KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that five current and former Kansas City, Mo., residents have been indicted by a federal grand jury for their roles in a $10.5 million conspiracy to distribute synthetic marijuana, commonly referred to as K2, to customers nationwide. They are also charged with smuggling the controlled substance analogue that was used to manufacture K2 into the United States from China, as well as with related charges of mail fraud and money laundering.
“Synthetic drugs are growing increasingly popular among teenagers and young adults, but they are just as dangerous and deadly as the drugs they mimic,” Dickinson said. “We are committed to shutting down these businesses that reap illicit profits without regard for the law or public safety.”
The federal indictment joins other law enforcement operations in 35 states targeting the upper echelon of dangerous designer synthetic drug trafficking organizations. These enforcement actions, part of Project Synergy, included retailers, wholesalers and manufacturers.
Since Project Synergy began in December 2012, more than 75 arrests have been made and nearly $15 million in cash and assets have been seized – including approximately $3.4 million in cash that was seized in the local investigation. Today, law enforcement officers executed over 150 arrest warrants and nearly 375 search warrants in 35 states, 49 cities and five countries.
Derek A. Williams, 31, and Ashli Adkins, 27, both of Laguna Beach, Calif., but formerly of Kansas City, and Jason M. Sparks, 33, Charidy Blankenship, 27 and Daniel R. Williams, 27, all of Kansas City, were charged in a 43-count indictment returned under seal by a federal grand jury in Kansas City on Friday, June 21, 2013. That indictment has been unsealed and made public today following the arrests and initial court appearances of several defendants.
The federal indictment alleges that the defendants, who operated under the business name KC Incense, LLC, participated in a conspiracy to commit mail fraud between March 1, 2011 and Nov. 27, 2012. They allegedly defrauded the Food and Drug Administration and the public by making false representations that Syn Incense products (including “Blond,” “Spearmint,” “Mean Green,” “Orange,” “Fire,” “Ripped,” “Berry Faded,” “Swagg,” “Chill,” “LemonLime,” “Twisted,” “Silver,” “Blowed,” “Suave,” “Smooth,” “Watermelon,” “Vanilla,” “Lite Chocolate,” “Lite Strawberry,” “Lite Cherry,” “Lite Bubble Gum,” “Lite Orange,” and numerous other synthetic cannabinoid products) were incense, potpourri or aromas and not for human consumption. These substances, which were delivered by mail or commercial carrier, were actually synthetic cannabinoids that were intended for human consumption as a drug, according to the indictment.
The federal indictment also alleges that each of the defendants participated in a conspiracy to distribute controlled substances between March 1, 2011 and Nov. 27, 2012. The indictment alleges that they distributed controlled substance analogues.
The federal indictment also alleges that each of the defendants participated in a conspiracy to import controlled substances between March 1, 2011 and Nov. 27, 2012. They allegedly imported controlled substance analogues into the United States from sources in China. These substances were allegedly used to manufacture K2, which was distributed all over the United States. To avoid law enforcement, the indictment says, members of the conspiracy requested the international shipments of the controlled substances to be sent to different addresses in the United States on different dates and that the packages be labeled as “Brightening Agent,” “Optical Brightening Agent” and “Pigments” to decrease the likelihood of interception of the packages by law enforcement.
In addition to the three conspiracy counts, the defendants are charged together in six counts of distributing a controlled substance.
Derek Williams, Adkins, Sparks and Daniel Williams are also charged together in one count of conspiracy to commit money laundering by conducting financial transactions that involved the proceeds of unlawful activity (that is, the conspiracy to distribute controlled substances) with the intent to promote the unlawful activity. The indictment cites a series of wire transfers to various businesses and individuals.
Derek Williams, Adkins and Sparks are also charged together in 29 counts of money laundering. Derek Williams, Adkins and Daniel Williams are also charged together in two counts of money laundering.
Daniel Williams is also charged with one count of money laundering related to conducting a financial transaction in order to avoid federal reporting requirements. Daniel Williams is also charged with one count of money laundering related to conducting a financial transaction with criminally-derived proceeds that was designed to conceal or disguise the nature, location, source, ownership or control of the proceeds.
The federal indictment also contains forfeiture allegations, which would require the defendants to forfeit to the United States any property derived from the proceeds of the alleged criminal activity, including a money judgment of $10,566,306 (constituting the proceeds of the mail fraud conspiracy), the Laguna Beach residence shared by Derek Williams and Adkins and nearly $3.4 million in cash that was seized by law enforcement officers (including nearly $600,000 that was seized from Williams and Adkins during a search of their residence, more than $1.7 million that was seized from their bank accounts and a safety deposit box and $894,160 seized from Sparks’s bank accounts).
Derek Williams and Adkins would also be required to forfeit to the government a 2011 Ford F-150, a 2011 Ford Edge SUV, a 2008 Kawasaki Ninja ZX-10R motorcycle, a Glock 9mm pistol, a Walther .22-caliber pistol, a Mossberg 12-gauge shotgun and a Bushmaster .223-caliber rifle. Sparks would also be required to forfeit to the government a 2010 Chevrolet Tahoe.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Catherine Connelly. It was investigated by the U.S. Drug Enforcement Administration.
Synthetic Designer Drugs
Over the past several years, smokable herbal blends marketed as being “legal” and providing a marijuana-like high have become increasingly popular, particularly among teens and young adults, because they are easily available and, in many cases, they are more potent and dangerous than marijuana. These products consist of plant material that has been coated with dangerous psychoactive compounds that mimic THC, the active ingredient in marijuana. These synthetic cannabinoids are sold at a variety of retail outlets, in head shops and over the Internet. Brands such as K2, Head Trip, Spice, Blaze, and Red X Dawn are labeled as incense to mask their intended purpose. However, they have not been approved by the Food and Drug Administration (FDA) for human consumption or for medical use, and there is no oversight of the manufacturing process.
While many of the designer drugs being marketed today are not specifically prohibited in the Controlled Substances Act, the Controlled Substance Analogue Enforcement Act allows these drugs to be treated as controlled substances if they are proven to be chemically and/or pharmacologically similar to a Schedule I or Schedule II controlled substance. This analogue provision specifically exists to combat these new and emerging designer drugs.