California medical marijuana operation targeted by feds

Article from L.A. Times
By Joe Mozingo, Los Angeles Times

The federal government is moving to shut down the nation's largest and highest-profile medical marijuana dispensary operation, filing papers to seize properties in Oakland and San Jose where Harborside Health Center does business.

Copies of the federal Complaint for Forfeiture were taped to the front doors of the two dispensaries Tuesday, alleging that they were "operating in violation of federal law."

Medical marijuana advocates, as well as some state and local officials, decried the action, saying it hurts patients in legitimate need of the drug and breaks repeated promises by President Obama's Justice Department that it was targeting only operations near schools and parks or otherwise in violation of the state's laws.

The U.S. attorney for Northern California, Melinda Haag, said she now found "the need to consider actions regarding marijuana superstores such as Harborside" because they presented unique opportunities for abuse.

Harborside was co-founded by outspoken marijuana activist Steve DeAngelo in 2006 and was the subject of a reality show, "Weed Wars," on the Discovery Channel last year. While other dispensary operators have sought a low profile since California's four U.S. attorneys began cracking down on the industry in October, DeAngelo has consistently railed against the federal intervention, advocated for better state regulations and become a leader in the movement.

"People are not going to stop using cannabis, they're just going to buy it in the illegal marketplace … on the streets," he said Wednesday in an interview. "Why are federal prosecutors using their discretion to do something so profoundly destructive?"

DeAngelo said that he would fight the Justice Department "openly and in public" and that he would resist any effort by his landlords to evict the dispensaries in response to the federal complaint — which targeted the property owners, not the tenants.

While all marijuana use and sales are illegal under federal law, Atty. Gen. Eric H. Holder told the House Judiciary Committee last month that federal agents were targeting only those large-scale growers and dispensaries that have "come up with ways in which they are taking advantage of these state laws, and going beyond that which the states have authorized."

In a statement released late Wednesday, Haag suggested "superstores such as Harborside" fit that bill.

"The larger the operation, the greater the likelihood that there will be abuse of the state's medical marijuana laws, and marijuana in the hands of individuals who do not have a demonstrated medical need."

She noted that Harborside claims to have "over 108,000 customers."

California's medical marijuana laws are nebulous in regard to how the drug is to be distributed and courts have yet to settle the matter. Still, marijuana activists often hail Harborside as a model of professionalism and compliance. Its main facility in Oakland is one of four independent enterprises permitted and strictly regulated by the city.

"If Harborside is not in compliance with state law, no one is," said DeAngelo, 54.

The Oakland dispensary was awarded its permit in 2006 after the city put out a request for proposals. DeAngelo says it does about $22 million in annual sales, and the San Jose shop does about $8 million. Together they pay about $3 million in city and state sales taxes, and employ more than 100 people.

The state Board of Equalization estimates it collects $58 million to $105 million in annual sales tax from dispensaries.

"If we continue to drive everything underground, we're going to create an unsafe environment for patients who need this product … and lose revenue," board member Betty Yee said.

This week's move against Harborside further highlights the continuing conflict between local and federal officials over the drug.

"The city of Oakland has developed a system to assure such distribution occurs according to state law in a fair and orderly process," Nancy Nadel, member of the Oakland City Council and vice mayor of the city, said in a statement. "It is most unjust to our citizen patients and distributors who have followed local guidelines to be harassed and treated as criminals by federal officials."

Medical marijuana advocates said the Obama administration has repeatedly reneged on its promises that it would not meddle with the state laws.

"This is the most obvious and significant step by the federal government in attacking completely law-abiding dispensaries," said Kris Hermes, spokesman for the advocacy group Americans for Safe Access. "It becomes more untenable for them to say they are just going after certain facilities and not just undermining the state's marijuana laws."

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Calif. Democratic treasurer perpetrated $7M fraud

By TOM VERDIN and DON THOMPSON
Associated Press
Published: Tuesday, Mar. 27, 2012 - 10:20

SACRAMENTO, Calif. -- Democratic campaign treasurer Kinde Durkee defrauded at least 50 candidates, officeholders and political organizations out of $7 million in a scheme that dates back more than a decade, according to a court filing made Tuesday by federal prosecutors.

The U.S. attorney's office in Sacramento filed the additional charges in federal court, providing the most detailed account to date in a case that has left some Democratic candidates scrambling for campaign cash in an election year.

Such filings typically are a prelude to a plea, but prosecutors would not confirm such a development or offer any further details.

Durkee, who heads Durkee & Associates in Burbank, was arrested in September and charged with suspicion of mail fraud after millions of dollars disappeared from the campaign accounts of U.S. Sen. Dianne Feinstein, other Democratic members of Congress and several Democratic state lawmakers.

The filing details a complex shell game in which Durkee shifted campaign money to cover an array of personal and business expenses.

In one example, $23,000 taken from Feinstein's account was used to help pay American Express credit card charges from the Los Angeles Dodgers, Amazon.com, Disneyland, Trader Joe's and Turners Outdoorsman.

Other misappropriations from Feinstein's account covered payments for a Long Beach condominium owned by Durkee and to the 401(k) plan for her employees.

The court filing said Durkee had devised a scheme from January 2000 until she was arrested last September "to defraud clients of Durkee & Associates, and to obtain money from them by means of materially false and fraudulent pretenses, representations and promises."

It said she had signature control over roughly 700 bank accounts, including those used by political campaigns.

Durkee's attorney, Daniel Nixon, did not return telephone and email messages Tuesday evening.

John Kevin Vincent, the assistant U.S. attorney listed as the chief prosecutor in the case, declined to discuss the material in the latest filing and would not say whether a plea deal was in the works.

"When we get to that point, we'll send out a notification," Vincent said.

Durkee was scheduled to appear in court Friday afternoon at a hearing that had been set before Tuesday's developments.

She has been accused of looting the accounts of dozens of Democratic officeholders, candidates and political organizations. Prosecutors also say Durkee filed false information with the Federal Election Commission and the California Secretary of State, which track campaign contributions and expenditures.

Read more here: http://www.sacbee.com/2012/03/27/4371582/prosecutors-filing-hints-at-plea.html#storylink=cpy

Read more here: http://www.sacbee.com/2012/03/27/4371582/prosecutors-filing-hints-at-plea.html#storylink=cpy

Pelosi's Daughter Blasts Welfare System

Nancy Pelosi’s daughter, who courted conservative controversy with a video short showing the sometimes racist views of toothless Mississippi rednecks, has enraged liberals with a second video: New York welfare recipients.

But Alexandra Pelosi admits it wasn’t easy getting the video on television. “All the people I work with at HBO, all the people I grew up with, said, ‘You can’t put that on TV.’

“Somehow [I was] allowed to do it to the toothless rednecks, but when it was our neighbors, it was wait a second, they got defensive,” she told Bill Maher on his HBO show, “Real Time.”

The people Pelosi interviewed at a welfare office on New York City’s 14th Street, admit they don’t want a job, and support President Barack Obama “because he gives me stuff,” and “because he’s black.”

One man smokes and drinks Budweiser through a straw as he stands on line. He laughs as he admits to having five children by four different mothers. He tells Pelosi, “I’m here to get a check … whatever they’ve got to offer, it’s not like they’ve got a checklist … I’m just here to get what I can get.”

Pelosi was attacked by conservatives for being selective in the people she depicted in her video from Mississippi. One man in that video said, “This is America, our president should be American, not Muslim.”

Pelosi said the film showed the entitlement culture is causing problems for the party her mother leads in the House. “We have to address the fact that this is why Democrats are losing ground. And this is a problem in America. The entitlement culture has gotten so big that we are losing our own people,” she said.

The Emmy-nominated documentary maker also predicted outrage among her fellow liberals, saying she expected “a left-wing feeding frenzy” about her report.

Reaction to the video was swift.

© 2012 Newsmax. All rights reserved.



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Bay Area Wakes Up To Magnitude 4.0 East Bay Quake

EL CERRITO (CBS 5 / KCBS) — An earthquake with a magnitude of 4.0 shook the Bay Area at 5:33 a.m. on Monday.

The shallow quake was centered a mile north of El Cerrito, two miles from Richmond, four miles north of Berkeley and 13 miles from San Francisco City Hall.

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San Jose meth bust: 750 lbs

A Palo Alto police investigation into stolen iPads has led to one of the largest methamphetamine busts in the country's history, federal investigators said Saturday.

Police and federal agents seized 750 pounds of methamphetamine, with an estimated street value of $34 million, from a San Jose apartment Thursday after Palo Alto investigators spotted the drugs while following up on stolen iPads, according to the U.S. Drug Enforcement Administration.

The bust "is one of the largest we are aware of," DEA Special Agent Casey Rettig said.

Investigators found "boxes and boxes and boxes containing bags and bags and bags of methamphetamine" inside the apartment, Rettig said.

The 750 pounds, or 340 kilograms, of methamphetamine confiscated in San Jose is equal to about 16 percent of all methamphetamine seized across the country last year, according to figures on the U.S. Department of Justice website.

Three people were arrested on state drug violations after the raid on an apartment in the 4400 block of Woods Drive, authorities said. They have not released their identities. Rettig described the investigation as "very fluid" and said "there is definitely the potential for more arrests."

The home is part of the Woods, a subdivision in south San Jose that its website highlights as a "park-like setting of mature trees, formal landscaped gardens, greenbelts and tranquil ponds maintained to award-winning standards."

Palo Alto detectives pursuing the electronics theft conducted a preliminary search of the apartment and saw "a large quantity of methamphetamine," according to the DEA. They then called in help from San Jose police and the Santa Clara County district attorney, who called the DEA.

Investigators believe the home was being used both as a residence and as a laboratory where powdered methamphetamine was converted into a crystal form, also referred to as "ice." Such methamphetamine has an appearance often described as that of broken glass or shattered ice and is ingested by smoking, federal officials said.

Rettig said it was too early in the investigation to link the lab to known drug cartels or trafficking networks, but she indicated that the trend in large methamphetamine busts in Central and Northern California involves ice conversion labs for drugs primarily smuggled in from Mexico.

Last month, the Mexican army seized 15 tons of pure methamphetamine with an estimated U.S. street value of $4 billion. The sheer size of the haul from that raid in western Mexico "could potentially put a huge dent in the supply chain in the U.S," DEA spokesman Rusty Payne said at the time.

Investigators in the San Jose raid also found stolen items that had initially led Palo Alto police there, Rettig said, including iPads.

Chronicle news services and San Francisco Chronicle staff writer Jill Tucker contributed to this report.

John Coté is a San Francisco Chronicle staff writer.