Later today, the Colorado Attorney General's office will formally release a 71-count indictment targeting businessman Conley Hoskins and eleven others with defrauding investors who wanted to cash in on the state's booming medical marijuana industry.
We got an early look at the document. It details a complex plot involving Jane Medicals, whose website notes locations in Denver and Lakewood.
When asked about the indictment, Carolyn Tyler, spokeswoman for attorney general John Suthers, says, "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 Hoskins and Jane Medicals, the indictment maintains that Dallan Dirkmaat, David Krause, Brenden Joyce, Yesenia Melendez, Audra Wimer, Kurt Criter, Nathan Newman, Ryan Tripp, Carols Meza, Dialyne Parker and The People's Law Firm were also involved in "the racketerring activity that was related to the conduct of the enterprise."
According to the 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.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."
Spokeswoman Tyler believes this scam was the first of its kind to be prosecuted by the AG's office. She declines to speculate about whether others are perpetrating similar fraud. In this case, though, "the process worked as intended."
Update: Here are photos of the individuals named in the indictment, as provided by the Colorado Attorney General's Office. The document itself follows.Continue for more photos of those indicted in the 71 count fraud allegation, plus the indictment and a release from the Colorado Attorney General's Office. Continue for more photos of those indicted in the 71 count fraud allegation, plus the indictment and a release from the Colorado Attorney General's Office. Continue for more photos of those indicted in the 71 count fraud allegation, plus the indictment and a release from the Colorado Attorney General's Office.
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