DENVER - A Colorado grand jury had indicted several medical marijuana dispensaries and 12 individuals for defrauding investors, running an illegal medical marijuana grow operation and other crimes.
The defendants face 71 criminal counts related to the Colorado Organized Crime Control Act and felony charges for tax evasion, securities fraud and money laundering, Colorado Attorney General John Suthers' office said Wednesday.
"The first red flag that something was askew came from the careful oversight of Colorado’s Department of Revenue," said Deputy Attorney General Matthew Durkin. "These individuals stole money from their investors to pay off personal debts and hid their illicit proceeds from law enforcement and taxing authorities and illegally expanded their medical marijuana production capabilities."
Prosecutors say a main player in the alleged criminal enterprises is Conley Hoskins, 34, who owns three medical marijuana dispensaries -- Jane Medicals and Higher Health Medical in Denver and All Care Wellness Centers in Lakewood.
The indictment says another key player is Dallan Dirkmaat, a longtime childhood friend of Hoskins. They grew up together in Idaho.
Hoskins and Dirkmaat, an attorney, ran business ventures together in construction, car washes and medical marijuana dispensaries, the indictment says. Hoskins' marijuana dispensary business is headquartered in the same building as Dirkmaat's law office, The People’s Law Firm LLC, which is based in Denver.
The other indicted individuals are Brenden Joyce, David Krause, Nathan Newman, Kurt Criter, Yesenia Melendez, Carlos Meza, Ryan Tripp, Dialyne Parker, Gerald Searle and Audra Wimer.
The indictment alleges an elaborate pattern of racketeering that began in January 2008. Hoskins, Dirkmaat and Krause are accused of engaging in a scheme to buy, sell, deal, cultivate and/or distribute medical marijuana in Colorado and at least one other state while committing securities fraud, theft, forgery, evading taxes and attempting to influence public servants through deceit. The enterprise evolved into a distribution ring, in part, because many members had long-standing personal and business connections with one another.
Over time, Hoskins' business interests evolved and he drew on his personal relationships and business experiences to raise capital from investors, according to the indictment. He then used those investor funds to run illegal grow operations in Adams, Denver and Larimer Counties.
Hoskins also had close ties with Gerald Searle, another childhood friend.
Searle is a doctor whose connection with both Hoskins and Dirkmaat lead to the development of a business relationship where Dr. Searle moved part of his medical practice to an office located around the corner from the Jane Medicals building, prosecutors said.
The indictment says state law prohibits doctors from receiving anything of value from medical marijuana dispensaries. Yet Hoskins is charged with paying Searle's rent while the doctor made patient referrals to Hoskins' dispensaries, the indictment says.