Local Marijuana Dispensary Operators Indicted on Drug Trafficking Charges

JUL 17 --(LOS ANGELES) – The Drug Enforcement Administration (DEA) along with the United States Attorney’s Office of the Central District of California, the Internal Revenue Service - Criminal Investigation, the San Luis Obispo Sheriff’s Department, the Corona Police Department and the Los Angeles Police Department announced today the indictments of owners and operators of four marijuana dispensaries  in Morro Bay, Corona, and two in West Hollywood. These individuals have been indicted on federal criminal charges alleging that they conspired to distribute and distributed large quantities of marijuana, including to minors, for significant profits. Also indicted is a medical doctor who wrote marijuana recommendations for payment including recommendations for minors with no medical examinations.

“The marijuana traffickers arrested today claimed to sell the drug for medicinal value, but it’s clear that marijuana’s financial value was their true motivation,” said Timothy J. Landrum, Special Agent in Charge of the DEA in Los Angeles. “These dispensary operators are no different than any other drug trafficker: they prey on people in our communities to make a profit. DEA and our law enforcement counterparts will not turn a blind eye to flagrant disregard of our nation’s essential drug laws—laws designed to protect our citizens, communities, and children.”

In 1996, voters in California adopted Proposition 215, which authorizes the distribution of marijuana for medical reasons under certain circumstances. Under federal law, however, distribution of marijuana for any purpose is illegal.

In Morro Bay, Charles C. Lynch was the owner and operator of the “Central Coast Compassionate Caregivers” marijuana store. The indictment against Lynch alleges that he and his employees sold more than $2.1 million in marijuana at the store in a one-year time period. The indictment further charges, during the same one-year time period, that Lynch and his employees sold marijuana to 281 minors. Also charged in the indictment is Dr. Armand T. Tollette, Jr. for writing marijuana recommendations for patrons of the Morro Bay marijuana store. The indictment alleges that Tollette wrote recommendations for minors, failed to conduct physical examinations before writing recommendations, and paid “finder’s fees” in marijuana for client referrals.

"This operation was nothing more than a super-sized retail drug-dealing center working under the cloak and smoke of prop 215," said Steve Bolts, Undersheriff, San Luis Obispo Sheriff’s Department. "There was no care, treatment or compassion shown to our operatives during any of our undercover buys, and marijuana was sold to our agents for 2 to 3 times the cost on the streets".

In a separate indictment, Larry R. Kristich and James Carberry have been indicted for operating a chain of marijuana stores in seven different cities in California. The stores, located in Oakland, San Francisco, San Leandro, Ukiah, Bakersfield, San Diego and West Hollywood, did business under the name “Compassionate Caregivers.” The indictment alleges that sales of marijuana and THC laced products at the stores totaled more than $95 million, and that Kristich used profits from marijuana sales to purchase expensive automobiles and real estate in Costa Rica. The indictment charges that, with a business associate, James L. Ealy, Kristich set-up non-drug related businesses to launder the profits of the marijuana stores.

James Carberry was an employee of Kristich and the manager of a marijuana store in West Hollywood known as “Yellow House.” The indictment alleges that Yellow House had an ATM machine and credit card readers in the store to facilitate purchases. In a single month at Yellow House, it is alleged that more than $1.7 million in marijuana and THC laced products were sold.

Debra D. King, Special Agent in Charge, Internal Revenue Service - Criminal Investigation's Los Angeles Field Office, stated: “IRS – Criminal Investigation plays a unique role in federal law enforcement’s war on drugs. Our agents target the profit and financial gains of narcotics traffickers, essentially following the money, to disrupt and dismantle these organizations and enhance criminal prosecutions and asset forfeitures. The results of today’s enforcement operations, including the execution of arrest and search warrants, sends a clear message that selling drugs, and laundering the profits earned from those drug sales, will lead to prison.”

In a separate indictment, John C. Moreaux, a former “Compassionate Caregivers” employee, was indicted for operating a second marijuana store in West Hollywood. In the indictment, Moreaux is alleged to have possessed a shotgun inside the West Hollywood marijuana store. The indictment further alleges that Moreaux has a prior felony conviction, and therefore cannot lawfully possess any firearms.

A fourth indictment charges Ronald B. Naulls, who operated the “Healing Nations Collective” marijuana store in a shopping center in Corona. The marijuana store opened in June 2006. In a nine-month time period, the store conducted sales of more than $1.2 million.

Under federal law, conspiracy to distribute marijuana carries a sentence of up to 40 years in prison, while a violation of the money-laundering statute carries a sentence of up to 20 years in prison.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.

The following individuals were arrested earlier today: Ronald B. Naulls, of Corona; Charles C. Lynch of Arroyo Grande; Armond Tennyson Tollette, Jr. of Culver City; John C. Moreaux of Valencia ; James L. Ealy of Tujunga.

The cases were investigated by the Drug Enforcement Administration, the Internal Revenue Service – Criminal Investigation, the Los Angeles Police Department, the City of Corona Police Department and the San Luis Obispo Sheriff’s Department.