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Press Release

Lincoln Mother and Son Convicted of Conspiracy to Distribute Misbranded Substances, Drug Paraphernalia, and Related Financial Crimes

For Immediate Release
U.S. Attorney's Office, District of Nebraska

Acting United States Attorney Robert C. Stuart announced that on Tuesday, March 28, 2017, co-defendants Allen E. Peithman, Jr., Sharon A. Elder, and their corporations, Cornerstone Plaza, Inc., and AEP Properties, L.L.C., were each convicted of at least one crime after a three-week-long jury trial. Peithman, his mother, Elder, and their respective corporations operated two “head shops” in Lincoln. They operated Dirt Cheap between October of 2013 and August of 2015, and Island Smokes between September of 2014 and April of 2015. In April of 2015, a number of drug overdoses were attributed to the sale of “potpourri” in Lincoln. Island Smokes was selling “potpourri,” also known as “K2” during that time. This led to the execution of a search warrant in April of 2015 during which over 500 packets of “potpourri” and hundreds of pieces of drug paraphernalia were seized. In August of 2015, a search warrant was served at Dirt Cheap, and additional drug paraphernalia was seized.

Peithman was convicted of conspiracy to distribute drug paraphernalia; investment of drug proceeds; conspiracy to distribute misbranded substances; conspiracy to commit mail fraud; conspiracy to structure financial transactions; and commission of an offense while on supervised release. Peithman’s corporation, AEP Properties, L.L.C., was also convicted of the conspiracy to structure. Elder and her corporation, Cornerstone Plaza, Inc., were convicted of conspiracy to distribute drug paraphernalia; investment of drug proceeds; conspiracy to distribute misbranded substances; conspiracy to commit mail fraud; and conspiracy to structure.

After the verdict was returned, additional evidence was presented, and the jury was instructed with respect to consideration of forfeiture allegations seeking forfeiture of real estate, cars, bank accounts, and products used in the above-listed crimes. On March 29, 2017, the jury returned a verdict forfeiting the business checking account for Cornerstone Plaza, Inc., as well as all the misbranded drugs and drug paraphernalia seized from the businesses. The Indictment also included an allegation that a money judgment should be entered against the defendants, and that matter is set for hearing on April 24, 2017.

The conspiracy to commit mail fraud charge carries a possible penalty of up to 20 years in prison. Investment of drug proceeds and conspiracy to commit structuring each carry possible penalties of up to 10 years in prison. Conspiracy to distribute drug paraphernalia and conspiracy to distribute misbranded drugs each carry penalties of up to three years in prison. The crime of committing a felony while on supervised release for which Peithman was convicted carries a possible sentence of up to 10 years consecutive to any other sentence. The corporations face fines of up to $1,000,000 on the structuring conviction. Sentencing for all defendants is scheduled for June 20, 2017.

This case was investigated by the Lincoln/Lancaster County Drug Task Force, the Food and Drug Administration, Homeland Security Investigations, and the Nebraska State Patrol. In response to the verdict, Special Agent in Charge William Conway, FDA Office of Criminal Investigations, Chicago Field Office, said,

“Drugs that are produced and distributed outside the FDA’s oversight put consumers at risk of being harmed. We will continue to work with our law enforcement partners to prevent such drugs from reaching the market and to bring to justice those who endanger American consumers by circumventing FDA's regulatory process."



Updated March 31, 2017

Drug Trafficking
Financial Fraud