A Colorado grand jury has indicted 12 people on allegations that they ran three medical-marijuana dispensaries as a front for an investment scam and an illegal marijuana-growing operation.
Among those named in the indictment are the dispensaries' owner, several of his business partners, a marijuana-grower, a lawyer and a doctor. The 12 people named in the indictment variously face charges of racketeering, marijuana cultivation and distribution, money laundering, securities fraud, tax evasion, forgery and attempt to influence a public servant.
The indictment was handed down last month by a state grand jury overseen by the Colorado attorney general's office. The charges were filed in Denver District Court. The 65-page indictment contains 71 total charges.
Carolyn Tyler, a spokeswoman for the attorney general's office, said the indictment was the result of "the careful oversight of the Department of Revenue and tight coordination between state agencies."
According to the indictment, the central figure in the case is 34-year-old Conley Hoskins.
Hoskins' attorney on Wednesday denied that his client was involved in anything illegal under state law.
"The attorney general's indictment is full of tortured and baseless allegations and is contrary in many respects to the plain language and protections provided by Amendment 20," attorney Steve Peters said, referencing the Colorado law that legalized medical marijuana. "Mr. Hoskins denies these charges and looks forward to presenting his defenses in court."
According to the indictment, Hoskins owns three dispensaries: Jane Medicals and Higher Health Medical in Denver and All Care Wellness Centers in Lakewood. All three dispensaries are shown as operating under pending license applications on a list of current dispensaries provided last month to The Denver Post.
Hoskins' childhood friend, 37-year-old Dallan Dirkmaat, is a lawyer who provided legal help to the dispensaries, the indictment states.
The indictment alleges that Hoskins and Dirkmaat, with the help of others, schemed to solicit investments in the dispensaries, then diverted the money into other uses, such as paying off personal debts or debts from other businesses.
"Mr. Dirkmaat and Mr. Hoskins, individually and through the use of their businesses, engaged in numerous fraudulent behaviors to gain investors and stave off outside financial pressures," the indictment alleges. "... Ultimately, the two fraudulently diverted a significant portion of the incoming investment moneys for purposes other than that which their prospectus had promised."
In addition, the indictment alleges that Hoskins conspired with a marijuana-grower to set up an illegal marijuana-cultivation operation in the basement of a house in Windsor. According to the indictment, the grower, who is not charged in the indictment, ultimately grew 10 to 20 pounds of marijuana for Hoskins.
According to the indictment, Hoskins teamed with another grower, 31-year-old Nathan Newman, to grow marijuana illegally in the basement of a house in Brighton. Marijuana from the illegal home grows — as well pot grown in a Denver warehouse that purported to supply a different dispensary — was taken to Jane Medicals, where employees sold it to both legal medical-marijuana patients and to people who weren't medical-marijuana patients, according to the indictment.
"Mr. Hoskins possessed knowledge of this and encouraged Jane Medicals, LLC employees to omit certain sales and understate these sales in the point of sales computer system to evade taxes and to avoid both the recording of illegal sales and the underreporting of sales and sales taxes to the Colorado Department of Revenue," the indictment alleges.
Peters, Hoskins' attorney, said his client made a good-faith effort to comply with state medical-marijuana law.
"Like many dispensary owners, Mr. Hoskins is essentially unable to maintain banking relationships," Peters said. "This may result in record-keeping issues, but certainly not in any acts of racketeering."
The indictment also charges a doctor, 34-year-old Gerald Searle, another childhood friend of Hoskins, with having an unlawful relationship with a dispensary. Colorado law prohibits doctors from receiving anything of value from dispensaries. According to the indictment, Hoskins paid the rent on Searle's medical office in exchange for Searle writing medical-marijuana recommendations to patients and referring them to Hoskins' dispensary, which was around the corner.
The others named in the indictment are 62-year-old David Krause, 33-year-old Brenden Joyce, 40-year-old Kurt Criter, 22-year-old Yesenia Melendez, 23-year-old Carlos Meza, 33-year-old Ryan Tripp, 37-year-old Dialyne Parker and 26-year-old Audra Wimer.