Pubdate: Sat, 09 Dec 2000
Source: Alameda Times-Star (CA)
Copyright: 2000 MediaNews Group, Inc. and ANG Newspapers
Contact:  66 Jack London Sq. Oakland, CA 94607
Website: http://www.newschoice.com/newspapers/alameda/times/
Authors: Josh Richman and Jeff Chorney, Staff Writers
Note: Staff Writer Robert Gammon Contributed To This Report.

OFFICIALS SAY RAID AND 10 ARRESTS WILL SLOW METH TRADE

East Bay Chemical Wholesaler Shut Down

A Hayward chemical wholesaler has been shut down and 10 people have been 
arrested in a case law-enforcement authorities say will put a huge dent in 
California's methamphetamine trade.

Federal and state drug agents and local police served search warrants early 
Thursday morning on seven sites in Oakland and one each in Hayward, San 
Leandro and East Palo Alto. At the top of the list was All Discount 
Laboratory Supply on American Avenue in Hayward, which has been under 
investigation for conspiracy to sell chemicals used in making methamphetamine.

"I would not be surprised to see a tremendous drop in the amount of illicit 
methamphetamine on the streets of Northern California ... until the 
manufacturers can find another source of these chemicals to start over 
again," said Bob Elsberg, senior special agent in charge of the state 
Bureau of Narcotics Enforcement's San Francisco office.

Alameda County Narcotics Task Force Lt. Paul Wallace said All Discount 
supplied freon to major methamphetamine producers statewide.

"The chemicals that these guys were (selling) were going to big labs ... in 
the Central Valley. They literally had hundreds of dump sites," Wallace 
said Friday, referring to investigators' finding empty, five-gallon freon 
cans with All Discount markings as far away as San Diego and Los Angeles.

Wallace and Lowery Leong, assistant special agent in charge of the Drug 
Enforcement Administration's San Francisco office, would neither confirm 
nor deny the case's possible links to Russian organized crime, but Wallace 
said the investigation continues and it "could go higher."

The investigation also probably will delve into whether All Discount was 
set up from the start as a criminal "front," and whether it received its 
chemicals legally.

All Discount's co-owner, Mark Alexander Kesel, 43; its manager, Vladimir 
Kotlyarenko, 43; warehouseman William Albert Gifford, 44; and employee 
Diane Marie Engle, 43, were arrested and charged with unlawful distribution 
of a chemical that can be used to make a controlled substance; aiding and 
abetting methamphetamine manufacture; and conspiracy. If convicted, they 
could face 10 years to life in federal prison and up to $4 million in fines.

Also arrested on similar charges were six members of what Elsberg called a 
Mexican methmaphetamine-making ring. They are Arnulfo Ochoa Navarro, 33; 
Maria Dolores Silva Navarro, 31; Juanita Navarro, 25; Jose Manuel Navarro, 
23; Domingo Lopez, 19; and Cristobal Vera Sandoval, 23.

Elsberg said this group has bought 24,000 gallons of freon since 1997 -- 
enough to make about 34 tons of methamphetamine, worth about $297 million 
on the street. In that same time, All Discount provided almost all of 
California's freon supply, Elsberg said; it bought 58,000 gallons of freon 
for resale, which is enough for 87 tons of methamphetamine worth $696 million.

U.S. Magistrate Judge Wayne Brazil of Oakland on Friday ordered all 10 
defendants jailed at least until a bail hearing next Wednesday.

Methamphetamine, a stimulant also known as "crank" or "speed," is most 
often snorted, smoked or injected and can be made in small labs from 
chemicals and over-the-counter drugs. Freon is used in the final stages of 
production, causing the pure form of the drug to separate from other 
chemicals. "Freon doesn't have that much of a legitimate use today," 
Elsberg said, adding it's needed in relatively small amounts for 
refrigeration, air conditioning and other uses. He said police guess about 
90 percent of the freon All Discount sold was going to methamphetmine 
producers.

Elsberg said agents who raided All Discount on Thursday seized 37 55-gallon 
drums full of freon, and about as many empty drums.

He also said that while almost nine out of 10 methamphetamine labs seized 
in California last year were not operated by Mexican nationals, those that 
were operated by Mexican nationals were much bigger operations, accounting 
for 90 percent of the state's total meth production.

Hayward Police narcotics squad Sgt. Tom Perry noted methamphetamine labs 
are dangerous: the chemicals are highly explosive, and the drug-making 
process produces toxic gases. Hayward finds five to eight such labs each 
year, he said.

All Discount registered with the state as a company in 1995 and opened in 
Hayward in 1996, taking out a hazardous materials storage permit, according 
to Hayward Fire Department records. Since then, inspectors have regularly 
visited the site and have not found any major violations, records show. The 
most recent inspection was Sept. 19; inspectors found only routine code 
violations.

The United States Business Directory lists All Discount as a chemical 
retail company doing $500,000 to $1 million in sales each year. It has a 
"satisfactory" credit rating.

Staff Writer Robert Gammon Contributed To This Report.
- ---
MAP posted-by: Jo-D