Update: $40K stolen from pot dispensary shuttered by state, inside job suspected
Update: Earlier this morning, we shared an interview with Conley Hoskins, an indicted medical marijuana entrepreneur who decried the shuttering of two dispensaries by a state agency; see our previous coverage below.
In the conversation, Hoskins mentions that about fifty employees went unpaid due to the shutdown -- and now he suspects a couple of them may have had a role in a robbery overnight that appears to be an inside job.
The incident took place at Higher Health Medical, located at 527 East Mississippi, an address captured in the following interactive graphic; if you have problems seeing the image, click "View Larger Map."
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Here's how Hoskins describes the crime, which was captured on surveillance footage.
"About 2:45 a.m., two individuals broke through a window that had a chain-link fence on it and a welded screen," he says. "They cut through all that, broke the window and entered the facility right next to the safe where we keep everything.
"There's a giant, welded cage around the safe that's padlocked. They used bolt cutters on the padlock."
The safe itself would presumably have presented them with an even bigger challenge. But no: Hoskins says, "They had the combination."
Conley Hoskins with his wife Alycia.
Upon opening the safe, the two men cleaned it out. Hoskins notes that "they took about $1,900 in cash, close to ten pounds of flowers and all the wax and edibles." He estimates the total loss in the $35-40,000 range.
The safe's contents represented all the product put on hold by the Marijuana Enforcement Division on Friday, when Higher Health was shuttered owing to a license denial Hoskins feels is unfair. According to him, officials had promised to let him remain in business until or unless he was convicted on a 71-count indictment filed by the Colorado Attorney General's Office in May of last year. However, the case against Hoskins was stayed by the Colorado Supreme Court this past October over a dispute about legal representation and has yet to be resolved one way or the other.
Because there was no motion detector near the safe, an alarm didn't sound when the two men entered the building. Hoskins was alerted to the robbery at around 6:30 a.m., after which he met personnel from the Marijuana Enforcement Division and the Denver Police Department to walk through the facility. (He no longer has keys to the building, so the locks had to be drilled so they could gain access.) A staffer from Higher Health's security company subsequently accessed the video and gave it to law enforcement.
A photo from the Higher Health Facebook page.
In the interview below, Hoskins says he was ordered to keep all the plants from the dispensaries alive -- something he didn't think was possible given that he now has no revenue coming in. As such, some people are likely to suspect him of having played a part in the break-in. To this possibility, he replies, "Abso-fucking-lutely not." For one thing, he doesn't match the description of the thieves: He says they were around "five-feet-six to five-feet-seven and skinny, and I'm six-feet and about 210. I couldn't have fit through the window." And besides, he says it makes no sense for him to be involved in such a crime when he's already under indictment.
Who else might have been responsible? "Everyone seems to think it's an inside job," he acknowledges. Referencing the previous interview, when he talked about the fifty or so staffers left jobless by the dispensary closures, he adds, "None of the employees got paid. So you're making an assumption, but it's a reasonable one to make," especially since the thieves had the safe's combination.
He's clearly frustrated by this latest twist. In his words, "I just think it's curious that five or six days ago, they came in and shut us down and locked us up -- and now we're getting broken into because nobody's around and we've got disgruntled employees."
Update. 10:13 a.m.: On Monday, we told you about a request for a temporary restraining order filed on behalf of Conley Hoskins, a medical marijuana dispensary owner who was indicted last year by the Colorado Attorney General's office; see our previous coverage below.
Later that day, a judge denied the restraining order, and Hoskins, who's kept a low profile since being named in the indictment, is frustrated enough to speak publicly about the developments, which he sees as an unjust action that's put dozens out of work.
Last May, as we've reported, Hoskins, owner of Jane Medicals and Higher Health Medical, was indicted along with eleven others on 71 counts revolving around allegations of fraud targeting investors. He declines to discuss the criminal case other than to confirm that it was stayed in October by the Colorado Supreme Court over a motion for disqualification of counsel.
Inside Higher Health.
He adds that he is currently the only person named in the indictment whose case has not been resolved. None of the other indictees received any jail time, with probation being the most common result.
Hoskins is considerably more vocal about last week's closure of Jane Medicals and Higher Health. He cites documents shared on the last two pages of this post as well as conversations with representatives of the Marijuana Enforcement Division in which he says he was told the businesses would be allowed to stay open unless or until he was convicted of the AG's allegations.
The only other negative mark on his record, Hoskins says, is a driving-while-ability-impaired beef from 2003 that he disclosed to the MED years ago.
Nonetheless, Hoskins subsequently received what he describes as "proposed license denial letters" that listed a slew of reasons for closure of the facilities. Many were vague, he argues: "One in particular said, 'You had someone who wasn't licensed or badged working in your facility,' but it didn't say where or when. And it also said we had more plants than patients, but that didn't have a time or date, either."
The AG's allegations also referenced the criminal case and his supposedly poor moral character as rationales for a shutdown. However, Hoskins notes that "there has been no conviction. I haven't even been arraigned on any of the charges. So it feels as though I'm guilty and I have to prove myself innocent instead of being innocent until proven guilty."
At an initial conference in the wake of the denial letters, Hoskins says he and his legal team brought 300 pages worth of documents intended to refute the assorted claims against him even though figuring out the right ones was nearly impossible without more information from the MED. According to him, a MED representative assured him at the time that there would be no closure until a hearing took place -- but a sit-down hadn't happened when the doors were shuttered last week under circumstances that he suggests were highly questionable.
"When the MED came to Jane Medicals, they essentially detained all of us, which I believe is illegal," Hoskins says, "and when they were interviewing employees, they got into their faces and even screamed at some of them -- like, 'You're a fucking liar! You're a fucking liar!' And when I inquired as to why they were being detained, the MED guy said he could do whatever he wanted to do."
In response, Hoskins, represented by attorney Sean McAllister, filed for the aforementioned restraining order -- but he says the judge, Michael Martinez, ruled that he didn't have jurisdiction and dismissed the case.
Where does that leave Hoskins? He and his attorneys are discussing their next move, and even though attempts to get the attorney general's office to consider a settlement deal or license transfers have gone nowhere, he pledges to fight on. But it won't be easy.
"The biggest thing for me is that fifty people got laid off and didn't receive their final paycheck," he says. "And how do they expect us to pay state and local taxes due next month?" Plus, he goes on, "they told us we're required by law to keep plants alive -- and how can I do that with no revenue stream?"
As a result, he sees the closures as "a death penalty. By the time there's finally a hearing, the businesses will be bankrupt. They won't even exist."
Continue to see our previous coverage about the request for a temporary restraining order, including photos and numerous documents. Original post, 8:50 a.m. April 7: Last June, the Colorado Attorney General indicted Conley Hoskins, owner of two medical marijuana dispensaries, for allegedly attempting to defraud investors -- and last month, the U.S. Attorney's Office filed to take a pot warehouse owned by fellow indictee David Krause, plus $850,000 in seized funds.
Now, the State of Colorado has denied license applications for Hoskins's businesses -- but he's filed for a temporary restraining order that will be heard this afternoon. Details, photos and documents below.
At the time of last year's indictment, as we've reported, Carolyn Tyler, spokeswoman for Colorado Attorney General John Suthers, said, "Just as we suspected, a medical marijuana business was perpetrating fraud. Through tight oversight by the Department of Revenue, this elaborate scheme was exposed and will be prosecuted."
In addition to Krause and Hoskins (owner of Jane Medicals and Higher Health), the 2013 indictment, on view below, names Dallan Dirkmaat, Brenden Joyce, Yesenia Melendez, Audra Wimer, Kurt Criter, Nathan Newman, Ryan Tripp, Carols Meza, Dialyne Parker and The People's Law Firm.
According to that document, Hoskins, attorney Dirkmaat and Dr. Gerald Searle grew up together in Idaho, and the longstanding friendship of Hoskins and Dirkmaat led them to take part in joint business ventures that included construction and car washes in addition to dispensaries. Specifically, the offices for the dispensaries shared space with Dirkmaat's law firm. Searle, for his part, moved his base of operations to the Jane Medicals building, making it easier to write referrals for the dispensary.
A banner from the Jane Medicals website.
As Hoskins began to concentrate on medical marijuana, the indictment alleges that his "plan to expand his marijuana businesses through investments took a turn down the criminal path. This path included defrauding those same individuals who sought to partner or invest with Mr. Hoskins as he expanded his marijuana businesses."
Criter, identified as an established businessman, is said to have been charged with creating a prospectus that was provided to investors and potential partners -- among them individuals outside the State of Colorado. But prosecutors say the information wasn't entirely genuine: "This prospectus included false sales figures, assets and liabilities and made numerous material omissions."
And what did Hoskins and company supposedly do with the cash they collected? According to the indictment, it wasn't poured into the dispensaries but "diverted for other unrelated purposes, including but not limited to paying off personal debts and business debts on the likes of car washes owned by Mr. Hoskins."
The indictment's narrative also maintains that "several members of the enterprise engaged in money laundering and tax evasion. These actions allowed enterprise members to hide their illicit proceeds from law enforcement and/or taxing authorities and to expand their marijuana production capabilities. Despite taxable earnings and/or taxable sales, others achieved similar goals of hiding their illegal marijuana proceeds or collected sales tax from law enforcement and/or taxing authorities by filing false returns or simply failing to collect or pay over trust taxes.
"Some members even used portions from the proceeds from their illegal sales of marijuana and tax schemes to pay for personal items, including but not limited to vehicles and debt on other businesses."
The restraining order request, also shared here, alludes to the indictment but stresses that none of the 71 total counts pertain to Higher Health -- and "the criminal case against Mr. Hoskins and Jane Medicals has not yet been resolved. At this time, the case is subject to a Rule 21 appeal to the Colorado Supreme Court based on the Attorney' General's attempts to disqualify Mr. Hoskins's trial counsel in that case, Stephen Peters."
Moreover, the document quotes from an e-mail sent in May 2013 by Laura Harris, then the executive director of the Marijuana Enforcement Division. In in, the complaint maintains, "the agency promised Mr. Hoskins's attorney that they would not shut down his facility unless and until there was a criminal conviction."
The e-mail, along with numerous other exhibits accompanying the request for a temporary restraining order, are also included here.
This February, months after Harris left the agency (she's currently a consultant for Denver Relief), Hoskins received a "Notice of Proposed Denial" that the complaint describes as "so vague that it was impossible for Plaintiffs to respond to the allegations" -- and when they tried to do so anyhow, they weren't granted a hearing to present what's described as "mitigating material."
Next, on April 2, Hoskins received a "Notice of Denial" letter from Barbara Brohl, Harris's successor. In the document, labeled plaintiff's exhibit A, Brohl spotlights thirteen reasons for the denial, many of them technical; one of them reads, "You failed to have a security camera with placement that will provide a clear unobstructed view of regular activity where medical marijuana is grown, cured or manufactured."
But such matters are topped by the assertion that "you failed to make written notification to the Marijuana Enforcement Division...of any criminal conviction and criminal charge pending against you within ten days of your arrest, summons or conviction," as well as this statement: "Your criminal history indicates that you are not a person of good moral character."
As such, Marijuana Enforcement Division agents shut down Hoskins's operations beginning around noon on Friday. But the complaint, filed by attorney Sean McAllister, argues that "the denials and holds were done without due process and contrary to provisions of the Colorado Rules of Civil Procedure and related statutory and regulatory provisions" and asks a judge to stay the shutdown and declare that the "denial of the license was done without due process."
The hearing on the temporary restraining order is slated to take place at 1:30 p.m. today at the Denver City and County Building, 1447 Bannock, room 259.
Look below to see photos of those indicted last June, followed by the complete indictment and the U.S. Attorney's Office forfeiture documents, plus the Hoskins complaint and numerous exhibits supporting it.
Send your story tips to the author, Michael Roberts.
More from our Colorado Crimes archive circa June 2013: "Marijuana: Conley Hoskins among dozen indicted for 71 counts alleging MMJ fraud."
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