One of the alleged masterminds of a hugely profitable synthetic marijuana operation pleaded guilty Friday to a single criminal charge, agreeing to hand over more than $3 million in cash and assets to the federal government.
John Shealey ran the day-to-day operations of Kratom Lab, a company that produced "Mr. Nice Guy" — a brand of synthetic marijuana that became so popular it spawned knock-offs, according to federal prosecutors. Made in West Palm Beach warehouses and marketed as herbal incense, Mr. Nice Guy was once sold in packets at gas stations, convenience stores and smoke shops.
Kratom Lab became one of the country's largest synthetic marijuana manufacturers, raking in millions until agents raided its locations in July as part of "Operation Log Jam," the first nationwide crackdown on the industry, court records show. Arrested along with Shealey, 40, was his business partner, Dylan Harrison, 31, and a Kratom Lab employee, Michael Bryant, 30.
Shealey, of Royal Palm Beach, faces up to five years in prison after pleading guilty to a count of conspiring to break federal laws. He admitted plotting to distribute an illegal substance, commit money laundering and make and sell a misbranded drug.
His sentencing is scheduled for May 10 before U.S. District Judge Kenneth Marra.
As part of his plea deal, Shealey agreed to pay a $2.2 million monetary judgment and also forfeit about $745,000 in cash. In addition, he gave up his 1957 Ford Custom 300, 1969 Dodge Coronet Super Bee, two SUVs, a boat and seven watches.
Shealey, dressed in a black suit, somberly answered Marra's questions Friday as the judge accepted his guilty plea.
After the court hearing, Shealey's attorney, Marc Seitles, declined to answer questions about the plea deal.
"I think the government and Mr. Shealey worked to fairly and equitably resolve the case and I believe we did so," Seitles said.
The popularity of synthetic marijuana exploded in 2010 with Kratom Lab becoming a major player in the industry, court records show. The federal government soon outlawed many of the chemicals used to make the drugs and local and state governments enacted their own bans.
While the drug — sometimes called "K2" or "Spice" — can offer the "high" of marijuana, it has an array of dangerous side effects, including rapid heart rate, nausea, hallucinations, seizures, renal failure and psychotic episodes.
When batches of Mr. Nice Guy would be blended in cement mixers, the process would let off such toxic fumes that employees would have to wear protective gear, according to court records. In May, a West Palm Beach warehouse rented by Kratom Lab exploded while a batch of Mr. Nice Guy was being mixed.
Shealey's partner, Harrison, cut a similar deal with federal prosecutors last month, pleading guilty to the same conspiracy charge and agreeing to forfeit more than $2 million in assets, including the $850,000 home in Lantana he bought with cash. He faces up to five years in prison at his April 26 sentencing.
Kratom Lab employee Bryant pleaded guilty to distributing a drug analogous to banned substances. His sentencing is scheduled for April 8.
By Jon Burstein, Sun Sentinel
.6:09 pm, March 1, 2013