By Mark Gutglueck
Nearly two years after City of Adelanto officials abruptly reversed a long-held opposition to permitting commercial cannabis operations within the 53-square mile High Desert city and a year after indications that some of those officials were personally profiting by facilitating the establishment of such marijuana-related businesses, the U.S. Attorney’s Office filed charges against one Adelanto City Council member this week.
Councilman Jermaine Wright was arrested Tuesday November 7 by FBI special agents after he was named in a criminal complaint filed on Monday charging him with bribery. Wright’s arrest came amid suggestions that he had already begun to cooperate with federal investigators by providing information implicating his colleagues in similar activities.
The U.S. Attorney’s Office and the FBI have alleged Wright engaged in other criminal activities, including attempting to torch the building in which his restaurant is located and seeking to arrange his own beating as part of a ploy to get himself out of his agreement to cooperate with investigators. There is further information indicating Wright sought to arrange the murder of one of the witnesses against him, and that he was at least partially responsible for a 16-year-old high school student having obtained access to a firearm.
On Wednesday, Wright made his first appearance in United States District Court in Riverside to answer bribery and attempted arson-related charges. He remains in custody and will next appear in court on Monday November 13.
The criminal complaint against Wright outlines two schemes. In the first, Wright allegedly solicited and accepted a $10,000 bribe from an undercover FBI agent who told Wright he wanted the councilmember’s assistance in navigating city rezoning and code enforcement issues related to a supposed marijuana transportation business.
In the second scheme, Wright allegedly paid $1,500 to another undercover FBI agent to burn down his restaurant so that he could collect insurance proceeds.
The investigation into Wright’s activities, which began as a probe into political corruption in the City of Adelanto, utilized an informant who introduced Wright to both of the undercover FBI agents and recorded a series of conversations in which Wright discussed both plots, according to the affidavit authored by FBI Special Agent Kevin Boles in support of the criminal complaint filed on Monday.
Soon after the investigation began, the informant – identified in the affidavit as a CHS, or confidential human source – introduced Wright to a man who said he wanted to move his marijuana cultivation business to Adelanto. The confidential human source is not identified by name. Boles states that “The CHS has criminal convictions for receipt of stolen property (1995, a felony), stalking (1995, a felony), obstruction (1997, a misdemeanor), fighting/use of offensive words (1992, a misdemeanor) and possession of controlled substance paraphernalia (2010, a misdemeanor). The CHS appears to be cooperating as a civic duty; the CHS has requested nothing in return for the CHS’s cooperating in this investigation. The CHS has not been paid for service, but has received a total of $47.33 in meals during two CHS debriefs and one operational meeting. The FBI has been able to corroborate most of the information the CHS has provided through independent investigation and consensual recordings, and, as such, has found the CHS to be credible.” The man who purportedly wanted to relocate his marijuana business was in fact an undercover FBI agent who told Wright he was interested in using a property outside of the zone designated by the city for marijuana cultivation. The undercover operative – referred to as UC-1 in Boles’ affidavit – requested Wright’s assistance in expanding the area where marijuana cultivation was permitted.
During a meeting in June, Wright said that “to obtain the necessary votes from the Adelanto City Council for the expansion of the area zoned for marijuana cultivation, UC-1 would have to purchase Wright’s vote,” according to the affidavit. After Wright said that his “price” was “20” – interpreted by the undercover agent to be $20,000 – Wright said a “donation” had to be made to a third party “because he keeps us out of jail.”
In mid-July, the Adelanto City Council approved the expansion of the marijuana zone, with Wright voting in favor of the issue. After the city council action, the undercover agent sought Wright’s assistance in fast-tracking an approval for the purported marijuana business, which Wright agreed to do in exchange for “15.” Wright did not receive the $20,000 for his vote because the city council’s action occurred sooner than anticipated and the funds to pay the bribe were not available at the time, according to Boles’ affidavit. Wright similarly was not paid for his services in speeding up the permit process for the marijuana cultivation operation because it required the purchase of a property prior to paying the bribe. However, the informant later told the FBI that Wright was willing to take money in exchange for his help in securing an “exemption” that would allow the undercover operative to operate a marijuana transportation business.
After two meetings with the informant in which Wright discussed how the undercover agent could open a marijuana transportation business, Wright participated in a third meeting that also involved the undercover agent. “During a meeting on October 6, UC-1 then placed $10,000 dollars on a box being used as a table, made up of two stacks of $50 bills, and told Wright, ‘That’s for you, or your non-profit, whatever,’” according to the affidavit. “Wright responded, ‘My non-profit, yes sir, thank you, sir.’ Wright eventually placed the $10,000 in his pocket.”
After taking the bribe, Wright said he would assist with code enforcement and votes, according to the affidavit. Wright also said that he could curtail code enforcement activities against the marijuana transportation business but that it would require a “stack” – which Wright identified as $2,000 – each time Wright interceded.
In the second scheme, Wright sought the informant’s assistance in setting fire to Wright’s business, an Adelanto restaurant called Fat Boyz Grill. The affidavit alleges that Wright subsequently solicited a second FBI undercover agent (UC-2) to assist Wright in burning down his restaurant so he could collect $300,000 in insurance proceeds. Wright eventually paid the second undercover agent $1,500, gave the agent a tour of the restaurant, and assisted in the planning of the arson by providing a ladder for the undercover agent and discussing various tactics to maximize the damage.
The informant first reported the arson scheme to the FBI in early August, according to the affidavit. In late August, the informant reported that Wright had again sought his assistance in finding someone to burn down Fat Boyz Grill. In late September, Wright asked the informant to pass his cell phone number to the “electrician” – so named because Wright wanted the cause of the fire to appear to be an electrical problem.
Wright met the “electrician” – actually the second undercover FBI agent – on October 3 and said he wanted the fire on the following Saturday when the sprinkler system would be turned off, according to the affidavit. After Wright assured the undercover agent that his insurance policy covers everything, the “electrician” agreed to do the job for $1,500. At a meeting three days later, Wright paid the $1,500 after the undercover agent told Wright he needed more time to prepare for the job.
On October 17, FBI agents executed a federal search warrant at the restaurant and interviewed Wright. According to Boles’ affidavit, Wright confessed to paying the undercover agent to burn down Fat Boyz Grill and that the would-be arsonist assured him that “this place be gone.” The FBI told Wright that the “electrician” was providing agents with information about the scheme. The affidavit states that, after Wright confessed to the attempted arson plot, Wright agreed to cooperate with the FBI’s investigation into corruption in the City of Adelanto, which included agreeing to surreptitiously use a recording device if requested by the FBI. He further committed to telling the truth and maintaining the confidentiality of the investigation.
The very next day, October 18, the informant reported to the FBI that Wright had approached the informant, disclosed the FBI search warrant on the restaurant, and said that the so-called electrician was a “snitch.” Wright requested the CHS’s assistance in making UC-2 “go away,” according to the affidavit. Boles states in the affidavit, “The CHS reported to the FBI Wright was soliciting CHS’s assistance to have UC-2 murdered.” According to the affidavit, the CHS was unable to record Wright making that request because “Wright had approached the CHS without advance notice. The CHS was not able to record the conversation due to the impromptu nature of the contact.” When the FBI arranged to have the confidential human source broach with Wright the subject of dealing with UC-2 in a circumstance in which Wright’s utterances could be recorded, Wright was suggestive but not explicit. According to the affidavit, Wright said, “I am already in enough hot water as it is. You brought shit to my door. Do whatever you do to get shit off my door. I have a defense attorney that can beat anything. The shit has to go away from my front door. They [the FBI] want to flip me and … this is all they have on me. Whatever you do don’t come back to you and doesn’t come back to me, and I don’t give a fuck what happens. I really don’t, but this shit needs to be cleaned up.”
Wright on October 23 contacted the informant and asked the informant to subject him to a beating. According to the affidavit, one of the reasons Wright wanted to be assaulted was to obtain “the dismissal of criminal charges due to memory loss Wright would claim he suffered as a result of the assault.” The informant recorded the conversation. “Wright started the conversation by asking the CHS, ‘So, how much is it going to cost to get my ass beat?’ Wright continued, ‘And it needs to happen quickly, though. Beat to the point where I have memory loss, all the rest of the stuff. They have to let me go… I have a good ass attorney.’” Wright instructed the informant to “put a rat next to me,” explaining that the FBI “would suspect someone has found out that I have talked to them [the FBI], and they’re sending me a message.” According to the affidavit, Wright continued, “I am going to lose at least three months of memory or more. I just need to be fucked up, real good.” A secondary benefit of the beating in addition to getting the FBI off his back, Wright said, was that it would induce his estranged wife to “return to him and comfort him while he is in the hospital,” according to the affidavit.
On the morning of November 3, the San Bernardino County Sheriff’s Department received a call for medical aid from an employee at Fat Boyz Grill. When deputies responded, they observed Wright on the ground in the restaurant’s parking lot being treated by firefighters. While he had no visible injuries, Wright was transported to a hospital, and he reported being attacked and robbed by an unknown assailant.
Wright was taken into custody on Tuesday by FBI agents after he was summoned for another interview.
The case against Wright is the product of an ongoing investigation being conducted by the Federal Bureau of Investigation and IRS Criminal Investigation.
For nearly a year, there have been recurrent and strengthening signs that federal investigators were zeroing in on insider trading conflicts involving Adelanto city officials relating to those officials’ collusion with a number of investors seeking marijuana cultivation operation and cannabis and cannabis product sales operation licensing in Adelanto.
In 2013, the City of Adelanto declared a fiscal emergency, which was widely perceived as a precursor to that municipality filing for Chapter 9 bankruptcy protection. Despite the city’s dire financial circumstance, city officials steadfastly refused to entertain proposals put forth by a number of individuals calling for the city to license the operation of medical marijuana clinics within the city and impose a tax on sales at those enterprises as a ploy to generate revenue for the city. City officials at that time insisted that stooping to profit off the sale of the drug would serve only to further damage the city’s already poor image. In the November 2014 election, three members of the five-member city council were turned out of office. Incumbent mayor Cari Thomas and incumbent councilmen Charles Valvo and Steve Baisden failed in their reelection bids and were replaced, respectively, by Rich Kerr, Charley Glasper and John Woodard. That changeover had no immediate impact on the city’s consistent rejection of licensing marijuana operations, as Glasper, who had formerly served on the council, was one of the most outspoken opponents of marijuana liberalization in the High Desert. In the summer of 2015, however, the council retreated from its anti-marijuana stance, passing an ordinance which still banned dispensaries and clinics from operating in the city but allowed marijuana cultivation operations to set up as indoor nurseries within the city’s industrial park district, a move the council said would generate substantial tax revenue rather than the nickels and dimes that would ensue from smaller scale retail sales to end users. The council’s turnaround was a remarkable one, raising eyebrows and suspicions. City attorney Todd Litfin resigned over the matter, and the ordinance that emerged was crafted by interim city attorney Julia Sylva, who was hired on a 90-day contract on the very day, November 18, 2015, that the ordinance was first considered in public by the council.
Almost immediately, Adelanto City Hall was overrun by a horde of would-be millionaires applying for cultivation licenses. On one occasion, the line of applicants wound from the business license/planning department counter through City Hall’s foyer and out the door. When then-city manager Cindy Herrera learned that many of those in the line were carrying briefcases or suitcases full of cash, she abruptly shut City Hall down and sent the city’s employees home, ending all operations at the municipality’s headquarters on that day out of concern that in such an atmosphere the temptation toward wrongdoing and the chances of misperception or misinterpretation were too great.
Nevertheless, city officials seemed to court suggestions and suspicions that something was amiss. The game changed once more in November 2016 when what was known as Proposition 64, the Adult Use of Marijuana Act, was approved by California voters, liberalizing the marijuana use atmosphere in California beyond merely tolerating its availability for medical purposes and allowing those of the age of majority to use it recreationally. Adelanto city officials took stock of the fact that they were already at the head of the marijuana sales bandwagon and could parlay that into even more money for the city.
Despite the change in state law, marijuana remains as a prohibited substance under federal law. In that circumstance a question of moment with federal authorities has become whether some of Adelanto’s officials have decided to cash in on the bonanza personally..
One matter that came under the microscope of the FBI, the Drug Enforcement Agency and the Securities and Exchange Commission was that involving an attorney, David Serrano, and his brother, Manny Serrano, and a long-neglected property on Adelanto Road.
The Jet Room, located at 17535 Adelanto Road just south of Joshua Avenue, was a cocktail lounge that had catered to airmen at the former George Air Force Base before the aerodrome was shuttered by the Department of Defense in 1992. While its owners had hoped that the bar would be able to sustain itself after the airbase was converted to a civilian aviation facility now known as Southern California Logistics Airport, that effort never panned out. Consequently, the Jet Room and the 2.25 acres upon which it sits lay dormant and dilapidating for close to a decade-and-a-half.
On March 23, 2016, Dmitri Manucharyan purchased the property for $239,000. On October 3, in a seeming rush, David Serrano entered into escrow to take the old Jet Room off of Manucharyan’s hands, paying $450,000 for it. The transaction was completed on October 11, 2016. Serrano, who purchased the property in conjunction with his wife, said he intended to convert it into a law office. The broker on the deal was John Woodard, of Woodard Realty in Adelanto, the same Woodard who was elected to the city council in 2014. On October 26, the city council held a discussion about allowing marijuana to be sold to end users from dispensaries within the city. Amid a number of proposals, Woodard at first indicated his support for a proposed marijuana marketing zone that went no further south than Joshua Avenue, stopping slightly north of David Serrano’s newly acquired property, which at that time, was still being represented as the site of a future law office.
Exactly seven weeks after Serrano closed escrow on the Jet Room, the Adelanto City Council held a public workshop, the upshot of which was a tentative proposal to re-zone two areas within the city in a way that would make them eligible to host medical marijuana dispensaries. With the passage of Proposition 64 three-weeks earlier, that meant that the dispensaries would very likely at some future date be selling marijuana not just to those with medical prescriptions under 1996’s Proposition 215, known as the Compassionate Use Act, but to those using the substance for recreational smoking purposes under 2016’s Proposition 64. Whoever had an inside track on setting up a pot shop in one of the delineated areas stood a substantial opportunity to get rich. As it would turn out, one of those zones the council decided to designate was the area between Pearmain Street, Air Expressway, Rancho Road and just west of Mesa Linda Road. Contained within that area was the Jet Room.
Involved in the public discussions relating to David Serrano’s recently-acquired Adelanto property was his brother, Manny. The Serrano Brothers’ sudden interest in the Jet Room made some people curious as to what was actually going on. The Serranos had previously bought a three-acre parcel in the city’s industrial park and had applied for a permit to operate it as a marijuana cultivation facility. And Manny Serrano is, or had been, the official spokesman for the High Desert Cannabis Association.
Meanwhile, David Serrano had submitted to the city an application for the conversion of the Jet Room into a law office. The declared intended use of the property allayed, at least ostensibly, the suspicion that something untoward had occurred. If indeed the interior of the Jet Room were to be transformed into offices for lawyers, paralegals, investigators and secretaries, the likelihood that it would be a storefront selling marijuana diminished.
What emerged, however, was that when David Serrano submitted his actual plans to the city for what he intended to do at 17535 Adelanto Road, they looked nothing like what was needed for a law office. Indeed, they included what was unmistakably the quarters for a dispensary, including display counters or tables, “a dispensing room,” a cashier station and a security room for safeguarding large amounts of cash.
An inference that many people drew was that the Serranos had not only been provided with advance information that the City of Adelanto was going to reverse its policy of prohibiting marijuana retail sales within city limits but also were told in which zones those sales were to be permitted.
And the Serranos may not have been the only ones provided with that inside information. There was a flurry of activity with regard to land acquisition in Adelanto in the fall of 2016, including six properties in the area being considered for the district in which marijuana sales will be permitted, four of which were finalized. In fact, on November 29, the very day the council held its workshop to discuss creating that retail zone, Industrial Integrity Solutions purchased property at 12011 Air Expressway. Industrial Integrity Solutions had already raised suspicions it had previously participated in an inside information scheme in Adelanto when its parent company, Frontier Enterprises, bought 31 acres for its marijuana farm less than two weeks before the planning commission made a re-zoning of the property to accommodate that use. By buying the Air Expressway property just a few hours before city officials indicated their readiness to put it into the marijuana sales district, Industrial Integrity Solutions cut hundreds of thousands of dollars or perhaps more than $1 million off the asking and eventual sales price on that property.
In addition, Adelanto’s contract economic development director, Jesse Flores, has championed the city’s efforts to attract cannabis retailers. His contract does not preclude him from representing business interests, and questions emerged about his relationship to some entities looking to establish large scale marijuana nurseries or dispensaries.
In July 2015, Adelanto City Clerk Cindy Herrera agreed to fill the role of city manager, at least temporarily. In March 2016, the council sought to make that a more permanent arrangement. Last January, in one of her last major acts as city manager, Herrera suspended the city’s contract with Flores, saying too many questions had been raised with regard to his activity. Within three weeks, however, the city council rescinded the suspension, putting Flores back into place. Around that time, Herrera insisted on returning to her previous position as city clerk, abandoning the city manager post. Given the totality of the circumstance, rumors began to spread to the effect that amid money exchanging hands, Flores had been turned by the FBI and had become an informant. It was suggested that Herrera’s well-intentioned cashiering of Flores had interrupted the FBI and DEA operations. Word was that Flores was wearing a wire and was, while ostensibly serving in the capacity of the city’s economic development director, trolling on behalf of the feds to find cannabis operation applicants who might bite at his offer to represent them, for a price, in facilitating their applications, something that might be construed as offering a city official a bribe.
Herrera’s apparent unwillingness to remain in place as city manager in the midst of all of the goings-on in Adelanto over the last two years is similarly reflected in the turnover in city attorneys that has taken place in the same time frame. Ruben Duran is Adelanto’s fourth city attorney since 2015. In late 2015, city attorney Todd Litfin bailed on the city as the city council accepted allowing marijuana growing operations to set up there. Julia Sylva replaced Litfin, having been brought in on the fly to put the finishing touches on the cannabis cultivation permitting ordinance that had prompted his exit. Because of concerns about Flores, Sylva thought it advisable for her to leave in April 2016, just five months after she came into the position. She was replaced by Curtis Wright [no relation to Jermaine Wright], of the law firm Silver & Wright LLP. Curtis Wright lasted fifteen months, but in July, he abruptly announced he would leave as city attorney.
Several individuals in high-ranking positions with the city appear reluctant to remain in the administrative or legally sensitive positions they were entrusted with.
Clearly at issue is whether those standing to make money off of the recently-manifested and still-manifesting changes in Adelanto’s ordinances pertaining to marijuana-related operations have offered money – in the form of bribes or kickbacks – to the officials making those changes, whether those changes were formulated to advantage anyone already positioned in Adelanto in exchange for that generosity or whether information was provided in a timely manner to any of the entities that now stand to profit so they were able to advantageously position themselves by securing property ahead of escalating land costs. Boles’ affidavit appears to suggest the investigation has churned up at least one indication that others beyond Wright were on the take. The affidavit states that “UC-1 confronted Wright about the vote to re-zone the land before UC-1 purchased a property and paid Wright the requested $20,000. In the recorded conversation, UC-1 told Wright, ‘We had the first conversation, I think, fuck, everything’s good to go. You know, uh, for the size of the investment, the 20, or possibly 10 for the other dude…’ Wright replied by saying, ‘And now it’s nothing, ‘cause it’s already done.’” There is no indication in the filing who “the other dude” is.
The matter is of interest to federal law enforcement and securities regulation officials because federal law is more sharply defined in this regard than is California law.
The U.S. Attorney’s Office and the FBI acknowledge that FBI agents had hoped to use Wright to suss out from his council colleagues or others whether payments have already been made or are in the process of being made for official action benefiting the providers of those payments.
The FBI considered that effort compromised when it learned on October 18 that Wright had disclosed to the informant known as CHS that he was in contact with the FBI. The Sentinel has learned through well placed and reliable sources that those other than Wright under scrutiny by the FBI include all members of the Adelanto City Council, in particular Woodard; Flores; both Serrano brothers; and James Previti, a principal in Industrial Integrity Solutions and Frontier Enterprises.
If convicted of the two charges in the complaint, Wright could face a statutory maximum sentence of 10 years in prison for the bribery count and up to 20 years in prison on the arson charge, which carries with it a mandatory minimum prison sentence of five years in prison. The seriousness of the charges filed against him and the length of prison time he is potentially exposed to provide him with an incentive to now be as truly cooperative as his actual knowledge of what transpired will permit.
Wright’s legal travails are not limited to the federal charges filed against him. On Thursday, the Sentinel learned that investigators with the San Bernardino County Sheriff’s Department have determined that the Glock Model 21 .45-caliber handgun and ammunition magazine found in the backpack of a 16-year old Silverado High School student on November 1 was registered to Wright. It is not clear what action state authorities will take with regard to the firearm.
The bribery and arson case is being prosecuted by Assistant United States Attorneys Sean D. Peterson of the Riverside Branch Office and Joseph B. Widman, Chief of the Riverside Branch Office.
By Mark Gutglueck