"It's Strictly Business": Inside the Prohibition Racketby William Norman Grigg
Jul. 29, 2014
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In addition to being an engine of misery, corruption, and bloodshed, the War on Drugs should be seen as a multi-tiered criminal enterprise.
At the top echelon are found the political figureheads who recite pious bromides. That’s likewise where we encounter the bureaucratic scribes responsible for crafting those cynical pronouncements and the legislation that gives them substance. The operational level consists of federally subsidized, hyper-aggressive law enforcement agencies that carry out military-style raids and seizures. This includes squalid undercover police operatives and the petty criminals who act as “cooperating informants,” as well as the strutting armored sociopaths who act on that “intelligence” by terrorizing people in home invasions that are typically carried out before dawn or after sunset.
Beneath the lurid violence of narcotics enforcement can be found the gray, undistinguished local bureaucrats who are actually in charge of such task as stealing property said to be “connected” to drug trafficking, caging the people from whom it was taken, and dividing up the spoils. Official transcripts from several meetings of Oregon’s Malheur County Commission provide useful insights regarding the retail-level business of that vertically integrated criminal enterprise.
For nearly two years, the Malheur County DA’s office, working in collaboration with the federally syndicated High Desert Drug Enforcement task force, has been milking revenue out of a September 11, 2012 raid on the 45th Parallel, which was a medical marijuana dispensary located in Ontario, Oregon.
Police raids were carried out against both the co-op and more than a dozen “grow sites” in both eastern Oregon and western Idaho. A total of eighteen people were eventually charged with “conspiracy” to provide medical marijuana “for consideration,” under a version of the Oregon medical marijuana law that is no longer in effect.
During an April 9 meeting of the Malheur County Commission, Deputy District Attorney Michael Dugan, an ardent prohibitionist, explained that “Under Oregon law at that time you could not sell marijuana even to another medical marijuana participant.” (Emphasis added.)
“You have to have an enterprise or an organization,” elaborated Dugan to commissioners Don Hodge and Larry Wilson. “An enterprise can be a for-profit [or] a non-profit corporation, it can be a business, it can be an association however loosely assembled.” It isn't necessary to be directly involved in a specific illegal act in order to be “wrapped up in the RICO,” Dugan told the two commissioners. In fact, “it could be the three of us if we associated to do something illegal.”
The purpose of the April 9 meeting was to persuade commissioners to continue funding the prosecution of William Esbensen and Raymond Kangas, the co-founders of the 45th Parallel, who were the final defendants in the case. On June 6 they were found guilty in a bench trial of conspiring to provide medical marijuana “for consideration,” despite the fact that the statute under which they were prosecuted was dead-letter law.
Interestingly, in an earlier jury trial two other 45th Parallel defendants, Kelly and Kerry Rhoan, were found guilty on two RICO counts but acquitted on “conspiracy” charges.
That verdict “kind of makes me cross my eyes because in order to have a RICO you have to have … an agreement to associate, and conspiracy is an agreement to commit crimes,” Dugan recounted to the Malheur County commissioners. Somehow, the only jury that rendered a verdict in the 45th Parallel case ruled that the defendants had created an association to do something that wasn’t considered a criminal act – in this case, to distribute a legally recognized palliative medicine to people who needed it.
As it happens, the purpose of Dugan's presentation on April 9 was to entice the commissioners into underwriting what amounted to a highly lucrative illicit enterprise: Prosecuting a RICO case without a clearly established “predicate offense,” through what appears to be a fraudulent county contract with the DA’s office, in collusion with a District Judge who had obliquely indicated her willingness to inflate the charges in order to impose draconian fines that would translate into larger profits for the county.
During the September 2012 raids, Dugan boasted, “we recovered” – that is, his armed accomplices stole at gunpoint – “a number of huge globs of money so to speak.” Among those “globs” was $53,000 in cash that was seized at Esbensen’s home in Boise, money that had no proven connection to the 45th Parallel. That stolen money “was subject to federal forfeiture,” which means it was available for “equitable sharing to … local law enforcement.” The Malheur County Sheriff’s office “received about 40 grand of that; [Sheriff Brian Wolfe] could tell you more exactly, but that goes into his forfeiture fund.”
This was explained, once again, during the April 9 commissioners’ meeting. Roughly two weeks later, Malheur County DA Dan Norris reported to the commission that $15,000 from the Sheriff’s forfeiture fund would “contribute to Mr. Dugan’s employment costs.” What this means, of course, is that the money stolen from Mr. Esbensen without due process of law would be used to fund his prosecution on charges filed under a law that was no longer in effect.
Norris asked the commission to provide “an additional $15,000 from [the] General fund to continue to contract with Mr. Dugan” and said that he would “generate additional funds needed” to underwrite the 45th Parallel prosecutions, which would cost “a total of $40,000.” How would the prosecutor “generate” the additional funds? Would he hold a bake sale, perhaps? Of course not: He “requested [that] monies from anticipated judgments in the 45th Parallel case be put into the revenue side of his budget” – in other words, that the prosecution would proceed in the expectation of additional forfeitures and fines.
Significantly, before the commissioners heard DA Norris’s pitch they were favored by a presentation from Circuit Court Judge Patricia Sullivan. In what one veteran attorney described to me as a clear violation of judicial ethics, Sullivan lobbied the commissioners to provide increased “resources” – that is, funding – for the DA’s office. At the time, Sullivan was presiding over the 45th Parallel case, yet she was advocating on behalf of the prosecution’s budget priorities.
Sullivan’s role in the case was also addressed by Deputy DA Dugan during the April 9 county commission meeting, in which he described the relationship between the severity of a RICO offense and the potential windfall for the county.
“I’ve got about $35,000 in prosecution costs that I’m asking the judge to impose against the first RICO defendant” – that is, William Esbensen – “add another 2,000 or [three thousand] for the second RICO defendant and it just keeps going up that way.”
“Now, these assets, other than money that you’ve recovered [sic], I assume you’re taking vehicles…?” inquired Commissioner Hodge.
“No, this is all cash, Don,” replied DA Norris, prompting an important clarification from Dugan.
“There are some land and houses involved; I’m not sure exactly how far we’ll go in terms of that,” Dugan stated. “I know that Mr. [Esbensen] owns a number of different properties in Idaho. County Counsel would have to be, I guess, assisting in terms of how we go about getting our judgments registered in Idaho and moving forward to recover [sic] some of the properties there.” Dugan told the commissioners that “you folks have to make the decision as to how much you want … to spend in terms of going after Idaho stuff” – that is, how far they want to pursue the theft of Esbensen’s property in the name of “asset forfeiture.”
As an incentive to carry out additional seizures, Dugan predicted that Judge Sullivan would be imposing significant “compensatory fines” against Esbensen and his partner, Scott Kangas. Getting those judgments would give the DA and the county counsel’s office funding to “do the house and foreclose on the house or do bank accounts, those sorts of things,” Dugan observed.
“We’re going to have a little bit … of an advantage because paying us is going to be part of their probation,” the deputy DA gloated. “The consequence of not paying that bill is more than say not paying your phone bill.”
This is entirely true: In the latter case, a legitimate business would simply cut off its useful service from somebody who refused to pay for it; in the former, a privileged extortion ring would kidnap a victim who failed to comply with its demands, and then put him in a cage.
Under Oregon law, Dugan continued, sentences are classified in severity “from one to eleven.” As an unclassified offense, a RICO conviction can be rated anywhere along that scale.
“I’m asking the judge to classify them [the 45th Parallel charges] at an eight,” Dugan informed the commissioners. “We’ll see what she does. An eight would be a potential prison sentence with an optional probation, and if they want to do the optional probation you can bet your bottom dollar that the optional probation is going to require a lot of payment on these prosecution costs.” (Emphasis added.)
The pronoun “she” referred to Judge Sullivan, the only female judge in the jurisdiction. By showing up at a commission meeting about two weeks later to lobby on behalf of a budget increase for the DA’s office, she clearly indicated what she intended to do if she had continued as the trial judge in the 45th Parallel case. As it turned out, Sullivan was forced to recuse herself from the case roughly a week after her participation in the April 22 county commission meeting – a development that had interesting consequences for the prosecution during the sentencing phase, as we’ll see anon.
Under the new medical marijuana law, Dugan pointed out to the commissioners, the county would be able to “impose a tax per gram and it’ll be paid… In Colorado it’s a 21 percent tax and they’re making millions of dollars.”
Until the commission decides how it will profit directly from the sale of medical marijuana under the new law, however, there was still the business of how to extract what revenue it could out of the prosecution of people under the old law. Norris emphasized that it would be necessary to fund Dugan’s efforts to “finish the 45th Parallel case,” then he and the commissioners would “have more in-depth discussions about additional collections and additional use of that money to see things through and do forfeitures next year. Which I think from a business standpoint would make sense.”
The “business” Norris referred to, once again, is a clearly unethical, patently immoral, and arguably illegal enterprise. In addition to its apparent collusion with Judge Sullivan, the Malheur County DA’s office had a dubious contract relationship with Dugan.
During a February 12 county commission meeting, county administrative officer Lorinda DuBois pointed out that Dugan’s contract “was up December 31st.” This would mean that he had no authority to act on behalf of the county until and unless a new contract was completed – and this was a matter of some urgency, DA Norris insisted, because of “some issues where attorneys in the drug case are seeking sanctions against the Sheriff’s Office and I don’t have anyone working on dealing with that issue. And it’s a time bomb ticking for the Sheriff’s Office. Mr. Dugan needs to be able to get back to work” – which he apparently couldn’t do unless and until a new contract was completed.
Or – perhaps he could, according to Norris.
“Now, as long as we have a temporary authorization for Mr. Dugan to return to work we certainly can wait until next week to get the paperwork done,” he told the commission.
“Is that legal?” inquired County Judge Dan Joyce, who clearly saw a problem in that proposal.
“It will be fine,” insisted an official identified as “Ms. Williams,” because “his contract’s going to be backdated to January anyway.” This is because “you really can’t do an amendment; it has to be a new contract from calendar year to calendar year,” she explained.
Yet somehow a curious document exists bearing the unwieldy title “First Amendment to Employment Agreement Between Michael T. Dugan and Malheur County Recorded with Malheur County Clear as Instrument Number 2013-0597.” That document, an impermissible amendment to a backdated (which is to say, likely fraudulent) contract, specified that Dugan’s employment “shall automatically end on June 30, 2014 or when [he] has worked 541 hours, whichever occurs first.”
There’s reason to believe that Dugan had expended his allotment of hours before the 45th Parallel trial was over. But that matter is academic if the backdated contract itself was invalid. Although some might regard this to be a matter of petty technicalities, it should be remembered that the defendants in this case were convicted of operating a criminal conspiracy to “deliver” a legally protect medicine in ways that supposedly violated arcane provisions of a medical marijuana law that is no longer in effect.
As noted earlier, Judge Sullivan’s participation in this case was central to the prosecution’s strategy. After Sullivan was replaced by Judge Gregory Baxter, Dugan prosecuted Esbensen and Kangas as level 4 offenders. Following their conviction, Dugan asked Judge Baxter to revise – or “backdate,” if you prefer – the offenses as qualifying for level 8 sentences, which would justify the imposition of heavier “compensatory fines” – with the threat of lengthy prison sentences as leverage.
Unlike Sullivan, Baxter didn’t appear sympathetic to the financial needs of the Malheur County DA’s office. He ruled that the defendants would be sentenced under level 4 guidelines, which meant two years of probation rather than a prison term. The final amount of “compensation” has yet to be decided, but it will most likely be a less lucrative pay-out than the DA’s office had anticipated – pending additional forfeiture actions, of course.
From teeth to tail, the 45th Parallel case has been a criminal enterprise on the part of the prosecution. It began with the corrupt actions of Boise-based DEA Agent Dustin Bloxham, who committed multiple felonies (including interstate wire fraud and falsifying medical records in order to obtain an Oregon medical marijuana card) during the course of an unauthorized undercover operation on a medical marijuana clinic outside his jurisdiction.
One of the key witnesses for the prosecution, Tricia Gardner, is a repeat narcotics offender and serial check forger who continues to operate a medical marijuana facility in Ontario despite a county-wide moratorium. A former staffer at the 45th Parallel, Gardner filed the necessary paperwork to open that clinic on September 10, 2012 – the day before the task force raided the co-op.
In November, Oregon voters will consider a measure that would de-criminalize recreational use of marijuana for residents who are at least 21 years of age. As Dugan indicated to the Malheur County Commission, the loosening of restrictions on marijuana use would require updating the local plunderbund’s business plan to emphasize taxation, rather than prohibition. In the meantime, they will have to be satisfied with using whatever means are at their disposal to wring the last trickle of revenue out of Esbensen, Kangas, and their fellow victims of the prohibition racket.
William Norman Grigg [send him mail] publishes the Pro Libertate blog and hosts the Pro Libertate radio program. Follow him on Twitter.