Two Brothers Plead Guilty to $1.2 Million K2 Distribution at Lebanon Store

SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that two brothers have pleaded guilty to a mail fraud scheme that involved the distribution of more than $1.2 million of synthetic marijuana, commonly referred to as K2, from a store in Lebanon, Mo.

Eric Scott Reynolds, 32, of Lebanon, Mo., pleaded guilty before U.S. District Judge Beth Phillips on Wednesday, Oct. 15, 2014, to conspiracy to commit mail fraud and conspiracy to commit money laundering. His brother, Stephen Brian Reynolds, 35, of Eldridge, Mo., pleaded guilty on Aug. 15, 2014, to his role in the mail fraud conspiracy and to one count of money laundering.

Stephen Reynolds is the owner of Lucky’s Novelties in Lebanon, which distributed K2. Eric Reynolds is employed at Lucky’s Novelties.

By pleading guilty, Eric and Stephen Reynolds admitted that they participated in a conspiracy to commit mail fraud from March 1, 2011, to Dec. 11, 2012. They defrauded the Food and Drug Administration and the public by using mail deliveries in a conspiracy to distribute several products that were labeled as “incense” or “potpourri” and “not for human consumption,” when in reality these substances were synthetic marijuana intended for human consumption as a drug.

Between Sept. 15, 2011, and July 25, 2012, Eric and Stephen Reynolds deposited $1,245,761 in proceeds from the distribution of K2 into bank accounts and a safety deposit box. Based upon DEA undercover purchases, they charged approximately $1 for every 300 mg of K2. Therefore, they distributed approximately 373 kilograms of K2.

Eric and Stephen Reynolds must forfeit to the government $1,167,990, which they obtained in proceeds from the distribution of K2, real estate in Eldridge, funds in bank accounts, approximately $128,000 that was seized from Stephen Reynolds’s residence and a safe deposit box, a 2012 Jeep Grand Cherokee, a 2007 Ducati 1098 motorcycle, three pistols, two rifles and a shotgun.

This case is being prosecuted by Supervisory Assistant U.S. Attorney Michael S. Oliver. It was investigated by the Drug Enforcement Administration, IRS-Criminal Investigations, the Laclede County, Mo., Sheriff’s Department, the Lebanon, Mo., Police Department and the Lake Area Narcotics Enforcement Group (LANEG).