Pubdate: Mon, 18 Aug 2014
Source: Milwaukee Journal Sentinel (WI)
Copyright: 2014 Journal Sentinel Inc.
Contact: http://www.jsonline.com/general/30627794.html
Website: http://www.jsonline.com/
Details: http://www.mapinc.org/media/265
Author: Bruce Vielmetti

FEDS TRYING TO STUB OUT DELAVAN'S SMOKE SHOP VIA CIVIL FORFEITURE

When you run a small town head shop, it's no surprise you draw the
scrutiny of local law enforcement.

That started at The Smoke Shop in Delavan, in Walworth County, in
2007. The store sells tobacco, smoking accessories, novelties, health
drinks, clothing, jewelry, bumper stickers and small foil packages
called incense or potpourri, but which drug agents say is meant to be
smoked like marijuana.

Officers seized glass pipes and made undercover buys of Mimosa root
bark.

Now owners David and Erin Yarmo are facing the biggest crackdown yet.
Federal prosecutors have seized $776,000 from two of the couple's bank
accounts, along with a parcel of undeveloped land in Walworth County,
claiming it's all proceeds or was bought with proceeds of the sale of
illegal substances, and therefore constitutes money laundering.

State criminal drug charges filed against David Yarmo, 44, in March
were dismissed in July. The feds haven't filed criminal charges, only
the civil forfeiture action. The Yarmos, who lost $110,000 of
inventory to a different federal seizure, plan to fight.

"They believe in their innocence and look forward to their day in
court," said John Markham, the couple's Boston lawyer.

At issue in such synthetic marijuana cases is the precise chemical
makeup of the products, with names like MJ Voodoo and MJ Wild Cherry.

The packages typically carry the warning "not for human consumption,"
but buyers smoke the stuff like marijuana. "Users ... have reported
intense hallucinogenic effects including, but not limited to,
paranoia, panic attacks, increased heart rate, hallucinations, and
increased blood pressure," according to government court filings.

But Markham said the products are legal, or were legal when the The
Smoke Shop was selling them.

"The real key here is you really have to drill down into the chemistry
of the products," he said.

The civil forfeiture action includes names like AB-FUBINACA, PB-22,
and 5F-PB-22, compounds federal agents say are analogues to controlled
substances. The latter terms are shortened versions of chemical names.

According to the government, the substances were analogues and could
be treated as if they were Schedule I controlled substances -
including heroin, cocaine, marijuana, LSD and other substances with a
high potential for abuse. And in February, the U.S. Drug Enforcement
Administration used an emergency power to move the substances to the
schedule. The compounds are used in what agents call SSC - smokable
synthetic cannabinoid, or fake pot.

Last year, undercover agents bought incense that later tested positive
for cited compounds. Witnesses told agents some users became addicted,
and long lines sometimes waited outside The Smoke Shop to buy more.
One witness told agents that David Yarmo told him he made $9,000 in a
single day selling SSC. A former employee told agents a manager once
kicked three customers out because they were openly talking about
smoking the products.

In about 11 months, the store generated about $408,000 in sales of
SSC, according to the government's estimate, based on invoices on
wholesale purchases seized from the store and estimated retail prices.
Bags the shop bought wholesale for $2.75 to $14.50 sold for $9.99 to
$40.

 From Feb. 10 to April 4, the shop had revenue of $318,443 from selling
products with AB-FUBINACA, another substance the DEA declared a
Schedule I controlled substance in February, prosecutors claim.

"Had it not been for The Smoke Shop, David Yarmo, and Erin Yarmo's
legal business activities and their commingling of drug proceeds with
the monies earned from these legal activities, the scope, source, and
nature of the estimated $726,390.49 in drug proceeds would have likely
been more readily detected by Walworth State Bank, law enforcement,
and others," the civil complaint reads.

Smoke Shop's legal troubles with federal authorities started in August
2012, when DEA agents seized $110,000 worth of the store's inventory.
Yarmo consented, believing the incense was legal. When he tried to get
it back, agents refused to return it.

U.S. District Judge Rudolph Randa found the government didn't prove
the compounds found in those products were "substantially similar" to
one on the banned list, and said he would have ordered the return of
the inventory. But during that litigation, the government added the
compounds to the DEA's Schedule I, and therefore the goods were
contraband and not returnable, Randa ruled.

The Yarmos then sued for "conversion" under the Federal Tort Claims
Act. Randa dismissed that suit, and last week, the 7th U.S. Circuit
Court of Appeals also ruled against The Smoke Shop, saying the DEA was
immune and the owners should have filed a damages claim with DEA or
the Department of Justice before suing under the act.

Markham said the Yarmos are considering an appeal to the U.S. Supreme
Court.  
- ---
MAP posted-by: Jo-D