Marijuana: Feds file to take David Krause's pot warehouse, $850K in seized funds
In June 2013, we told you about a 71-count indictment accusing businessman Conley Hoskins and eleven others with defrauding investors who wanted to cash in on the state's booming medical marijuana industry.
Big photos and more below.
That move was taken by the Colorado Attorney General's Office, but now, the feds are getting involved. The U.S. Attorney's Office has filed a forfeiture action to take a marijuana warehouse owned by indictee David Krause, seen here, plus $850,000 in seized funds. Photos, documents and details below.
At the time of last year's indictment, as we've reported, Carolyn Tyler, spokeswoman for Colorado Attorney General John Suthers, said, "Just as we suspected, a medical marijuana business was perpetrating fraud. Through tight oversight by the Department of Revenue, this elaborate scheme was exposed and will be prosecuted."
In addition to Krause, the 2013 indictment, on view below, names Conley Hoskins of Jane Medicals, as well as Dallan Dirkmaat, Brenden Joyce, Yesenia Melendez, Audra Wimer, Kurt Criter, Nathan Newman, Ryan Tripp, Carols Meza, Dialyne Parker and The People's Law Firm.
According to that document, Hoskins, attorney Dirkmaat and Dr. Gerald Searle grew up together in Idaho, and the longstanding friendship of Hoskins and Dirkmaat led them to take part in joint business ventures that included construction and car washes in addition to dispensaries. Specifically, the offices for the dispensaries shared space with Dirkmaat's law firm. Searle, for his part, moved his base of operations to the Jane Medicals building, making it easier to write referrals for the dispensary.
As Hoskins began to concentrate on medical marijuana, the indictment alleges that his "plan to expand his marijuana businesses through investments took a turn down the criminal path. This path included defrauding those same individuals who sought to partner or invest with Mr. Hoskins as he expanded his marijuana businesses."
A banner from the Jane Medicals website.
Criter, identified as an established businessman, is said to have been charged with creating a prospectus that was provided to investors and potential partners -- among them individuals outside the State of Colorado. But prosecutors say the information wasn't entirely genuine: "This prospectus included false sales figures, assets and liabilities and made numerous material omissions."
And what did Hoskins and company supposedly do with the cash they collected? According to the indictment, it wasn't poured into the dispensaries but "diverted for other unrelated purposes, including but not limited to paying off personal debts and business debts on the likes of car washes owned by Mr. Hoskins."
This image of Conley Hoskins golfing is cropped from a photo that appears on Black-Tie Colorado's website.
The indictment's narrative also maintains that "several members of the enterprise engaged in money laundering and tax evasion. These actions allowed enterprise members to hide their illicit proceeds from law enforcement and/or taxing authorities and to expand their marijuana production capabilities. Despite taxable earnings and/or taxable sales, others achieved similar goals of hiding their illegal marijuana proceeds or collected sales tax from law enforcement and/or taxing authorities by filing false returns or simply failing to collect or pay over trust taxes.
"Some members even used portions from the proceeds from their illegal sales of marijuana and tax schemes to pay for personal items, including but not limited to vehicles and debt on other businesses."
Assertions like these form the core of the U.S. Attorney's Office forfeiture complaint, which names several banks with which the defendants are said to have worked. But the focus is the warehouse owned by Krause, who was allegedly concerned that illegal activities would splash back on him.
Continue for more about the marijuana warehouse seizure filing, including photos and documents.