Pubdate: Tue, 11 Mar 2014
Source: Denver Post (CO)
Copyright: 2014 The Denver Post Corp
Author: John Ingold
Page: 4A
Bookmark: (Asset Forfeiture)


In a Forfeiture Action, Federal Prosecutors Want to Seize $850,000 and
a Marijuana Warehouse.

Federal prosecutors are seeking to seize more than $850,000 from a
Denver medical marijuana business in one of the largest civil
forfeiture actions ever taken against the cannabis industry in Colorado.

The attempted seizure stems from a major indictment last year in state
court of a dozen people tied to several medical marijuana
dispensaries. The forfeiture complaint, which was filed in February
but only unsealed Monday, seeks to seize money held in bank accounts
of several people-including some of those indicted in the state case.
Federal prosecutors are also trying to seize a warehouse at 5105 E.
39th Ave. in Denver, where they allege marijuana was illegally grown
and distributed to three dispensaries mentioned in the state indictment.

"The warehouse and money that is the subject of this forfeiture action
were proceeds of an illegal scheme perpetrated by certain individuals
who were not only violating federal law, they were violating Colorado
state law," Colorado U.S. Attorney John Walsh said in a statement.

The Colorado attorney general's office announced the 71-count state
court indictment last June. The indictment accuses the owners and
others connected to three dispensaries - Jane Medicals and Higher
Health Medical in Denver and All Care Wellness Centers in Lakewood -
with using the stores as fronts for an investment scam and an illegal
pot-growing operation. Among the specific allegations, the indictment
accuses one of the dispensaries' owners, Conley Hoskins, of setting up
illegal residential marijuana grows to supply the stores and of
selling pot to people without medical marijuana cards.

Hoskins' lawyer at the time, Steve Peters, denied the

"The attorney general's indictment is full of tortured and baseless
allegations," Peters said last June.

The civil forfeiture complaint filed in federal court repeats some of
the details contained in the indictment, but it does not make specific
allegations of state law violations. Because all marijuana cultivation
and distribution is illegal under federal law, federal prosecutors do
not have to prove the businesses violated state law in order to seize
their assets.

Aspokesman forWalsh said prosecutors believe the businesses involved
violated at least two of the eight factors the deputy U.S. attorney
general listed in a memo outlining when federal authorities would
intervene in state marijuana-legalization efforts.

The forfeiture complaint also adds new details about the businesses
and the warehouse on East 39th Avenue.

According to the complaint, the warehouse's two owners - David Krause
and Janet Joyce - spent about $300,000 to renovate the warehouse for
marijuana growing and then leased it to Hoskins. The warehouse had an
average monthly power usage of 47,588 kilowatt hours and produced
about 1,400 pounds of marijuana between October 2011 and May 2013,
according to the complaint. The three dispensaries the warehouse
supplied did an estimated $4.6 million in sales, the complaint alleges.

Joyce was not charged in the state indictment. The case against
Hoskins is ongoing, according to state court records. Krause has
pleaded guilty in state court to filing a false tax return and
illegally cultivating marijuana, according to the federal forfeiture

According to records from the Colorado Marijuana Enforcement Division,
two medical marijuana dispensaries- Higher Health Medical and Tea
Alchemy in Nederland - have applied to grow marijuana at the warehouse
on East 39th Avenue. According to the forfeiture complaint, Tea
Alchemy has closed.

Despite the indictment and the federal complaint, all the dispensaries
connected to the warehouse are listed in state records as "operational
pending" - meaning they are allowed to stay open while state
regulators decide whether to deny their license applications.
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