Affidavit Outlines Lucrative Nature of Synthetic Business
By Lee Hermiston and Mark Carlson, The Gazette & KCRG-TV9
CEDAR RAPIDS, Iowa - During a period of 18 months in 2012 and 2013, one Cedar Rapids business did more than $1.3 million in synthetic marijuana sales, according to federal court documents.
A 27-page affidavit seeking the forfeiture of four properties one in Cedar Rapids and three in Des Moines outlines how staggeringly lucrative the sale of synthetic marijuana, also known as K2, has been for one Cedar Rapids business owner.
According to the affidavit, Mohammad and Melissa Al Sharairei owners of Puff N’ Stuff II, 1545 First Ave. SE, and the Aladdin Restaurant, 4342 16th Ave. SW used proceeds from the sale of synthetic marijuana to purchase 14 to 15 homes, including one in Cedar Rapids for roughly $100,000 cash.
According to federal court documents, the Al Sharaireis were arrested Wednesday and each faces a charge of maintaining a drug-involved premises.
The affidavit for the property seizures and the couple’s arrest warrants were filed Wednesday, the same day federal, state and local agencies raided businesses and residences across the country in the second phase of a global crackdown on synthetic marijuana networks and suppliers. The documents filed by Department of Treasury special agent Michael Hare and a Cedar Rapids police narcotics investigator Bryan Furman includes portions of an interview with Mohammad Al Sharairei in which he admits to purchasing several properties with profits from the sale of incense.
Synthetic marijuana is often sold as incense or plant food but is smoked like marijuana.
All of my monies was going (into) properties, investing, I have this house in here, Al Sharairei is quoted as saying in a Jan. 9 interview. I own this house, I paid cash for it, $100,000.
The court document is seeking the forfeiture of the Cedar Rapids residence to which Al Sharairei was referring, at 142 34th St. SE, as well as three properties in Des Moines. The affidavit states the residences were involved in a transaction or attempted transaction of money laundering.
The defendant real properties also represent criminally derived proceeds based upon the distribution of controlled substance analogues . These properties are therefore subject to civil forfeiture, the document states.
According to the affidavit, Puff N’ Stuff II brought in more than $1.8 million from all sales between Jan. 9, 2012, and June 26, 2013 the day federal agents raided several Eastern Iowa businesses in the first phase of the Project Synergy synthetic drug raid.
Of those profits, 74 percent, more than $1.3 million, came from the sale of botanical sachets, according to court documents. The affidavit states that included in the botanical sachets sales category were the name brands of synthetic marijuana products.
The couple told investigators each of the three shifts at the store brought in $2,000, half of which came through synthetic marijuana sales. The largest selling brand was called Bizarro. According to the arrest affidavit, Puff N’ Stuff II sold 520 1.5 gram packets of Bizarro and 419 3.5 gram packets in December 2012.
From the beginning of 2013 to the June 26 raid, the store sold 6,278 1.5 gram packets, 6,389 packets of 3.5 gram packets and 4,584 10 gram packets.
A Puff N’ Stuff II employee told investigators she was ordered to tell people to leave the store if they used language indicating they were planning to consume the potpourri another term used to describe synthetic marijuana or planning to use it for something illegal.
Al Sharairei’s operation shows why less than a year after the Project Synergy raid hit 11 Eastern Iowa businesses three Iowa City businesses continued to sell the illegal products. Federal, state and local officials seized products and cash from Zombies, Pipe Dreamz and Happy Daze in Iowa City on Wednesday.
It’s an extremely lucrative trafficking scheme, said Jim Shroba, special agent in charge of the DEA’s St. Louis, Mo., division, which covers Iowa. They make a lot of money from it.
Law enforcement agencies served nearly 200 search warrants across 29 states on Wednesday, according to the DEA. Shroba said officials in Eastern Iowa served 10 warrants at commercial and residential properties, as well as storage units.
The warrants were served in Iowa City, Cedar Rapids and Center Point.
One of the warrants in Eastern Iowa was served at an alleged production facility in the Cedar Rapids area where raw material generally some plantlike material such as potpourri was mixed with chemical components, packaged and sent to distributors. Shroba said authorities would not identify the location of the production facility.
Shroba described the Eastern Iowa operation as a substantial distribution organization.
We view these drugs as the new frontier, he said. They’re promoted exclusively as safe alternatives to the real drug when, in fact, looking at overdose death rates, we see that nothing could be farther from the truth.
Added Shroba, They’re right there, distributing in the heart of a major U.S. university . It was a vast organization, no doubt.
A scope of the operation’
Along with cash seizures, Wednesday’s operation netted roughly 100 pounds of packaged K2 and 100 pounds of raw material that had not yet been packaged. Authorities also recovered a handgun, chemical sprayers and pallets of packaging materials.
When you find a pallet-load of those it gives you a scope of the operation, Shroba said. They were selling it faster than they could make it.
Shroba said three people were arrested Wednesday in Eastern Iowa, but would not say if the Al Sharaireis were two of those people.
While Puff N’ Stuff II was raided last June, the synthetic marijuana business continued. The affidavit states that between June 1, 2013, and Aug. 19, 2013, 24 checks totaling nearly $500,000 were written to two synthetic wholesale companies in the Midwest.
Both synthetic wholesale companies and their owners are under investigation for the manufacture and sale of illegal synthetic drugs, according to court documents.
Additionally, the documents state roughly $160,000 worth of spice another synthetic marijuana street name was stolen from Al Sharairei’s vehicle on Aug. 21, 2013. Al Sharairei reported the theft to the Cedar Rapids Police Department, which in turn, contacted the DEA to handle the remaining product.
Al Sharairei allegedly told the agents he wasn’t concerned about them seizing the remaining synthetic marijuana and that he would just order more as soon as they left, and it would be delivered within days.
During the Jan. 9, 2014, interview which Al Sharairei gave to help his immigration status, according to court documents Al Sharairei told the interviewer he was making $1,200 per day in the summer of 2013. However, after the raid, he was pulling in $15,000 to $20,000 a day, according to the affidavit.
While not specifically talking about Al Sharairei, Shroba said synthetic marijuana distributors have full knowledge of the destruction they are causing.
They’re lured into it by the extreme profit that can be generated by these drugs, he said. They’re no different from the cocaine or heroin trafficker. They try to legitimize it by opening up a retail operation called Zombies or Pipe Dreamz.
We don’t view them any differently than any other despicable trafficking operation, Shroba said.
Despite their instistance in interviews about their alleged ignorance of the legality of synthetic marijuana, narcotics investigator Furman’s arrest affidavit indicates he believes otherwise.
I believe they intended the (synthetic marijuana) to be used for human consumption, he wrote. The synthetic cannabinoid products are sold at a smoke shop’ that sells smoking paraphernalia commonly associated with consuming marijuana and other controlled substances ... . Additionally, the high price the Al Sharaire’s charged for these products is indicative of a product that is intended for human consumption, to generate a high’ in its users.
This is not the first time the government has gone after the finances and property of suspected synthetic marijuana distributors. In March, the U.S. Attorney’s Office for the Northern District of Iowa sought to freeze the bank account of Smoke-N-Pipe, 3221 First Ave. SE, in Cedar Rapids. The store was accused of selling K2 to customers in November.
Smoke-N-Pipe owner Amer Ijaz has denied that his bank account contains proceeds from illegal sales. If he does not win a dismissal of the government’s case, he will seek a jury trial.
The call to Puff N’ Stuff II went unanswered Thursday as the phone was disconnected.
l Comments: (319) 398-8238; email@example.com