Intrepidly, and in seeming defiance of federal law enforcement’s assertion of its authority last month, a concentrated circle of public officials and business interests are determinedly pushing ahead with their vision of transforming Adelanto into California’s entrepreneurial marijuana Mecca. So many irregularities have arisen, however, that the overriding question of the moment is whether the public officials so heavily involved in this transformation are doing this, as they say, to put the city on firm financial footing or whether their real motivation is to exploit the situation and enrich themselves.
Indeed the lure of the money to be made off of the commercialization of the substance once-considered illicit under state law and which remains a Schedule 1 controlled narcotic under federal law seems too powerful for the city’s elected leadership to resist, whether what is driving them is civic or venal. Using the city’s desperate financial condition as its prompting, together with the provision’s of 1996’s Proposition 215, which legalized medical marijuana, and later the 2016 passage of Proposition 64, which legalized the adult use of recreational marijuana, a majority of the Adelanto City Council, with councilman Ed Camargo dissenting, in late 2015 first cleared the way for the city to host marijuana cultivation operations within the city’s expansive industrial park. After a decent-seeming interval, the council then expanded its tolerance of drug sales to include medical marijuana dispensaries which would sell the product to those with medical prescriptions. More recently the council majority has embraced wholesale the concept of the city hosting marijuana storefronts where the drug is to be available to adults over the age 21 looking to use it for its intoxicative effect.
Adelanto, along with Needles, is at the forefront of the new era of marijuana tolerance, while the vast majority of cities in San Bernardino County are remaining far more conservative in their several approaches, with a minority of them allowing rigidly proscribed medical marijuana access or distribution to take place within their city limits, and virtually all of them resisting the prospect of marijuana being sold within their jurisdictions for outright recreational purposes. The mad rush of entrepreneurs to get in on the marijuana bonanza in Adelanto has created an unseemly and wide open atmosphere, leaving many with the overpowering perception that at least some of those entrusted with overseeing municipal operations are themselves seeking to cash in on the situation. Last month, with the FBI’s arrest of Adelanto City Councilman Jermaine Wright, there was confirmation of those suspicions.
On Wednesday, December 6, Wright, who at this point remains a councilman in name only, pleaded not guilty in U.S. District Court in Riverside to charges of bribery and attempted arson of a building. The bribery element of the crime Wright is accused of relates to his promise to an undercover FBI agent masquerading as a would-be marijuana grower and distributor that he would use his position as a city council member to facilitate the altering of city zoning codes so the undercover agent’s business could operate in an area in the city not yet zoned for such operations. Wright further committed to preventing Adelanto’s code enforcement division from interfering with that business. Wright said he would provide this assistance in exchange for $10,000.
Despite having made arrangements through his family members as well as from his own available funds to post the $100,000 bail bond Judge Kenly Kiya Kato specified would allow him to be freed pending trial on November 13, Wright remains in custody. He has not yet met other conditions of his bond release, which include undergoing a psychological evaluation, turning over to authorities all of his one dozen registered firearms and agreeing to desist in participating in Adelanto city affairs in his capacity as an elected official there.
Wright’s November 7 arrest came roughly a year after widespread suspicion with regard to the motives and actions of city officials had begun to settle over Adelanto City Hall, then spread throughout the city of 33,500, in time spilling over into the Victor Valley and beyond that to San Bernardino County in general, and now throughout the state. While city officials said their willingness to allow marijuana production and sales to become a significant percentage of the city’s economic base was simply a logical response to its severely eroded financial status, there were a multitude of indicators that was not the actual case.
A first indicator was the city’s hiring of Jessie Flores as its contract economic development director. Flores had an established history of involvement in governmental scandals, including the diversion and/or misappropriation of public funds perpetrated by disgraced former San Bernardino County Supervisor/Assessor Bill Postmus as well as a scheme cooked up by a coterie of individuals including Postmus and county corruption figures Adam Aleman, Dino DeFazio and Charles Steven Cox relating to the exploitation of the Adelanto Charter Academy. That hustle raked in for its participants $3.1 million in public funds that should otherwise have gone toward the education of students but which was instead diverted to activities, purchases and disbursements having no conceivable academic application, and ultimately into the pockets and bank accounts of Postmus, Cox, Flores, Aleman, DeFazio and their confederates. In the city’s contract with Flores, it permitted him to act on the city’s behalf in seeking to attract businesses into the city while simultaneously allowing Flores to work on behalf of the businesses being courted, either directly as an employee or as a consultant. Thus, Flores was at liberty to work both sides of the street, enriching himself and any partners he had on the side by accepting money from entities seeking to obtain clearance and permits to operate in Adelanto, including marijuana purveyors. In this way, the city was virtually inviting would-be cannabis entrepreneurs to accustom themselves to making payments to a city official to facilitate their projects.
Believing the market for marijuana would prove to be very lucrative, and faced with brisk competition from others seeking to come into the same market they were, investors or operators were ready to seize whatever advantage they could to put themselves into position either at the front of the permit application line or to come into possession of property that could be converted from modestly-priced desert real estate into a thriving marijuana-cultivation operation. In a relatively short period, the town was getting a reputation for according some applicants at the city “special treatment” or “special accommodation.” The suggestion was that those provided such special accommodation were the ones who had hired Flores or were finding some creative way of passing money through to members of the city council.
One case in point is that of David Serrano’s acquisition of a former cocktail lounge that largely catered to airmen at the former George Air Force Base in years gone by, known as the Jet Room, located at 17499 Adelanto Road just south of Joshua Avenue. Having faded after George Air Force Base was shuttered by the Department of Defense in 1992, the Jet Room sat dormant and dilapidating on its 2.25 acre lot. On March 23, 2016, Dmitri Manucharyan purchased the property for $239,000. On October 3, 2016 in a seeming rush, David Serrano, an attorney whose brother Manny Serrano was the spokesman for the High Desert Cannabis Association, entered into escrow to take the 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, Julia, said he intended to convert it into a law office. The broker on the deal was John Woodard, of Woodard Realty in Adelanto. Woodard is a member of the Adelanto City Council, first elected to the city council in 2014, and a key vote in the coalition of council members driving the cannabis liberalization phenomenon in Adelanto. On October 26, 2016 the city council, which to that point had allowed growers to operate in the city but had continued to hold the line on prohibiting retail sales of marijuana, entered into a serious public discussion about allowing marijuana to be sold to end users from dispensaries within the city. Amid a number of proposals, Woodard 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 contemplated as the site of a future law office, or at least it was represented.
Exactly seven weeks after Serrano closed escrow on the Jet Room, the Adelanto City Council held a public workshop, the upshot from 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 the 1996 Proposition 64, but marijuana for recreational smoking purposes under the 2016 Proposition 64. Whoever had an inside track on setting up a pot shop in one of the proscribed 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, just west of Mesa Linda Road and Rancho Road. Contained within that area was the Jet Room.
Ultimately, David Serrano submitted plans to the city calling for the conversion of the Jet Room into a cannabis sales business, replete with sales counters, a “dispensing room” a cashier station and a high-security money counting room, all of which are incompatible with a typical law office. One interpretation is that the Serranos were provided with advance information that the City of Adelanto was not only going to reverse its policy of prohibiting marijuana retail sales within city limits but were told precisely where the zones where those sales were to be permitted would be designated. Woodard, as a member of the city council, was in a position to have that inside information. As the broker on the project, he earned a commission on the sale of the property to Serrano.
A second case in point is property acquisition carried out by Industrial Integrity Solutions, a corporate subsidiary of Frontier Enterprises, which is a company controlled by James Previti. Industrial Integrity Solutions was registered as a corporate entity with the California Secretary of State on November 7, 2016. On November 16, 2016 Industrial Integrity Solutions purchased 31 acres with an address of 12011 Air Expressway at what was the standard price of $35,500 per acre. Thirteen days after that, on November 29, 2016, the Adelanto planning commission rezoned the district around that span of Air Expressway so that marijuana cultivation could take place there. Subsequently, the city’s development services division expedited Industrial Integrity Solutions’ project application and by early February, Industrial Integrity Solutions had obtained an entitlement to proceed with 630,000 square feet of development under roof, to entail 21 structures, within which would be housed some 465,000 square feet of greenhouses in which marijuana is to be grown. Ground was broken immediately thereafter. The alacrity with which the project went from conception and land acquisition, and through the application process, approval and plan checking, not to mention the rezoning accommodation to allow it to occur, was unprecedented, an example of what was variously referred to by city insiders and members of the building industry as “fast passing” or fast tracking.” Yet the sheer speed by which Previti and Frontier Enterprises, which throughout the approval process denied any connection to Industrial Integrity Solutions, were able to effectuate that entitlement to build raised eyebrows. Previti and Frontier have a long held and well-deserved reputation for generosity in endowing the political war chests of the elected officials who ultimately vote to approve their development projects. From the circumstance in Adelanto, observers inferred that it was the largesse from Frontier toward Adelanto officials that had prompted the fast tracking of the Industrial Integrity Solutions project along Air Expressway. When those perceptions were verbalized, however, city officials, in particular Mayor Rich Kerr and Wright, went out of their way to deny the obvious, claiming, rather improbably, that Industrial Integrity Solutions had been given no accommodation out of the ordinary and had to wait in line just like everyone else.
Indeed, an invisible alliance had formed between Kerr and Wright, the primary effect of which was they were able to corral councilman Charley Glasper’s vote on virtually every issue of substance that came before the council. Kerr is a Marine Corps veteran, civil service employee and project manager for Motorola, whose first foray into politics consisted of his successful 2014 run for mayor. After coming into office, he perhaps sincerely embraced the ethos of marijuana liberalization as a financial panacea for the city, which had been driven to the brink of bankruptcy earlier in the decade and had declared that it was in a state of financial emergency in June 2013, a move preparatory toward seeking Chapter 9 bankruptcy protection. Kerr had the advantage of being a former Marine, which lent him the trappings of patriotism and conservatism that would allow him to talk seriously about accepting the social wave that brought with it allowing adults to make a choice about what types of intoxicants they wish to use without subjecting himself to being derided as a left-leaning liberal. Wright, who once claimed that he was a pastor and with his wife, Amber, had welcomed upwards of 50 foster children into his home over the span of a decade, had the bona fides of a caring social conservative, as well. During the first two years of his tenure as a city council member, he had stated publicly that he was opposed to allowing marijuana businesses of any type to set up in Adelanto. Thus, when Wright relented in 2015 to first consider and then actually vote to approve allowing the herb to be grown in the city but not be sold to end users within the city limits, he appeared to put the imprimatur of legitimacy on the shift. In this way, Kerr had come to rely, in part, on Wright for both political support in pushing forward with the city’s plan to generate tax revenue through permitting marijuana marketing in the city, as well as in justifying the policy to marijuana access opponents. The political reality was that the troika of Kerr, Wright and Woodard formed a majority on the council that was adequate to bring about a sea change in Adelanto by which marijuana could become the anchor of the city’s economy. The addition of Glasper’s vote made the move rock solid. Riding that political crest, Kerr dared to think in big concepts, at one point proposing that Adelanto host a university dedicated to scholarship, research and experimentation with regard to cannabis.
Nevertheless, Wright was playing a deep game, one far deeper than Kerr, who appears to take many things at face value, seems to have understood.
Kerr had thrown his lot in with Flores even prior to the time he was elected. Flores had been a political associate of Bill Postmus, who in the first decade of the current millennium had risen to tremendous heights as the chairman of both the San Bernardino County Board of Supervisors and the San Bernardino County Republican Party. With some of Postmus’ feel for the political pulse of the High Desert’s electorate having rubbed off on him, Flores could lay claim, either dubiously or actually, to a degree of political sophistication. Flores in 2014 backed Kerr in his run for mayor and in time, Kerr moved to return the favor, securing Flores the position of contract economic development director with the city. Hitching Adelanto’s wagon to the cannabis star had put Flores into the catbird seat with regard to profiteering as a contact point with would-be marijuana entrepreneurs.
Wright, it is now known, coveted the position that Flores had come to occupy: the city’s official ambassador to the business community, who was given the assignment of attracting investors, entrepreneurs, small and medium sized businesses and corporations alike to Adelanto to have them set up shop there, while simultaneously being permitted under the terms of his contract to go to work for those he was assigned to invite into the city. The city had practically given Flores a license to steal, or at least to engage in a conflict or merging of interests by which he stood to reap tremendous profit. Wright, however, wanted to fulfill that role, albeit in far less open way, indeed in one that was unequivocally illegal. He wanted to be able to approach those interested in setting up cannabis operations in town, tell them he was positioned to smooth the way for their applications and that he was inclined to approve their project proposals with the power of his vote on the council, all for a little fee on the side, of course. It was thus propitious for Wright to get Flores out of the way.
In late 2016 and into the early months of 2017, Wright went to work on driving Flores out of his position. Through a series of moves, including coordinating with public interest groups, attorneys and the press, Wright arranged for a public information blitz highlighting Flores’ past depredations, indiscretions and questionable actions, dealings and associations, while planting seeds of doubt about the ethical and legal implications, to say nothing of the effectiveness, of allowing Flores to remain in the position of economic development director.
Wright’s ploy worked, for a time. In late January, Flores was suspended from his post. Within a month, however, through backroom maneuvering, Kerr, who appeared to be unaware of Wright’s perfidy toward Flores, managed to have Flores reinstated.
By that point, Adelanto had become the focus of federal investigators, including those with the FBI, the Drug Enforcement Administration and the Securities and Exchange Commission.
Coming from a context in which marijuana was yet cataloged as a Schedule One controlled substance, federal agents had some adjusting to do, even though California had essentially decriminalized the simple possession of small amounts of the drug years before and the substance’s legalization in a limited set of other states, such as Washington, Colorado, Oregon and Alaska had provided an existing model for the acceptance of its recreational use. Moreover, on the same day that California voters voted to legalize recreational use of marijuana, so did the states of Maine, Massachusetts and Nevada. Thus, circumstances were changing and the legal commercialism of marijuana was somewhat akin to the growth of broadband internet in the early 2000s. Nevertheless, federal agents were not prepared for the sheer intensity of the frenzy in Adelanto, where the rational and regulated approach utilized elsewhere had given way to a stampede of profit seekers who had, given the far more conservative approach of most other jurisdictions, been literally shoehorned into a single city, where land, at least initially, was so cheap and start-up money was being liberally spent. As the city moved forward on zoning property, land prices within the zones designated to allow marijuana cultivation or end sales of the plant escalated astronomically. The price of property falling outside the zones remained stable, or relatively so. This led to the spectacle of speculators gobbling up the cheap land lying just outside the city’s original cannabis-related use zones, followed by an intensive lobbying campaign targeting members of the city council and planning commission to enlarge the marijuana growth and sales zones to include the recently purchased properties. In a significant number of cases, such as that involving the Jet Room and the property picked up by Industrial Integrity Solutions along Air Expressway, those zone changes were granted.
The Adelanto marijuana commercialization orgy took its toll on Adelanto government.
Jim Hart had been Adelanto city manager since 2004. During that time he had survived dauntingly rough economic times for the impoverished city, where 50 percent of the population is Latino and 30 percent African-American, 39 percent of the population lives below the poverty line and where, according to a 2012 survey, 19 percent of the adult population lacked basic English language skills. Having overcome the lingering 2007 to 2013 economic downturn/recession and the ignominy of having the city declare a state of fiscal emergency in 2013, Hart was, despite his demonstrable survival skills, forced to depart in February 2015. In the November 2014 election, voters had made a clean sweep of then-incumbents mayor Cari Thomas and councilmen Steve Baisden and Charles Valvo, in their place electing Charley Glasper and John Woodard to the council and installing Rich Kerr as mayor. Despite Glasper’s initial opposition to a radical makeover of Adelanto into a haven for potheads, Kerr and Woodard had no such hesitation. Linked up with Wright, who at that point was publicly advocating against establishing Adelanto as the grass smokers’ capital of California but was militating to do just that behind closed doors, the newly formed ruling coalition on the council considered Hart too staid and conservative to last in the city manager’s role.
On the night in February 2015 the city council officially ended the Hart Era at City Hall and appointed city engineer and public works director Thomas Thornton as interim city manager to replace him, the council broached the subject of marijuana availability in the city, with its members avoiding becoming outright advocates for the change by suggesting that Adelanto’s residents should have the “right” to vote on a measure that would allow cannabis dispensaries to operate in the city. By the end of June, however, Thornton had run his course, overwhelmed by the council majority’s steamroll toward cannabis liberalization.
The council then elevated Cindy Herrera, at that time Adelanto’s city clerk who had previously served as executive assistant to then-city manager Pat Chamberlaine beginning in the 1980s, to serve as interim city manager. In March 2016, the council dropped the “interim” designation from her title, making her the city’s full-fledged city manager. But the sledding proved rough for Herrera, who found herself in charge of a city buffeted on all sides by would-be cannabis billionaires made myopic by the dollar signs in their eyes. When one particularly persistent drug dealer who had been illicitly selling the drug to street users for years saw in Adelanto his opportunity to legitimize his operation, he resolved to go through the application process and achieve proper permitting and licensing. As his project submittal wended its way through that process, the applicant found himself and his planned enterprise tripped up by certain technical and procedural requirements. When he lodged a complaint with city council members and the mayor, the Sentinel is told, Kerr told him that the problem resided with staff at City Hall, laying blame for the bureaucratic foot dragging with Herrera and those she supervised. At one point, according to sources, the drug dealer came into City Hall, where he threatened Herrera. Efforts by the Sentinel to reach Herrera and have her verify that account were unsuccessful.
Herrera had misgivings, as well, with the role Flores was playing in the marijuanification of Adelanto. When she moved, in the face of multiple complaints, to suspend Flores, she found herself on the wrong side of Kerr. Despite Wright’s desire to see Flores sacked, his militating against him had been carried out surreptitiously, and he went along with all of his council colleagues when Kerr pressed for Flores to be reinstated. At that point, Herrera was on the verge of being force out entirely, when she chose to voluntarily step back into the position of city clerk, from which position she will be able to remain in place and retire, as anticipated in another five years after a 35-year career with the city.
The council filled the city manager gap temporarily with Mike Milhiser, a journeyman city manager who had led the cities of Montclair, Ontario and Upland for nearly three decades in the 1970s, 1980s, 1990s and 2000s. Not fully appreciative of what he was walking into when he took the assignment, Milhiser shortly after arrival became acutely conscious that what was going on around him might prove to be the events by which the entirety of his professional career would be defined for posterity. He found himself having to negotiate a tortuous path which was beset on one side by elements of the cannabis industry willing to purchase politicians to gain a place at the feast table and politicians demanding that he make accommodations for business interests with dubitable motivations and intentions. Milhiser rode along with Kerr’s program for six months, though it appears that by June, Milhiser was aware that the FBI and DEA were sniffing about town.
In August, the city concluded its search for a full-on city manager, and the interim Milhiser was replaced by Gabriel Elliott, who became the city’s fifth city manager, or acting city manager, in 30 months. Four months later, Elliott is now having second, third and fourth thoughts about what he has taken on, as a majority of the city council without Wright consisting of Kerr, Woodard and Glasper, even in the aftermath of what happened to Wright at the hands of federal authorities, wants the city to be far less tentative in accommodating the demands of the entrepreneurs seeking to establish operations in the city.
Similarly, the city has burned through attorneys at an alarming rate since the city council has been gripped by marijuana-based enrichment fever. In November 2015, city attorney Todd Litfin abruptly resigned, unwilling to do the council’s bidding with regard to drafting and putting into place ordinances, zoning codes and plans to legalize massive scale marijuana cultivation. Julia Sylva was brought in on the fly to put together the cannabis cultivation permitting ordinance that had prompted Litfin’s exodus. Five months later, after Adelanto had processed a prodigious number of applications and approved permits on no fewer than 25 cannabis growing operations, Sylva in April 2016 resigned as city attorney, like Litfin, concerned that her association with wide-open Adelanto might harm her legal career. Bound by professional protocol that mandates she maintain strict confidentiality with regard to her client, she offered no public comment. She was replaced as city attorney by Curtis Wright, of the law firm Silver & Wright LLP. Wright, who is no relation to Jermaine Wright, saw the city through its transition from a jurisdiction that would allow cannabis-related businesses limited only to agricultural operations to one that embraced all level of marijuana-related commercial enterprises, including the medical marijuana dispensaries and the coming advent of recreational marijuana emporiums. But Curtis Wright would, like Litfin and Sylva before him, come to the realization that going whole hog on behalf of his political masters in Adelanto would very likely lead him to territory that would prove treacherous for him professionally and perhaps even legally on a personal level. Wright left after fourteen months in July 2017, prompted by the knowledge that the FBI and DEA had drawn a bead on his bosses. Like Sylva before him, he was not at liberty to publicly disclose all that he had witnessed. Wright was replaced with Ruben Duran, Adelanto’s fourth city attorney in 22 months.
Under the FBI’s microscope were a handful of so-called charities set up by pillars of the community. Some of those non-profits had the patina of legitimacy, such as the Adelanto Nonprofit Corporation, which was set up by the city, and was used to gather funds for public events, like the city parade and civic celebrations. There were others, including one run by mayor Kerr’s wife which has not yet been granted 501 C3 status, all of which purported to use the money for worthy purposes. Providing donations to those charities became a way of generating goodwill. Indeed, the charities provided open cover for “donors” to hand out envelopes stuffed with cash to charity representatives in public settings, including at Adelanto City Council meetings. Would-be marijuana entrepreneurs, including Jerry Davis, the president of CSPA Group, a specialized marijuana-based product manufacturing concern, as well as the head of the Adelanto Growers Association, was in particular heavily involved in making donations to these charity organizations. Nevertheless, charities in Adelanto have historically proven to be particularly vulnerable to exploitation or as means of delivering money on the sly to politicians or public officials. In the 1990s, then-police chief Phil Genaway was taking money out of the police department canine fund, a charity set up so the police department could be outfitted with police dogs. He was arrested, charged and convicted of pilfering that money, which was alleged to have been laundered bribes. In 2007, then-city councilman Jim Nehmans was arrested, charged and then indicted for having made off with over $20,000 in funds and donations to the Adelanto Little League. He and his wife were convicted of embezzlement in 2008. At issue in the FBI probe is what representations the charities in question made about what was to be done with the money they received, what in fact the money was utilized for, the integrity of the accounting by these charities, penultimately the connection these charities had to Adelanto’s decision makers, i.e., the city council, and whether a cogent case can be made that those decision makers received any of that money and voted to advance the fortunes of any of the donors.
When Jermaine Wright was arrested, he was charged with attempting to hire what turned out to be a second undercover FBI agent to torch his business, Fat Boyz Grill. The U.S, Attorney’s Office alleges that Wright was hoping to collect some $300,000 in insurance as a consequence of the loss of that building.
Wright had created Fat Boyz Grill at the old Astro Burger at 11619 Rancho Road, an eatery specializing in hamburgers, barbecue, soul food and seafood in partnership with restaurateur Jack Hall, the proprietor of Fat Jack’s in Apple Valley, as a silent partner. Wright had been assisted by Guillermo Bermudez, a real estate agent and broker with Cal Capital Realty in Adelanto, in putting the Fat Boyz Grill deal together.
“I helped him secure the lease,” Bermudez told the Sentinel. Asked about his dealings with Wright and his take on the councilman’s arrest, Bermudez said, “I read about it in the newspapers, but as for the rest, I have no clue.”
Asked about the impact of marijuana legalization on the real estate market in Adelanto, Bermudez said, “Prices are coming up in real estate.” Despite his involvement in securing financing for Fat Boyz Grill, Bermudez said, “I don’t deal with industrial or commercial. What I deal with is residential. I don’t manage properties. I help buyers and sellers buy and sell properties.”
When the Sentinel sought to delve deeper into Bermudez’s relationship and dealings with Wright, “Bermudez said, “I am not dealing with him.” When he was queried about what collateral Wright had put up to obtain the loan for purchasing the 11619 Rancho Road property and whether the $300,000 Wright apparently hoped to obtain through the arson matched or exceeded Wright’s collateral and the actual value of the property, Bermudez bridled at the question “I am not dealing with him and I am going to stop your phone call right now,” he said. “If you want to find things out, get a court order. I helped with lease is all. Beyond that, you’ll have to get a court order.”
This summer, the FBI’s inquiry into the dealings between Adelanto city officials and the marijuana business interests seeking to locate or having already located into the city was intensifying, with a particularly meaningful focus on the exchange of information between city officials and companies or individuals who had purchased property that was later rezoned to allow cannabis-related activity to take place on it. Under scrutiny was the 31 acres along Air Expressway purchased by Industrial Integrity Solutions and its parent company, Frontier Enterprises, in November 2016, just before that property saw its $35,500 per acre valuation jump to approximately $1.2 million per acre by virtue of the zone change granted it.
Naseem Farooqi, vice president of governmental and public affairs for Industrial Integrity Solutions, had been the corporate functionary designated by Frontier Enterprises to deal with Adelanto city officials in making sure that the marijuana farm project to be built on the Air Expressway property was facilitated. Farooqi, speaking on behalf of Industrial Integrity Solutions, stated publicly and repeatedly assured city officials the project would be one that would create upwards of 500 jobs while fattening the city’s coffers by some $2 million annually through municipal taxes to be paid. Farooqi had succeeded spectacularly, with the city moving ahead with head-spinning rapidity in approving the project. One area of focus by the FBI agents in Adelanto earlier this year was whether Farooqi had paved the way for that success by means of extracurricular generosity toward city officials.
According to the U.S. Attorney’s Office, the FBI was making considerable parallel progress with regard to that question by means of contact one of the FBI’s informants had with Wright. The informant, whom the U.S. Attorney’s Office has designated in court papers as “confidential human source” or CHS for short, put Wright in touch with an undercover FBI agent, identified by the U.S. Attorney’s Office in court papers as UC-1, who represented himself to Wright as someone who wanted to move his marijuana cultivation business to Adelanto and locate it in a property outside of the zone designated by the city for marijuana cultivation. UC-1 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 court papers. Wright indicated he would endeavor to effectuate the zone change for $20,000 and a “donation” to a third party. In mid-July, the Adelanto City Council approved the expansion of the marijuana zone, with Wright voting in favor of the expansion. At that point, however, 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 to the FBI at the time of the city council action. UC-1 then sought Wright’s assistance in fast-tracking an approval for the purported marijuana business, which Wright agreed to do in exchange for $15,000, according to the U.S. Attorney’s Office. Again, no payoff was delivered to Wright, but discussions between Wright and UC-1 progressed relating to UC-1 being granted through Wright’s action an “exemption” that would allow the undercover operative to operate a marijuana transportation business. On October 6 UC-1 provided Wright with $10,000 consisting of two stacks of $50 bills, and Wright assured UC-1 he could curtail code enforcement activities against the marijuana transportation business on an as-needed basis for $2,000 each time his intercession was required.
CHS had also put Wright in contact with another undercover FBI agent, designated by the U.S. Attorney’s Office in court papers as UC-2, after Wright sought the informant’s assistance in setting fire to Fat Boyz Grill. According to the U.S. Attorney’s Office, Wright solicited UC-2 to assist him in burning down his restaurant so he could collect $300,000 in insurance proceeds, and 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, and arranged to have the restaurant’s fire control sprinkler system turned off at the time the arson was supposed to take place.
On October 17, FBI agents executed a federal search warrant at the restaurant and interviewed Wright, at which point he confessed to paying the undercover agent to burn down Fat Boyz Grill. 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, CHS reported to the FBI that Wright had approached the informant, disclosed the FBI search warrant on the restaurant, and referred to UC-2 as a “snitch.” Wright requested the CHS’s assistance in making UC-2 “go away,” i.e., according to the U.S. Attorney’s Office, “soliciting CHS’s assistance to have UC-2 murdered.”
By the time summer had turned to fall, with the FBI’s presence and activities in Adelanto intensifying to a fever pitch, things appear to have grown far too hot for those who had earlier hoped to profiteer, and profiteer heavily, by inducing Adelanto city officials to rezone the property they had purchased at bargain basement prices in such a way that its value would increase by a factor of ten or more.
In late September or very early October, Farooqi took his leave of Industrial Integrity Solutions and its parent company, Frontier Enterprises. He vacated the High Desert and is believed to have left the country.
On October 6, David Serrano and his wife, Julia Orama Serrano, gift deeded the Jet Room property to Lisa Marie Guerra, signing a document that gave Guerra the property for no consideration other than that “of love and affection.” That gift deed was recorded with the San Bernardino County Recorder’s Office on October 11. Guerra is an employee within Serrano’s law office.
Farooqi’s making himself inaccessible to the FBI and Serrano’s gifting of the Jet Room property without realizing a profit on it is likely to make it far more difficult for the U.S. Attorney’s Office to prove or even allege that in the cases involving zone changes to the properties purchased by Industrial Integrity Solutions and David Serrano illegal activity took place.
Wright’s failure to live up to his October 17 commitment to FBI agents to assist them in their further investigation threw a kink into the federal government’s operation in Adelanto. It is not known, precisely, whether in the aftermath of his being confronted by FBI agents on October 17 Wright confided to his council colleagues or others in Adelanto what he had just experienced. If he made such a revelation, it likely greatly limited the effectiveness of what the FBI was able to accomplish with further undercover operations. That issue became moot when on November 7 Wright was arrested by federal agents based on an arrest warrant that had been obtained by the U.S. Attorney’s office on November 6. The cat at that point was fully out of the bag and instantaneously everyone in the Adelanto community recognized that the complexion of the game had changed.
Nevertheless, the advocates for maximizing the profit local entrepreneurs can make from the production and marketing of cannabis and the tax revenue Adelanto can generate by allowing that to happen, remain bold. An illustration of that came last week, on November 30, when San Bernardino County Sheriff’s Department deputies and narcotics investigators descended on the not yet fully completed quarters of Lifestyle Delivery Systems, located at 9501 Commerce Way, armed with a hastily issued search warrant in response to a report that someone was manufacturing methamphetamine there. That initial report was determined to be in error. Nevertheless, a narcotics lab of some sort was discovered on the premises, and upon closer examination it was determined to be one intended for cannabis extraction.
The property is the location of a not-yet-fully completed facility intended to house a state-of-the-art commercial marijuana cultivation and processing facility to be jointly operated by Lifestyle Delivery Systems Inc., headed by its CEO, Brad Eckenweiler, and Jerry Davis’s CSPA Group. There are potential medical or clinical applications for cannabis extracts. One product derived from cannabis extraction is cannabinol, a non-psychoactive cannabinoid found in cannabis which has shown potential immunosuppressive and anti-inflammatory properties that make it medically applicable. However, extraction is more commonly used in the production of hash oil, which contains a concentrated form of the active psychotropic ingredient in marijuana. Under existing law, the extraction of hash oil, as well as the use of volatile or toxic chemicals in doing so, remains a felony under California law. The yet-existing laws on the books specify the punishment for extracting marijuana hash oil as a minimum of three years to a maximum of seven years in state prison.
Based on the sheriff’s department report of the November 30 incident, it appears that the Lifestyle Delivery Systems/CSPA Group activity was not only unlicensed and unpermitted, volatile chemicals were being used in the extraction process rather than the standard non-volatile means, which entail the use of CO2 (i.e., carbon dioxide).
Propane, ethanol and butane, used to “cook,” i.e., process the marijuana to the point where its derivatives can be extracted, were present at the location, as was a significant quantity of concentrated cannabis, believed to be hashish or hash oil, together with lab equipment. All of those items were seized, either by law enforcement personnel or a San Bernardino County Fire Department hazardous materials handling team.
In the midst of the raid, Kerr and Flores arrived at the Commerce Way location. They had a limited exchange with the public safety personnel and left shortly thereafter.
There were reports that four days later, on December 4, while authorities had yet to make any arrests of Eckenweiler, Davis or their employees relating to what the search warrant affidavit described as an illicit narcotics manufacturing operation, Kerr and Flores, accompanied by Eckenweiler and Davis, had sojourned to meet with California Bureau of Cannabis Control officials. It was also reported that Kerr and Flores had attempted to intercede with high ranking members of the San Bernardino County Sheriff’s Department and district attorney’s office in an effort to ameliorate the situation and head off any possible enforcement action or prosecution that might proceed from the November 30 raid. Kerr was publicly offering assurances that any further cannabis extraction activity, either at the facility run by Eckenweiler and Davis or any of a dozen others in the city, would cease until January 1. Kerr suggested that extraction activity will be unequivocally legal by that point at designated and licensed cannabis-related businesses. Kerr’s statement was also taken as an indication that he has nearly universal access to the marijuana- related operations in the city, and the power to control their activities.
While several individuals said Kerr, Flores, Eckenweiler and Davis had earnestly sought to engage with law enforcement and California Bureau of Cannabis Control officials, the city’s spokesman said the quartet were stood up.
Michael Stevens, who is officially authorized to speak on the city’s behalf, on Wednesday told the Sentinel, “There was no meeting in Sacramento It didn’t take place. I don’t know the reason(s) why it didn’t, but it didn’t.”
As for criticism leveled at Kerr and Flores for associating with Davis and Eckenweiler in the aftermath of the raid on their facility last week, and potentially interfering with the enforcement of the law relating to existing state regulation of cannabis and cannabis products, Stevens said, “People can speculate all they want and theorize what ‘city officials’ should or shouldn’t be doing, but we will continue to serve our constituents and clients to the best of our abilities.”
-Mark Gutglueck