1 billion, with less than 20% of property seized coming from cases where the owners were prosecuted.

At the federal level, things are a bit better than they used to be, but it clear that room for abuse still exists, as the Caswell case demonstrates. Prior to federal asset forfeiture reform legislation passed in 2000, seizures could be made on mere suspicion that the property was involved in a crime. Once that happened, the property owner had to prove by a "preponderance of evidence" that the property was not involved in a crime.

Ironically, it was the attempted seizure of another motel, the Red Carpet Inn in Houston, Texas, that helped lead the way to passage of the Civil Asset Forfeiture Reform Act of 2000. In that case, the feds seized the motel in 1998, claiming it was a "drug haven."

Like Caswell, Red Carpet owner Jason Brice had complied with police by hiring security and allowing police to patrol his property, and had spent thousands of dollars to comply with law enforcement demands that the motel discourage drug dealing. But when Brice balked at raising room rates and then revoked permission for police to patrol the property, the feds moved in with a civil forfeiture claim. Brice won in court, but only after years of stress and hundreds of thousands of dollars in attorneys' fees.

Led by then Rep. Henry Hyde (R-IL) and inspired by cases like that of the Red Carpet Inn, Congress finally acted in 2000, passing the first effort to rein in asset forfeiture abuse at the federal level. The reforms include the "innocent owner" defense that Caswell successfully used in its trial.

But the civil asset forfeiture machine that grew out of Ronald Reagan's 1980s drug war keeps on humming. When the Department of Justice's Asset Forfeiture Fund to split seized goods with local and state law enforcement started in 1986, it took in $93.7 million. Last year, it took in $1.5 billion. That is a real and continuing incentive to pervert policing in pursuit of profits.

"It's like stealing your property in a hold-up without a gun," summed up Russ Caswell. "It goes back to our founding fathers. What happened to me was so un-American."

Someone needs to tell US Attorney Ortiz, who has not yet given up the fight for the Caswell Motel. On Tuesday, her office said "we are weighing our options with respect to appeal." They have until March 15 to file, and until then, Russ Caswell and his motel still aren't in the clear.

Federal Magistrate Rules for Harborside Medical Marijuana Dispensary

A federal magistrate in Oakland Monday ruled that landlords for the Harborside Health Center cannot stop it from selling medical marijuana in their properties in the cities of Oakland and San Jose. Federal Magistrate Maria-Elena James issued an order blocking the landlords from forcing Harborside to close its doors.

Harborside is the world's largest medical marijuana dispensary, serving 108,000 registered patients at its two locations. It was targeted by federal prosecutors as part of their ongoing crackdown on medical marijuana providers in states where it is legal.

Federal prosecutors targeted Harborside by threatening its landlords with seizure of their properties. In a bid to fend off asset forfeiture actions, the two landlords went to federal court to try to stop Harborside from engaging in "any unlawful activity," which, under federal law, includes selling medical marijuana.

But Magistrate James ruled that the landlords had no right to pursue such an action under federal law and she challenged the landlords' claims that their property values would be harmed by the sale of medical marijuana. Harborside has operated at the Oakland property since 2006 and in San Jose since 2009.

"Any damage or threat of harm to the (properties) resulting from Harborside's operations would have occurred when Harborside began its operations at the Oakland and San Jose locations," she wrote. "There is nothing in the record indicating that Harborside's continued operation compromises the existence, value or title of either the Oakland or San Jose property. Any argument about the urgency of stopping Harborside's activities rings hollow."

Harborside was joined in court by the city of Oakland, which argued that the federal government has missed the statute of limitations in the case and that closing Harborside would create a public safety risk by creating a black market for formerly available medical marijuana. The court did not rule on the city's motion to immediately enjoin the federal government from shutting down Harborside, but set a date for more hearings on that issue.

"We are grateful that Judge James carefully considered the facts and arguments in the Harborside case, and decided to grant us our day in court," said Harborside executive director Steve DeAngelo. "We have always believed that a Bay Area jury will recognize the value that Harborside brings to the community, and refuse to allow the federal government to seize the properties where we are located. We look forward to proving our case in front of a jury, and continue to believe we will prevail. In the meantime, we ask the Department of Justice to immediately freeze enforcement actions against Harborside and any other cannabis providers acting in full compliance with state law. Our nation's law enforcement officers should concentrate on real crime."

Harborside isn't out of the legal woods yet, though. The federal effort to shut it down remains alive, even though the dispensary won this skirmish. It has stated repeatedly that it will fight the battle to the end, and on that score, at least, nothing has changed.

"We are gratified that Judge James listened to and analyzed the parties' arguments so thoroughly and has now rendered an opinion that will ensure Harborside has the right to present its case to a jury," said Harborside attorney Henry Wysocki. "Despite the government's efforts to shortcut the case, Harborside will now be able to fully defend itself at trial. That is all we had asked, and the court has now agreed. The stage is now set for a jury trial on the underlying issues of the litigation, which will probably take place in about one year."

Oakland, CA
United States

Medical Marijuana Update

Dispensary wars continue in California, a package of restrictive bills passes in Michigan, and DC's long-awaited dispensaries are a step closer to opening.

California

Last Tuesday, a Sacramento dispensary operator pleaded guilty to federal drug charges. Bryan Smith, 28, had operated R&R Wellness Center that was first raided by local law enforcement and then turned over to the feds to prosecute. He and his colleagues got caught with more than 400 marijuana plants and $256,000 in cash. He agreed to a sentence of not less than five years in federal prison.

Also last Tuesday, Oakland Mayor Jean Quan said the feds should back off from trying to run Harborside Health Center out of business. The statement came in court filings ahead of a court date set for Thursday.

Last Thursday, two Bakersfield dispensaries sued Kern County, claiming they spent a total of $99,000 to set up under state and local laws, only to have the county fine them $100,000 for doing it. A third dispensary sued earlier, seeking the return of $280,000 in fines.Kern County passed an ordinance in 2009 removing restrictions on where medical marijuana dispensaries could operate. Under the new ordinance, dispensaries could operate anywhere in unincorporated areas except within 1,000 feet of a school. But last year, the county adopted two new ordinances: one banning cultivation of medical marijuana, and the other banning marijuana collectives from unincorporated areas, to take effect 30 days after adoption. The dispensaries want the county to pay for changing the rules on them and they want an end to efforts to ban them.

Last Friday, Murrieta officials shut down the Diamond Star Remedies dispensary for alleged code violations. The dispensary owner, John Szwec, said he had applied for a business license but been denied. Two other dispensaries -- Cooperative Medical Group and Greenhouse Cannabis Club -- that attempted to operate in the city have also since shut their doors.

On Tuesday, LA city officials said a referendum to keep most of the city's dispensaries had enough signatures to go to the voters. The Medical Marijuana Collectives Initiative Ordinance awaits verification of signatures, which could happen as early as January 2. At that point the Clerk will forward the initiative to the City Council, which can vote to make it law, call a special election, or place the matter before voters during the next scheduled election, which is May 21.Another referendum that would allow only 128 dispensaries has already been approved for a vote.

Also on Tuesday, Yuba County supervisors gave final approval to a medical marijuana ordinance. Growing on less than an acre would be limited to 12 mature plants with no more than six growing outdoors, and no more than 18 plants overall. Supervisors and grower advocates said in the long run, the ordinance should push growing out of residential areas and into more rural ones.

Also on Tuesday, the California Supreme Court said it had taken up the appeal of a Temecula dispensary. In City of Temecula v. Cooperative Patients Services Inc., the Riverside-based Fourth District Court of Appeal, Division Two, followed its pattern of denying an appeal from the clinic and upholding the city's preliminary injunction against its operation. But unlike others cases from that court, the vote was 2-1.

Colorado

Last Friday, three dispensaries in the town of Dacono sued to stay open. They asked the Weld County District Court to block the city's ban of marijuana-related businesses. Without legal protection, all three will have to shut down at the beginning of the new year. The town council passed a ban in June, but a petition drive will bring the issue to a vote next year. But it won't enable the dispensaries to stay open in the meantime.

On Monday, a medical marijuana grower sued the Larimer County sheriff after his 42 plants were destroyed. Kaleb Young was arrested and his plants and equipment seized during a drug raid even though he was in compliance with state law and had paperwork to prove it. He was acquitted of all criminal charges last year. His attorney, Rob Corry, said he would ask for $5,000 for each destroyed plant, based on sheriffs' estimates of the plants' value when they were seized. "Typically, the agency will preserve the plants as they're required to do under the (Colorado) constitution," Corry said. "Here, they just straight-up cut them down and destroyed them."

Massachusetts

Last Wednesday, a medical marijuana evaluation company said it has lost its lease after its landlord received negative feedback from local residents and businesses. California-based CannaMed had announced two weeks earlier that they would open a Framingham office by mid-month, but the building's owner, Jumbo Capital Management, terminated the lease after receiving letters from other tenants objecting to CannaMed moving in.

Michigan

Last Friday, the state legislature passed a package of bills adding restrictions to the state's medical marijuana law. HB 4834 says that registry cards will expire after two years, HB 4856 requires medical marijuana to be transported in the trunk of a car, and HB 4851 puts new limits on when doctors can recommend medical marijuana. Gov. Snyder (R) is expected to sign them, and they will take effect April 1 if he does.

Montana

On Tuesday, federal prosecutors agreed to drop six of eight charges against Chris Williams, who was set to be sentenced to 85 years or more after being convicted of marijuana cultivation and gun charges. Under the deal, the federal government dropped convictions for conspiracy to manufacture and possess with the intent to distribute marijuana; manufacture of marijuana; possession with intent to distribute marijuana; and three counts of possessing a firearm in furtherance of a drug trafficking crime. His convictions for one count of possessing a firearm in connection with drug trafficking and one count of possession with intent to distribute marijuana will stand. He faces a maximum term of five years for the distribution of marijuana charge and a mandatory minimum of five years -- and a maximum of life -- for the firearm-related charge. In return, he waives his right to appeal. He was a partner in Montana Cannabis, which was hit hard by DEA raiders in March 2011.

Washington, DC

On Tuesday, DC officials okayed the occupancy permits for the city's first medical marijuana cultivation center and dispensary. Medical marijuana is coming to the District; it's just taken 14 years since the voters approved it and three years since Congress stepped out of the way.

This Week's Corrupt Cops Stories

A small-town Florida department run amok loses its chief -- at least temporarily -- an Alabama cop gets caught delivering weed, four South Texas cops get caught running cocaine, and a Camden, New Jersey, sergeant goes down for a dope squad run amok there. Let's get to it:

In Bal Harbour, Florida, the Bal Harbour police chief was suspended last Wednesday after a US Justice Department report said the department had misspent millions of dollars in drug money it had seized. Chief Thomas Hunker, 61, has been suspended with pay while an outside law enforcement agency investigates. The Bal Harbour police had developed the habit of conducting undercover operations all over the country to target drug dealers and their cash. Records show the agency doled out $624,558 in payments to informants in less than four years, and ran up $23,704 in one month for cross-country trips with first-class flights and luxury car rentals. The feds have frozen millions that Bal Harbour police helped confiscate, and the Justice Department now wants the village to return more than $4 million. The Justice Department also accused Hunker of professional misconduct for, among other things, conducting unauthorized checks of national criminal records databases for individuals who did not have access to those systems; receiving multiple gifts from people who may have benefited from his influence; allowing a drunk individual to drive a marked police vehicle on a beach, getting a "sweet deal" on his wife's car purchase after the department bought several vehicles from the same dealer; allowing inflated overtime on money-laundering investigations; and improperly paying informants.

In Montgomery, Alabama, a Montgomery police officer was arrested last Wednesday after he was caught delivering more than three pounds of high-grade marijuana to a home in Mobile County. Officer Lyvanh Ravasong is charged with marijuana trafficking. Ravasong went down when he arrived at the residence at the wrong time -- as Mobile County Sheriff's deputies were executing a search warrant at the address. Ravasong is also believed to be associated with a 16-acre pot farm discovered in October near Chunchala. Officer Ravasong is now former officer Ravasong.

In McAllen, Texas, four South Texas lawmen were arrested late last week on charges they accepted thousands of dollars in bribes to guard shipments of cocaine. Mission Police Officer Jonathan Trevino, 29, and Hidalgo County Sheriff's deputies Fabian Rodriguez, 28, and Gerardo Duran, 30, were arrested last Friday, while Mission Police Officer Alexis Espinosa was arrested a day earlier. All four were members of an anti-drug trafficking task force called the Panama Unit, but are accused of instead providing protection for traffickers. Trevino is the son of Hidalgo County Sheriff Lupe Hidalgo. Federal prosecutors said they received a tip in August that task force members had been stealing drugs and set up a sting. The sting resulted in Duran and another task force member escorting 20 kilograms of cocaine north from McAllen, for which they were paid $4,000. The other task force members earned thousands more dollars for escorting four more cocaine shipments in November. It's unclear what the actual charges are, but all four were being held on $100,000 bonds.

In Camden, New Jersey, a former Camden police sergeant was sentenced last Wednesday to eight months in federal prison for his role as the supervising officer of a corrupt anti-drug squad that stole cash, conducted illegal searches, planted drugs and falsified reports. Dan Morris, 49, had previously pleaded guilty to conspiracy to deprive others of their civil rights. He admitted that between May 2007 and September 2008, he conducted illegal searches without a warrant or consent, obtained coerced consents to search residences based on threats and undue pressure, stole money during illegal searches and arrests, and allowed officers he supervised to include facts in police reports that were false. Morris is the third Camden officer to plead guilty in the conspiracy, while a fourth was found guilty at trial, and a fifth was acquitted. The FBI probe of the conspiracy has resulted in the reversal of about 200 drug convictions of suspects arrested by the unit between 2007 and 2009, when the cops were arrested. Morris, a city officer since 1986, was the unit’s supervisor during the time of the investigation.

HSBC Bank Admits Cartel Money Laundering

The London-based HSBC Group, Europe's largest banking entity, has agreed to forfeit $1.256 billion and pay an additional $600 million-plus in fines for laundering money for Mexican drug cartels and other objects of American ire, federal officials announced Tuesday. The agreement was part of a deal to avoid criminal prosecution of the bank by the Justice Department and will result in deferred prosecution provided the bank lives up to its agreements with the Justice Department.

The bank was accused of violating the Banking Secrecy Act, the International Emergency Economic Powers Act, and the Trading with the Enemy Act -- the latter two types of violations having to do with its transactions on behalf of customers in Cuba, Iran, Libya, Sudan, and Burma, all of which were subject to sanctions enforced by the Office of Foreign Assets Control at the time of the violations. The Banking Secrecy Act violations have to do with the banks laundering of at least $881 million for Mexican drug trafficking organizations.

"HSBC is being held accountable for stunning failures of oversight -- and worse -- that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more in transactions with sanctioned countries," said Assistant Attorney General for Criminal Affairs Lanny Breuer. "The record of dysfunction that prevailed at HSBC for many years was astonishing. Today, HSBC is paying a heavy price for its conduct, and, under the terms of today's agreement, if the bank fails to comply with the agreement in any way, we reserve the right to fully prosecute it."

"Today we announce the filing of criminal charges against HSBC, one of the largest financial institutions in the world," said US Attorney for Eastern New York Loretta Lynch. "HSBC’s blatant failure to implement proper anti-money laundering controls facilitated the laundering of at least $881 million in drug proceeds through the US financial system. HSBC's willful flouting of US sanctions laws and regulations resulted in the processing of hundreds of millions of dollars in OFAC-prohibited transactions. Today's historic agreement, which imposes the largest penalty in any BSA prosecution to date, makes it clear that all corporate citizens, no matter how large, must be held accountable for their actions."

HSBC may have been slapped with the largest penalties ever, but it is hardly the only bank to have been caught profiting off prohibition. In 2010, Wachovia forfeited $110 million to avoid criminal prosecution for money laundering for the cartels, Sigue Corporation forfeited $15 million in 2008, American Express International Bank paid $65 million in fines and Union Bank of California forfeited $21.6 million in 2007, and Bank Atlantic paid a $10 million fine to avoid prosecution for laundering drug cartel profits in 2006. Like HSBC, all of those banks agreed to reform their banking practices and submit to federal oversight as part of the agreement.

HSBC is accused of under-staffing its anti-money laundering program and failing to monitor billions of dollars in purchases of physical dollars by its Mexican affiliate, HSBC Mexico. It reportedly failed to monitor over $670 billion in wire transfers and the purchase of over $9.4 billion in US dollars.

According to the Justice Department, "HSBC Mexico's own lax AML controls caused it to be the preferred financial institution for drug cartels and money launderers."

The unanswered question is why a government that lets bankers who launder hundreds of millions of dollars of drug profits routinely sends crack-slingers to federal prison for decades for selling a few dollars worth of drugs. Perhaps if those drug dealers had a few million dollars they could hand over to the feds, they could walk, too.

New York, NY
United States

Medical Marijuana Update

It's been a relatively quiet week on the medical marijuana front, with the big news being the DC Circuit Court's interest in determining whether Air Force vet Michael Krawitz has standing to challenge the federal government's refusal to reschedule marijuana. But that isn't all. Let's get to it:

National

On Monday, plaintiffs in the federal marijuana rescheduling case filed an additional brief at the court's request after it heard oral arguments last week. In the case Americans for Safe Access v. Drug Enforcement Administration, the DC Circuit issued an order last week seeking details on the harm sustained by plaintiff and disabled US Air Force veteran Michael Krawitz as a result of the federal government's policy on medical marijuana. The federal appeals court will use this additional briefing to decide whether the plaintiffs have legal "standing" to bring such a lawsuit against the government. The lawsuit argues that the government has acted arbitrarily and capriciously by keeping marijuana classified as a Schedule I substance, a dangerous drug with no medical value. By ignoring the overwhelming scientific evidence, ASA argues that the federal government has kept marijuana out of reach for millions of Americans who would otherwise benefit from its therapeutic value.

Arizona

Last Friday, a lawsuit against Maricopa County officials for refusing to process dispensary applications got underway. The White Mountain Health Center filed a lawsuit against Maricopa County after it refused to provide documentation and information required in order to obtain a dispensary permit under the voter approved 2010 Arizona Medical Marijuana Act. White Mountain was the first to apply for a dispensary permit under county jurisdiction, but Maricopa County DA Bill Montgomery opposes the Arizona Medical Marijuana Act because he says it would force public employees in Arizona to violate federal drug laws that prohibit the use, sale and cultivation of marijuana. Lawyers from the ACLU, who are representing White Mountain, argued that the state has the right to have a medical marijuana law, and that the federal government has not punished officials in any of the other 17 states where it is legal. The case continues.

California

Last Friday, San Francisco's first unionized dispensary opened. The Mission Organic Center applied for its permit more than three years ago, but had to navigate the permit process and overcome an appeal at City Hall before opening. Dispensary owner Eugene Popov has been paying rent on the storefront the whole time, as well as shelling out $10,000 in permit fees. The United Food and Commercial Workers Local 5 has supported the dispensary throughout the process and now has the union shop dispensary in the city.

Also last Friday, neighbors of a Berkeley dispensary threatened to sue the building owner if the dispensary does not stop "all illegal drug activities at the location" associated with the Perfect Plants Patient's Group. Residents complained of bags from the business in neighborhood yards, drug deals openly occurring on the street and kids loitering and smoking marijuana, all of which they attribute to the continued operation of the dispensary. The city is contemplating ordering the dispensary shut down, but the neighbors issued their lawsuit threats because they felt the city wasn’t moving fast enough. The dispensary is not on the city's list of permitted dispensaries.

On Wednesday, the San Francisco Weekly revealed that Mayor Ed Lee blocked a plan to let shuttered dispensaries operate on city property. The number of dispensaries in the city has shrunk from 30 to 20 under the federal onslaught, and city officials had bruited about the idea of letting some of them open on city property while they sought new locations. But Lee's office nixed the idea earlier this month, according to emails retrieved by the Weekly.

Late Wednesday afternoon, an alert went out on the San Diego Americans for Safe Access email list saying San Diego's only known dispensary, Next Generation on San Ysidro Boulevard, was being raided. The dispensary is "currently under attack and in full raid condition," the alert said.

Michigan

On Wednesday, a Big Rapids medical marijuana provider was sentenced to federal prison. John Clemens Marcinkewciz was a registered caregiver when he was arrested on state charges, which were then handed off to the feds. After the federal court ruled that he could not mention the state's medical marijuana law in his defense, he pleaded guilty to conspiracy and manufacture of 100 or more marijuana plants. While there was no word at press time what sentence he received, he was looking at at least a five-year mandatory minimum.

Oregon

Last week, Lane County authorities filed an asset forfeiture complaint against a dispensary they raided in August. They hit Kannabosm on August 30 and arrested the owner, Curtis Shimmin, on marijuana and money laundering charges. The store had been open for a year. Now, they want to seize $60,637 in cash, Shimmin's personal automobile, and an ATM machine that was at the business. Shimmin had argued that cash-for-marijuana transactions were not illegal under the Oregon Medical Marijuana Act because they were not technically sales, but compensation to growers for their expenses. Lane County begged to differ.

Medical Marijuana Update

The end of dispensaries in LA looms, more federal threat letters in Colorado, and a medical marijuana initiative in North Dakota!? That's just some of the news. Let's get to it:

National

Last Thursday, Rep. Barbara Lee (D-CA) and eight initial cosponsors introduced HR 6335, the States' Medical Marijuana Property Rights Protection Act, in an attempt to stop the seizure of property from landlords of state law-compliant medical marijuana businesses. The bill would prohibit the federal government from using the civil asset forfeiture statue to go after real property owners if their tenants are in compliance with state medical marijuana law. The bill is a response to the use of threat of asset forfeiture by US Attorneys in California in their campaign to shut down dispensaries, including the state's largest dispensary, Harborside, last month.

Arizona

On Monday, Arizona Attorney General Tom Horne said the state should not authorize dispensaries because they could violate federal law. His advice came in the form of an official opinion crafted by lawyers in Horne's office, following requests for the opinion by law enforcement officials. He also wrote that he expected the courts to settle the matter and that he would not seek to block Tuesday's lottery for dispensary applicants.

On Tuesday, state officials conducted the lottery, awarding applicants in 68 dispensary districts preliminary approval to move forward with the permitting process. More than 400 applications had come in for those districts. In another 29 districts, there was only one applicant. State officials say some dispensaries could open within weeks if they are already well along in their planning processes.

California

Last Wednesday, LA Mayor Antonio Villaraigosa signed the ordinance banning dispensaries. The measure, approved by the City Council a week earlier on a 14-0 vote, will take effect within 30 days. The so-called "gentle ban" will still allow patients and caregivers to grow their own, but is designed to eliminate the estimated 500 dispensaries in the city. Organizers from the UFCW Local 77 were already discussing plans for a referendum asking voters to allow some dispensaries.

Also last Wednesday, LAPD raided a Woodland Hills dispensary and an associated private residence, seizing 50 pounds of marijuana and arresting one person. The dispensary was West Valley Caregivers on Ventura Boulevard. Police said to report that they were working their way east on Ventura "so hopefully some of these will shut down without us having to do all this work."

Last Thursday, Lake County officials are using nuisance abatement procedures adopted a month ago under an interim urgency ordinance to shut down large grows in the county. As of last Thursday, 19 grows had been shut down, 2,000 plants removed, and seven people arrested. The enforcement actions come as a local judge issued a temporary restraining order stopping them from being inflicted on the four plaintiffs in the case, but only them.

Last Friday, a Riverside County judge ruled that the county cannot ban dispensaries in unincorporated areas. Judge Ronald L. Taylor said the county's outright ban on dispensaries leaves no room for dispensaries to operate legally under state law. A county attorney vowed to appeal.

Also last Friday, the Tax Court ruled a dispensary operator could not deduct business expenses. The ruling came after the IRS went after Martin Olive, owner of the Vapor Room Herbal Center in San Francisco, which was forced out of business at the end of July after its landlord received letters threatening asset forfeiture from US Attorney Melinda Haag. The federal tax code precludes a deduction of any amount for a trade or business where the "trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances… which is prohibited by federal law." Olive argued unsuccessfully that the provision did not apply because his business was not the illegal trafficking of a controlled substance, but was operating legally under state law.

Colorado

Last Friday, US Attorney John Walsh sent threat letters to 10 more dispensaries. This is the third batch of letters containing threats of prosecution or asset forfeiture directed at dispensaries. The first two rounds led to the closing of 47 of them. The letter said all of the targeted dispensaries were within 1,000 feet of schools. They have 45 days to shut down or face asset forfeiture actions.

Also last Friday, the DEA claimed medical marijuana is being diverted into illegal trafficking. It cited some 70 cases of Colorado medical marijuana ending up in 23 different states. Medical marijuana defenders responded that 70 cases wasn't that many, that the state's industry is tightly-regulated, and that there was marijuana in those states before Colorado had a medical marijuana program.

New Jersey

Patients in the Garden State will be able to register for medical marijuana cards beginning Thursday of this week, according to NBC New York. "It's the first time the department will be interacting directly with potential patients and their caregivers," state Health Commissioner Mary O'Dowd told the Associated Press. Greenleaf Compassion Center in Montclair has begun to grow marijuana and will open its doors to patients in the fall.

North Dakota

On Monday, proponents of a statewide medical marijuana initiative handed in signatures. They need 13,500 valid signatures to make the November ballot. They handed in 20,000. State officials have about a month to validate signatures and see if the initiative made it.

Washington

On Tuesday, the state Health Department charged two naturopaths with unprofessional conduct for running "an assembly line" for medical marijuana approvals at last year's Hempfest. The pair, who were featured in a Seattle Times story last August, saw 216 potential patients and approved 214 of them after cursory exams. The charges are believed to be the first against any medical professional in the state over medical marijuana recommendations.

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