The Santa Clara County District Attorney's Office on Thursday charged two San Jose marijuana dispensary executives with illegal pot sales, tax evasion and insurance fraud, and netted a third man during their investigation.
NBC Bay Area's Investigative Unit was the first to report the story.
San Jose Organics owner Ben Lew, 44, and manager Brian Wong, 43, now face more serious charges and potential prison terms after first being arrested in July, mostly on health code and marijuana distribution violations, during a city, state and federal sting. A third man, Ernest Ma, 28, the dispensary's Secretary of Corporation, was also charged Thursday in the probe.
The dispensary's attorney, J. David Nick, blamed NBC Bay Area's Investigative Unit for the original arrests and had no further comment. In July, he said the police and city used "terrorist tactics" against his clients.
Prosecutors brought the case to a criminal grand jury, whose members this week came back adding charges that carry much heftier penalties, according to Deputy District Attorney Ed Liang.
"People like these defendants are profiteers exploiting the medical marijuana laws,” Liang said. “They do this, while at the same time ignoring laws that every other business in California is required to follow."
The felony charges include illegal sales of marijuana, tax fraud, insurance fraud, worker’s compensation fraud, and money laundering. Prosecutors allege that San Jose Organics leaders failed to pay over $2 million in taxes to the state and city, despite the fact that investigators found a paper trail showing the dispensary made approximately $10 million dollars in profit between April 2013 and July 2015.
Lew was charged with 47 counts and and could face a maximum of 46 years in prison if convicted of all counts. Prosecutors said they found $800,000 in cash from his home, and another $400,000 uncovered from other spots linked to the investigation.
Wong was charged with 16 counts and could face up to 23 years in prison of convicted of all counts. Ma was charged with six counts. Ma's maximum penalty is 10 years if convicted of all counts.
In May, the NBC Bay Area Investigative Unit reported on the marijuana dispensary, which San Jose said violated numerous city ordinances, including selling pot to patients younger than 21 in clear violation of city ordinances.