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Appeals court upholds Modesto pot convictions

  1. Terrapinzflyer
    A federal appeals court has upheld the convictions of two Modesto men for using their medical marijuana dispensary for drug trafficking.

    The 9th U.S. Circuit Court of Appeals on Tuesday affirmed the 2008 verdict that found Luke Scarmazzo and Ricardo Montes guilty of running a criminal enterprise, manufacturing marijuana and possessing the drug with intent to distribute.

    The court also determined that the men's sentences — nearly 22 years for Scarmazzo and 20 years for Montes — were not disproportionate to their crimes.

    Drug Enforcement Administration officials say records at the dispensary, called the California Healthcare Collective, showed the two 29-year-olds made more than $9.2 million in marijuana sales from 2004 until September 2006.

    Tuesday, January 4, 2011



  1. CaptainTripps
    While I do not support marijuana prohibition in any way, I do believe that the court was correct to affirm the convictions. The fact is marijuana is illegal under federal law. This is not a secret. By running a dispencery and keeping records, I am sure there can be no doubt that these two broke the law. In addition I am sure there are hundereds if not thousands of witnesses to their crimes. I don't know if they were offered a plea deal, but going to trial could only make sense if they were hoping for jury nullification. When you flagrantly break the law and make big bucks doing it, you take your chances.

    That being said, I can not possibly see how the court could say that the sentences were not disproportionate to the crime. First, this is a victimless crime. Second, they were doing this for an arguably noble reason, to help people who are suffering from medical problems. Third, they were not doing this covertly, they were doing this in a way that was consistant with state law, even if it was not consistant with federal law. I am sure that the reason for the long sentences was the amount of marijuana involved and the length of time over which the criminal activity took place. It is common knowledge that the federal government, by their own admission are looking the other way when medical marijuana "crimes" are committed that are legal under state law. It would seem that the feds could have shut this operation down much earlier at a time when the offenses would have generated lower sentences. It would seem to me that if these two were doing such grave harm to society that they should recieve a couple of decades in prison, that the government had an obligation to stop this activity as soon as was possible. This was not covert, they could have mitigaged this "harm" much earlier. This clearly should have been a factor in determining an appropriate sentence. It is a shame these young lives are being destroyed for this BS.

    However, this is something that anyone who is thinking of going into the "legal" large scale marijuana business should consider.. While Obama and company may for the most part be looking the other way now, this could change in the next election. While they are diligently following all the rules, paying all the taxes and keeping all the correct records, they may simply be building an airtight case for some future prosecutor. It will not be a defense in 2013, that the government knew what they were doing in 2011, and was looking the other way. It should also be noted that although probably unconsitutional, there is a federal death penalty statute for being a marijuana kingpin. Even though that is a bit out there, life sentences are not that uncommon in the federal system. The government really only has two choices at this point, give up the stupid, cruel and costly war against marijuana, or get really mean and ruthless. One final consideration, many drug laws have mandatory minimum sentences, which take all the power away from the judge and give it to the prosecutors.

    The most likely reason they got the time they did was to set an example, to discourage others. This basically makes them political prisoners. Hopefully the war will end soon and they will be released before they reach middle age.
  2. Killa Weigha
    Also, if it were determined that they were "profiting" from the venture it would contravene state law as well. It is a sanctioned "Non-profit" industry as per state law. Could be why the state of California did not intervene in the appeals process. Wouldn't be too hard to prove since they had records. If they were driving Range Rovers and living in Mansions, the "flagrance" issue compounds the severity of the punishment.

    At any rate the length of sentences were, on the face of it, "cruel and unusual". I'd like to hear an official justification for them.
  3. Terrapinzflyer
    some more background- heres the original DEA press release from 2006:

    Search Warrant Served at Central Valley's Largest Marijuana Distribution Center
    California Healthcare Collective allegedly supplied over 400 drug users a day

    MODESTO – Drug Enforcement Administration (“DEA”) Assistant Special Agent in Charge Gordon Taylor, Modesto Police Department Chief Roy W. Wasden, United States Attorney McGregor W. Scott and Internal Revenue Service (“IRS”) Special Agent in Charge Roger L. Wirth, announced the culmination of a 15-month investigation into the illegal trafficking of marijuana from California Healthcare Collective (“CHC”) in Modesto, the largest marijuana distribution center in the Central Valley of California. Earlier this morning agents served federal search warrants at CHC and seven homes in the Modesto area, resulting in the seizure of computer equipment, two loaded handguns, approximately $16,000 from the residences and an unknown amount of U.S. Currency from CHC, approximately 60 lbs processed marijuana, approximately 34 lbs of marijuana laced baked goods, a 2006 Dodge Ram Truck, and a 2007 Mercedes. CHC proprietors Ricardo Ruiz MONTES, 26, and Luke Anthony SCARMAZZO, 26, both of Modesto, were arrested this morning for conspiracy to distribute over 450 kilograms of marijuana from CHC, as alleged in the affidavit. Additionally, eight seizure warrants were served on the bank accounts of MONTES, SCARMAZZO and the CHC. Also arrested were CHC employees Jose Francisco MALAGON, 33, and Antonio MALAGON, 28, both of Modesto, in connection with the investigation.

    “We’ve pulled the mask off a multi-million dollar illegal drug enterprise that tried to hide behind California “medical marijuana” laws. Now that the mask is off, people can see these crooks for what they really are--- nothing less than common drug dealers,” said DEA Assistant Special Agent in Charge Gordon Taylor. Taylor added, “The DEA will continue to enforce federal drug laws which prohibit the cultivation and sale of marijuana.”

    This investigation was initiated in June 2005 by the Modesto Police Department and DEA’s participation in the case was subsequently requested. According to the affidavit in support of the criminal complaint, MONTES is identified as the Chief Executive Officer (“CEO”) and SCARMAZZO is identified as the Chief Financial Officer (“CFO”) of the CHC. Throughout the investigation law enforcement learned that an individual wanting to purchase marijuana at CHC would encounter “security” personnel at the front door, at which time the individual presented their “documents” and was occasionally “patted” down before being allowed to proceed into the CHC. After passing through security the individual would then come into contact with another CHC employee, who would again look at the “documents”. Finally, the employee would direct the individual to a back room where various types of marijuana were displayed, prices were listed and the transaction would take place. On more than one occasion law enforcement observed almost 50 customers per hour. Taking into consideration CHC’s operating hours, the average would be more than 400 customers per day.

    On July 21, 2006, in connection with this investigation officers served two state authorized search warrants on the 2600 block on Beatrice Lane, Modesto. As a result of those searches law enforcement seized an indoor marijuana grow, approximately 39 marijuana plants, 5 ½ lbs packaged marijuana, 14.9 grams cocaine, 3 handguns, 2 of which were stolen, and approximately $93,000 in cash. Furthermore, pay stubs were seized indicating that the MALAGON’s, acting as security personnel at the CHC, were being paid $120-$150 per hour. Agents learned that between October 2004 and June 2006 the proprietors of CHC claimed in excess of $4,500,000 from the sales of marijuana.

    “Proposition 215 never allowed for large marijuana distribution centers to sell marijuana for profit. Marijuana distribution centers are in clear violation of federal law and will not be tolerated in Modesto,” stated Chief Wasden

    “The fact that sale of marijuana is prohibited under federal law is hardly a secret. These defendants ran a wide scale--and highly profitable--narcotics trafficking operation, that was not just illegal under federal law, but California's Proposition 215 as well. We will not turn a blind eye to our responsibility to enforce federal law when warranted,” said United States Attorney McGregor W. Scott.

    According to IRS Special Agent in Charge Roger L. Wirth, “We are proud to be part of this joint law enforcement effort against an organization we believe is in fact a criminal enterprise, motivated by greed and profit. IRS CI can bring our unique financial investigative skills to such investigations to help identify these illicit proceeds and pursue money laundering violations as appropriate.”

    Federal search warrants were served this morning at the following locations:

    1009 McHenry Ave., Ste D, Modesto, CA – California Healthcare Collective
    2637 Dardanelle Drive, Modesto, CA
    2608 Beatrice Lane, Modesto, CA
    2600 Beatrice Lane, Modesto, CA
    1709 Woolston Way, Modesto, CA
    1729 Morning Dove Circle, Modesto, CA
    1628 Edgebrook Drive, Modesto, CA
    3500 San Clemente Drive, #155, Modesto, CA
    MONTES was arrested at the residence located at 2600 Beatrice Lane, SCARMAZZO was apprehended at his residence on Woolston Way, while J. MALAGON and A. MALAGON were arrested by Modesto Police Department as they were departing Beatrice Lane, all arrests occurred without incident. MONTES, SCARMAZZO, J. MALAGON and A. MALAGON are scheduled to make their initial appearance in Federal Court in Fresno, CA on September 29, 2006. All charged with violations of Title 21 United States Code (“USC”), Section 846-Conspiracy to Distribute Marijuana and Section 841(a)(1)-Distribution of Marijuana. The maximum statutory penalty for Conspiracy to Distribute Marijuana is a minimum mandatory term of imprisonment of ten years, and a maximum term of imprisonment of life; a $4 million dollar fine. The maximum statutory penalty for Distribution of Marijuana is a minimum mandatory term of imprisonment of ten years, and a maximum term of imprisonment of life; a $4 million dollar fine.

    This case is the product of an extensive joint investigation conducted by the U.S. Drug Enforcement Administration, Modesto Police Department, Modesto Narcotics Enforcement Team (“MNET”), Stanislaus Drug Enforcement Agency (“SDEA”), and the Internal Revenue Service.

    This case is being prosecuted by the United States Attorney’s Office, Eastern District of California, in Fresno. The charges are only allegations and the defendants are presumed innocent unless proven guilty beyond a reasonable doubt.

    September 27, 2006
  4. Terrapinzflyer
    and a local news report from the day of the raids:

    Modesto Medical Marijuana Dispensary Raided
    DEA, Police Raid California Healthcare Collective
    MODESTO, Calif. -- The Drug Enforcement Administration has broken up what it calls the largest medical marijuana dispensary in Northern California.
    Modesto police and federal agents said the California Healthcare Collective sold marijuana to people who did not have valid doctor's recommendations.
    A California Healthcare Collective employee said he was shocked that his workplace was busted.
    "People need help, right? They're helping them," employee Santos Lopez said.
    But investigators said the California Healthcare Collective wasn't just selling marijuana to patients who are registered users, they were also selling to ordinary people who just wanted to get high.
    The DEA began its investigation last year, and said it has watched the store make millions in just months.
    "This is the largest so-called medical marijuana dispensary that we've investigated in the Central Valley and inland Northern California," DEA agent Gordon Taylor said.
    In addition to the store on McHenry Avenue, seven homes were raided on Wednesday.
    Seized were 60 pounds of marijuana, pot-laced foods including cookies and Rice Krispie treats, $16,000 in cash, guns, and a 2007 Mercedes valued at $170,000.
    Four men were arrested, including 26-year-old Luke Scarmazzo, who identified himself as the store's chief financial officer.
    Meanwhile, confused customers gathered in the California Healthcare Collective parking lot.
    "As far as I know, everybody here had been complying with the state law," a customer said.
    But investigators said despite Scarmazzo's claim that he's doing a service to the community, they believe he's all about making money and point to his rap music video on the Internet.
    "Make no mistake about it. This is not a medical marijuana issue. This is a lot of drugs into our community, feeding the drug problem that we face. It simply will not be tolerated," Modesto Police Chief Roy Wasden said.
    This is not Scarmazzo's first brush with law.
    Scarmazzo served time for his role in the 2003 beating death of Jonathon Shyrock, who was killed in retaliation for a car-egging incident.

    September 27, 2006

    comment: from other reports it looks like IRS agents also took place in the raid
  5. Terrapinzflyer
    and a little more backstory- while I'm not finding a currently available story- this dispensary had been ordered to close by the city about two months before the raids- and refused.

    An archived copy of the story originally in the Modesto Bee:

    A McHenry Avenue medical marijuana clinic is fighting to stay open a month after it was supposed to close.

    The Modesto City Council passed a moratorium on medical marijuana clinics in December, ordering the California Healthcare Collective to stop selling pot to patients by July 14.

    The collective won a reprieve in the spring and earlier this month filed a lawsuit against the city, seeking to overturn the council order.

    However, Oakland attorney James Anthony said the clinic is waiting to serve the city while it negotiates to stay open. That means the lawsuit is on file in Stanislaus County Superior Court, but it is not going anywhere.

    Anthony said the clinic initiated the lawsuit because of a breakdown in talks with the city attorney's office. He said those negotiations are progressing, though he didn't have a timetable regarding when or if the clinic would follow through on the lawsuit.

    The clinic intends to stay open, possibly by persuading the city that its medical marijuana ban doesn't apply to the McHenry Avenue shop, Anthony said.

    "The collective is a lawful, beneficial nonprofit. Why would we want to close it?" Anthony asked.

    The city attorney's office declined to comment.

    Clinic director Ricardo Montes did not return a phone call Monday.

    The lawsuit alleges that the council's ban violates state laws that allow people to possess, use and grow medical marijuana. Dispensaries such as the clinic on McHenry Avenue help sick people who can't grow marijuana to get their medicine, supporters say.

    The lawsuit also claims the ban would harm two Modesto medical marijuana users, one of whom has breast cancer, by requiring them to travel to retrieve the drug. Neither patient could be reached for comment Monday.

    The Modesto council passed its moratorium with a 5-0 vote Dec.6 after heated arguments between people who said they relied on medical marijuana to treat debilitating illnesses and others who said the clinic encouraged illegal drug use.

    Federal law does not allow for the use or possession of medical marijuana. That distinction put the city in an awkward position of permitting an illegal activity by allowing the dispensary to do business, former City Attorney Michael Milich argued at the December meeting.

    Other Modesto officials said the clinic taxed the Police Department's resources. Police indicated they had found medical marijuana prescriptions at drug busts before the council's vote.

    "That really wasn't something that fits the community values that Modesto is trying to achieve," said police Sgt. Craig Gundlach, who led the department's investigation into the marijuana dispensary.

    A medical marijuana supporter who attended the December meeting said the city's law was too strict, making it vulnerable to the collective's potential lawsuit.

    "The Modesto City Council has taken a stand against our rights," said Nathan Sands, communications director for the Compassionate Coalition, a Sacramento advocacy group.

    Modesto's medical marijuana ban spurred similar measures throughout Stanislaus County. Ceres, Hughson, Riverbank, Turlock and Waterford have taken steps to block medical marijuana clinics.

    August 22, 2006

  6. Killa Weigha
    They got the mandatory minimums considering they got the old dirty tricks "conspiracy to commit" as well as the crime. I think the take-away here is if the local police chief is not on your side you are doomed. All they have to do if they don't like you (or if you're not in compliance) is call in the DEA. Then you're done.
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  7. talltom
    What is potentially important about this case is what it might say about the future of medical marijuana cases in California and other states where it is legal under state law. The newly-confirmed DEA director, Michele Leonhart, is on record saying that marijuana is not legal, medical or not. Press reports pointed out that she was going against what her own boss, the attorney general, had said about not prosecuting "reasonable amounts" of medical pot

    However, this was an appeals case from several years ago, and the distributers were flagrant in the amount they sold and of the money they took in. It is also significant that the local police asked them to shut down and they refused.

    We need to see whether there is an increase in new prosecutions against medical marijuana distributers, especially those not as large as in the Modesto case.
  8. 80sbaby

    yes, and i have a feeling that this whole medical marijuana thiing and how big its gotten, i ggot a strange feeling that with all these RC's, coming out, the dea has thier hands full, but my gut tells me eventually, what cali is right now, will no longer be soon, and i fear they will get really strict down there. hope not, as i plan on moving there.
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