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Nine Charged in Oregon for Far-Reaching Fraud, Pot Plot

The scheme involved defrauding banks, using the money to start illegal marijuana grow houses, then funding an interstate pot distribution ring, according to court documents filed Tuesday.

Posted: Jun 12, 2018 5:45 PM

GILLIAN FLACCUS , Associated Press

PORTLAND, Ore. (AP) — Oregon's top federal prosecutor has charged nine people with financial and drug crimes in a scheme that involved defrauding banks and using the money to start illegal marijuana grow houses and fund an interstate pot distribution ring, according to court documents filed Tuesday.

The case is the first involving marijuana-related charges prosecuted by U.S. Attorney Billy Williams since he issued a memo criticizing Oregon's pot surplus and called on state regulators to get a better handle on the amount of the drug flowing across state lines.

Williams was the first U.S. attorney to publicly outline his strategy for federal marijuana enforcement after Attorney General Jeff Sessions rolled back Obama-era protections for states with legal pot. Oregon is one of about 30 states that have legalized marijuana in some form, creating a two-tier enforcement system at the state and federal levels.

The current case began as a major fraud investigation and grew into a drug probe that stretched into California and Illinois, federal prosecutors said in a complaint filed in U.S. District Court in Eugene. Three of the defendants have been arrested and the rest are at large.

The money also funded a state-licensed marijuana store in Corvallis, Oregon, where excess pot was surreptitiously packed, vacuum-sealed and shipped out of state in suitcases and by mail, prosecutors alleged. That store, Corvallis Cannabis Club, was raided by the U.S. Drug Enforcement Agency on Tuesday. No one answered the phone at the store on Tuesday.

Those arrested will make a first court appearance Wednesday in Eugene, Oregon. Defense attorneys were not listed in court filings and it was not immediately known if they had retained private attorneys or will be assigned a federal public defender.

According to a probable cause affidavit from FBI Special Agent Jeff Schiltz, federal authorities began investigating a credit card fraud scheme in 2016.

The scheme involved getting Armenians in Hollywood, California, who were struggling financially to provide the defendants with their personal information in exchange for payment. The defendants would then open credit cards in their name.

The defendants used the cards and made initial payments on the balances using fraudulent bank accounts, but then told the banks the accounts were bogus.

The credit card companies then repaid the banks and the cards weren't used again.

At one point, some defendants drove 60 pounds (27 kilograms) of marijuana to Chicago and sold it on the black market. Other marijuana was sold and sent to California and still more was sent to Peoria, Illinois, where state authorities were already conducting an undercover investigation, court papers say.

The defendants deposited tens of thousands in cash from the out-of-state marijuana sales in many different bank accounts in Oregon and California, prosecutors said.

____

Flaccus is a member of AP's marijuana beat team. Follow her at www.twitter.com/gflaccus. Follow AP's complete marijuana coverage: https://apnews.com/tag/LegalMarijuana

Oregon Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 4086

Reported Deaths: 151
CountyConfirmedDeaths
Multnomah110359
Marion93125
Washington71517
Clackamas30411
Deschutes1210
Linn1159
Umatilla1143
Polk9811
Yamhill697
Lane672
Jackson650
Benton555
Clatsop450
Klamath410
Malheur330
Coos310
Douglas250
Jefferson250
Josephine251
Wasco211
Columbia160
Hood River130
Morrow120
Lincoln100
Crook60
Curry60
Union60
Tillamook60
Wallowa20
Lake20
Sherman10
Harney10
Grant10
Baker10
Unassigned00

California Coronavirus Cases

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Confirmed Cases: 103813

Reported Deaths: 3993
CountyConfirmedDeaths
Los Angeles498602241
Riverside7341313
San Diego7100260
Orange5744142
San Bernardino4914190
Alameda309794
Santa Clara2701140
San Francisco243740
San Mateo202282
Kern200737
Tulare183580
Fresno165832
Santa Barbara163612
Imperial144326
Contra Costa138437
Sacramento134956
Ventura106232
San Joaquin84235
Kings7043
Stanislaus68328
Sonoma5304
Solano50922
Monterey4699
Marin43614
Merced2807
San Luis Obispo2681
Yolo20723
Santa Cruz2062
Placer1969
Napa1113
Humboldt983
Madera942
San Benito852
El Dorado840
Del Norte440
Sutter422
Nevada411
Butte400
Shasta374
Mono351
Yuba281
Mendocino250
Lake230
Inyo191
Mariposa161
Calaveras150
Glenn140
Amador100
Siskiyou60
Colusa50
Lassen50
Tuolumne40
Plumas40
Tehama41
Alpine20
Trinity10
Sierra10
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