By Mark Gutglueck
Former Adelanto Mayor Rich Kerr was arrested today by the FBI on a federal grand jury indictment alleging he accepted more than $57,000 in bribes and kickbacks in exchange for approving ordinances authorizing various types of commercial marijuana activity within the city where he was mayor until December 2018, and ensuring his co-schemers obtained city licenses or permits authorizing certain commercial marijuana activities.
Kerr, 64 of Adelanto, whose full name is Richard Allen Kerr, was taken into federal custody at his home without incident around 7:30 this morning. He is charged with seven counts of honest services wire fraud and two counts of bribery.
Kerr made his initial appearance this afternoon in United States District Court in Riverside, where he was arraigned. He pleaded not guilty and was released upon the posting of a $30,000 bond. He did not waive his right to a speedy trial, which is set to begin on October 4.
According to the indictment returned on August 11, as part of his official duties, Kerr, who served as Adelanto’s mayor from 2014 to 2018, voted on ordinances governing zoning regulations in the city and served on the Adelanto Cannabis Dispensary Permit Committee, which determined the number of dispensary permits that would be issued and which applicants would receive them.
“Beginning on an unknown date, but no later than on or about November 23, 2015, and continuing until an unknown date but no earlier than on or about June 18, 2018, in San Bernardino County, within the Central District of California, and elsewhere, defendant Richard Allen Kerr, together with others known and unknown to the grand jury, knowingly and with the intent to defraud, devised, participated in, and executed a scheme to defraud the City of Adelanto as to material matters, including by depriving the City of Adelanto of its right to the intangible right of honest services of defendant Kerr, namely, the honest performance of defendant Kerr’s duties as mayor,” the indictment states. “Specifically, defendant Kerr secretly used his official position to enrich himself and his co-schemers by: (1) passing ordinances authorizing various types of commercial marijuana activities, including marijuana cultivation, marijuana distribution and transportation, and retail sales of marijuana via a dispensary; (2) drafting zones for commercial marijuana activities to include locations used by his supporters; and (3) ensuring his supporters obtained the licenses or permits they sought; all in contravention of conflict of interest prohibitions applying to defendant Kerr, and in exchange for bribes, kickbacks, gifts, payments, and other things of value.”
As mayor, Kerr supported marijuana legalization, voted in favor of an ordinance authorizing marijuana cultivation in the city, voted in favor of an ordinance authorizing the operation of medical marijuana dispensaries, and voted to authorize the distribution, transportation and testing of medical marijuana, among other commercial marijuana activities. At the same time, Kerr secretly used his official position to enrich himself and his co-schemers by passing those ordinances, the indictment alleges.
Kerr allegedly also drafted zones for commercial marijuana activities to include locations used by his co-conspirators, and he ensured they obtained the licenses and permits they sought in exchange for bribes, kickbacks and gifts, according to the indictment.
That Adelanto was on the FBI’s, the DEA’s, the IRS’s and the U.S. Attorney’s radar has long been known. Shortly after the 2014 election, in which Kerr, John Woodard and Charlie Glasper were elected in a clean sweep that displaced, respectively, former Mayor Cari Thomas and councilmen Charles Valvo and Steve Baisden, after the trio was installed on the council, Kerr and Woodard joined with Councilman Jermaine Wright, who had originally been elected to the council in 2012 and was reelected in 2016, to reinvent the financially challenged city of 34,000 as one embracing the social change afoot in California and elsewhere calling for the decriminalization, and availability, of marijuana. Initially, Kerr, Woodard and Wright said they were interested only in taking advantage of the potential that had been created with the 1996 passage of Proposition 215, the Compassionate Use of Marijuana Act, which allowed the growing and sale of medical marijuana to create a revenue stream for the city. They would do that by allowing indoor cultivation of marijuana to be sold in dispensaries outside the city, they said, while continuing to prohibit the retail sale of marijuana within city limits. Suspicions were raised, however, when dozens of applicants filed into City Hall in 2015, many of them bearing briefcases full of cash, to apply for what was represented as a strictly limited number of operational permits. That frenzy intensified in 2016, even before the passage of Proposition 64 on that year’s November ballot. That measure ratified California’s Adult Use of Marijuana Act, which made, for those having achieved the age of 21, the use of marijuana for the plant’s intoxicative effect legal.
There were unmistakable signs that graft was afoot in the city. In November 2017, Wright was arrested by the FBI after he accepted $10,000 from an undercover FBI agent posing as an applicant for a marijuana distribution business, money which he took in exchange for an assurance that he would assist in keeping the city’s code enforcement division from interfering with that business operation once it was up and running. In May 2018, the FBI served search warrants at City Hall, Kerr’s home, at the Jet Room Marijuana Dispensary in Adelanto and at the San Bernardino office of the Professional Lawyers Group. Items seized included Kerr’s cell phone and computers. The warrants obtained for those searches extended to Kerr’s banking accounts, including his personal account with US Bank and the Navy Federal Credit Union account Kerr, as a former Marine, retained as a veteran.
According to the indictment, Kerr was being paid money by entities who were purchasing property in Adelanto with the intent of establishing marijuana-related and cannabis-related businesses thereon. Those providing the mayor with that money had a financial interest in the city widening its acceptance of such businesses, and ultimately, in exchange for the money he was receiving, Kerr used his elected position to do just that.
“On or about November 23, 2015, defendant Kerr voted in favor of Ordinance 539, authorizing medical marijuana cultivation in the city,” the indictment states. “On or about October 12, 2016, defendant Kerr voted in favor of Ordinance 548, authorizing the distribution, transportation, and testing of medical marijuana. On or about October 26, 2016, defendant Kerr voted in favor of Ordinance 553, an ordinance allowing medical marijuana dispensaries to operate in the city.”
The indictment does not identify by name those individuals and entities involved with Kerr in the graft described in the the indictment, using instead Person A, Person B, Person C, Person D and Person E, as well as Law Firm A and Business A in its narrative. The Sentinel has been able to identify Person A, Person B, Person E, Law Firm A and Business A.
Kerr’s alleged co-conspirators were David Serrano, a lawyer who specialized in plaintiffs’ tort litigation – identified in the indictment as “Person A” – and two individuals – labeled “Person C” and “Person D” – who had business interests in the city, including those involving marijuana cultivation. The Sentinel has identified Person B as Manny Serrano, David Serrano’s brother. Manny Serrano’s activity, while tangential to that of David Serrano, according to what is described in the indictment, did not appear to have risen to the level of a criminal conspiracy. Person E has been identified by the Sentinel as Bill Rinker, a mechanic who worked in the motor pool with the City of Adelanto’s public works department. Law Firm A is Professional Lawyers Group, San Bernardino, which is a law firm owned and controlled by David Serrano. Business, A, the Sentinel has documented, is a marijuana dispensary operated out of a former restaurant/bar known as the “Jet Room, located at 17499 Adelanto Road, at the northeast corner of Adelanto Road and Joshua Avenue in Adelanto.
The bribes and kickbacks were disguised by Kerr and his co-schemers as gifts, donations to a charitable fund, donations to Kerr’s election campaign, or advance payments for the proceeds of planned litigation associated with a motorcycle accident.
In exchange for the bribes and kickbacks, Kerr provided favorable official action on behalf of the city to David Serrano, Person C and other co-conspirators with business interests in the city by authorizing various types of commercial marijuana activities, ensuring his supporters obtained the licenses or permits they sought, and interfering with enforcement activities by city officials.
In one instance described in the indictment, on November 29, 2016, the Adelanto City Council held a public hearing related to an ordinance, including discussion of “overlay zones” within which medical marijuana dispensaries would be located. The initial proposal applied to two zones, neither of which included the Jet Room, which was located on a 2.23 acre lot, the entirety of which was purchased for $450,000 from Dmitri Manucharyan by Serrano and his wife, Julia Orama-Serrano, in a deal in which escrow was entered into on October 3, 2016 and finalized on October 11, 2016.
During the discussion, Kerr requested a change in the boundaries of the second overlay zone, which expanded the zone to include the Jet Room property. The plans for the business initially called for the building to be an attorney’s office, although they ultimately included features that were inconsistent with a legal operation and more consistent with a dispensary, according to the indictment.
On December 5, 2016, Kerr deposited a $5,000 check – dated November 29, 2016 – from David Serrano’s real estate trust account into his bank account. The check’s memorandum line read, “Adv Xmas Fund.”
In May 2017, Kerr voted twice in favor of a city ordinance that included Serrano’s business in the marijuana dispensary overlay zone. In February, June and August of 2017, Kerr deposited three $10,000 checks from Serrano’s law firm, with the memorandum lines of each check stating, “Advance.”
Initially, representations were made that the Jet Room, which was vacant at the time David Serrano purchased it and had not been operational for more than a decade, was going to be converted into a law office.
With the dawn of 2017, however, that pretense was dropped. Manny Serrano, David Serrano’s brother and the spokesman for the High Desert Cannabis Association, became actively involved in the plans for the Jet Room.
According to the indictment, “On or about February 15, 2017, Person A and Person B, a family member of Person A, submitted plans to the city’s planning department to remodel the building. The plans called for the building to be an attorney’s office, but they included items such as ‘elongated sales counters,’ a ‘dispensing room,’ ‘cashier,’ and ‘security room.’ On or about February 28, 2017, defendant Kerr deposited a $10,000 check from Law Firm A into his US Bank account. The memorandum line of the check stated, ‘Plaintiff Advance.’ On or about May 17, 2017, the city council heard the first reading of a revised Ordinance 553 and Ordinance 557, with General Plan Amendment 17-03, which included Business A in a dispensary overlay zone, as discussed on November 29, 2016. Defendant Kerr voted in favor of both revised Ordinance 553 and Ordinance 557, with General Plan Amendment 17-03. On or about May 24, 2017, the city council heard the second reading of revised Ordinance 553 and Ordinance 557, with General Plan Amendment 17-03. Again, defendant Kerr voted in favor of both revised Ordinance 553 and Ordinance 557, with General Plan Amendment 17-03.”
Kerr and David Serrano used a lawsuit that Serrano’s firm had filed on behalf of Kerr in January 2019 naming the Adelanto Grand Prix, Malcolm Smith Racing, the American Motorcycle Association, the Big 6 Grand Prix Series and SoCal MC as a means of laundering kickbacks provided to Kerr by Serrano. That suit grew out of a motorcycle accident Kerr was involved in on January 14, 2017, in which he sustained a broken collarbone, several crushed, bruised or broken ribs and a partially collapsed lung during the first day of the two-day Adelanto Grand Prix racing event at Stater Bros. Stadium held over the January14/15, 2017 weekend. The basis for the suit fell under question almost immediately, as the accident did not occur within the stadium, owned by the city, where the event was being held, but rather in the desert area outside it. For Kerr and Serrano, the legitimacy of the suit and prospect for its success were not at issue, as the lawsuit’s purpose was to provide a cover for Serrano providing payments to Kerr, which were disguised as advances on the future settlement of the lawsuit.
According to the indictment, “’Person C’ and ‘Person D’ had business interests in and out of the city, including business interests involving marijuana cultivation.” The indictment further states, “On or about December 22, 2016, defendant Kerr deposited $4,000 of a $5,000 check from Person C into defendant Kerr’s Navy Federal Credit Union account. On or about June 5, 2017, defendant Kerr deposited a $2,500 check from Person C into defendant Kerr’s US Bank account. On or about April 12, 2018, defendant Kerr deposited a $5,000 check from Person C into his US Bank account. On or about April 27, 2018, Person C gave defendant Kerr $10,000 in cash. On or about April 28, 2018, defendant Kerr sent a series of text messages to Person C, thanking Person C for the $10,000 and saying, in part, ‘I owe you big time, you name it.’ Person C responded by text message, saying, in part, ‘Just returning the favor for all your help.’”
A remarkable element of the criminal scheme outlined in the indictment is the seeming nonchalance with which most of those involved in exchanging money for political favors did so, casually and in a way that could be traced, using checks and accounts with no effort to hide what they were doing other than the somewhat puerile ruse by which David Serrano sought to represent his payments to Kerr as advances on a future lawsuit settlement, and one other exception involving Person C when on April 27, 2018 he provided Kerr with $10,000 cash.
There was some creativity shown, however, in the way in which a payment to Kerr was made in 2018 from an applicant for a marijuana cultivation business, identified in the indictment as Person D. The money did not go directly to Kerr, but rather came through Bill Rinker, the lead mechanic in the City of Adelanto motor pool/public works division. A ruse was cooked up by which an award, ostensibly for hard work and dedication to the city was to be given to a deserving city employee. That employee was to then split the money with Kerr. Rinker was ultimately selected as the recipient of the prize money, and he was cut a check by Person D. Rinker was then obliged to turn over half of that money to Kerr.
According to the indictment, “In or around November 2017, defendant Kerr told ‘Person E,’ an employee of the city, that defendant Kerr had recommended Person E for a $25,000 award, and that defendant Kerr wanted half of that award in exchange for the recommendation. Unbeknownst to Person E at the time, the award was to be paid by Person D.”
In total, according to the indictment, Kerr accepted at least $57,500 in bribes and kickbacks from Serrano, Person C and other co-conspirators.
According to the indictment, “Richard Allen Kerr corruptly solicited and demanded for the benefit of himself and others, accepted, and agreed to accept, a thing of value, namely, money from bank accounts associated with Person A, intending… to be influenced and rewarded in connection with the passage of an ordinance authorizing the creation of medical marijuana dispensaries in the city, the expansion of a medical marijuana dispensary business zone to include the location of Business A, and the approval of Business A as a medical marijuana dispensary.”
The indictment uses similar language in pointing out that “Kerr solicited, demanded, accepted, and agreed to accept money from Person C, intending to be influenced and rewarded in connection with the passage of ordinances (1) authorizing medical marijuana cultivation, and (2) authorizing the distribution, transportation and testing of medical marijuana.” The indictment said Kerr engaged in those acts of political corruption through his votes as a member of the city council and the city’s cannabis dispensary permit committee.
The Sentinel inquired of Ciaran McEvoy, a public information officer with the U.S. Attorney’s Office about the status of the others whose acts are mentioned in the indictment – David Serrano, Manny Serrano, Bill Rinker, Person C and Person D.”
McEvoy said he could not speak to what was in store for them or whether they have already been charged separately or if they are cooperating with the FBI and the U.S. Attorney’s Office.
“We’re not prepared to go beyond what is contained in the indictment,” McEvoy said.
Assistant United States Attorney Sean D. Peterson of the Riverside Branch Office is prosecuting the case under the supervision of Assistant U.S. Attorney Jerry C. Yang, the chief of the Riverside Branch Office of the U.S. Attorney’s Office and Assistant U.S. Attorney Scott M. Garringer, the chief of the criminal division within the U.S. Attorney’s Central District of California operations.
If convicted of all charges, Kerr would face a statutory maximum sentence of 160 years in federal prison.