LOS ANGELES — The marijuana shops evoked health and homeopathic care, with names like Dana Point Safe Harbor Collective, Belmont Shore Natural Care, Alternative Herbal Care and Costa Mesa Patients Association.
Nine dispensaries in all, they appeared to be run by different owners around Orange and Los Angeles counties in California, little different than any of the hundreds of dispensaries that have popped up in the last five years.
But they were secretly owned and operated by a 56-year-old convicted drug dealer from San Clemente, Calif., who used the stores to make millions.
Federal drug agents say John Melvin Walker, who was arrested in October, was one of the biggest players they have prosecuted in Southern California’s medical marijuana trade. They could recall only one similar case, a man who used the proceeds of his seven dispensaries to buy land in Costa Rica.
On Monday, Walker is expected to appear at the U.S. Courthouse in Santa Ana to plead guilty to two felony counts: conspiracy to distribute more than 1,000 kilograms of marijuana and tax evasion. He must forfeit more than $25 million in assets, cash and business interests — including his Tuscan manor high above the Pacific in San Clemente, two homes in Long Beach and four mobile homes in Mammoth — and possibly pay $4.3 million in tax restitution.
He faces 10 years to life in prison, but prosecutors say sentencing guidelines call for 21 years to 27 years.
The Orange County Sheriff’s Department started the investigation with the help of federal agents.
They took the case to the U.S. attorney because federal penalties are more severe and federal law is clear — all marijuana possession is illegal — avoiding the ambiguity of California’s medical cannabis laws, which do not directly address whether commercial sales of pot are legal.
Assistant U.S. Attorney Christine Bautista said it was common for “drug-traffickers like (Walker) to hide behind the facade of medical marijuana laws and compassionate care, to make millions of dollars and conceal their identities as the true owners/operators of a string of marijuana stores.”
She didn’t know of any other cases involving so many stores.
“It appeared from evidence that he ran a tight ship,” she said. “He instituted regular procedures at all nine shops. He regularly visited to observe. He required managers to report midday and end-of-day figures to him to show cash on hand.”
At the Dana Point shop, detectives found spreadsheets showing sales over 10 months totaled $3.17 million, with $2.47 million cash on hand, according to an affidavit.
When Orange County sheriff’s detectives first conducted searches of properties owned by Walker and his cohorts, they were staggered by the cash. At a Walker rental in Long Beach, they found $390,160.00 in four grocery bags in his garage, along with a shotgun, a Beretta handgun and a Chinese AK-47 with a bayonet. At a stash house in San Clemente, they found stacks of bills stuffed in furniture, in an Igloo cooler and on an ironing board, totaling about $700,000.
In October 2012, 14 people, including Walker — also known as “Pops” — were indicted on 14 counts and arrested.
The indictment alleged that Walker failed to report any income from the shops to the IRS and that he told his bookkeeper “to destroy all records pertaining to income generated at the marijuana dispensaries shortly after they were generated and not to create records that fully identified Walker’s connection to the marijuana dispensaries.”
According to his plea agreement, he might have to forfeit his properties, $535,291 in currency and give up any benefits he got from a $700,000 loan he made to a Charles Westlund and Silent Strippers LLC, and whatever interests he had in six businesses.
Walker’s attorney, Kate T. Corrigan, said Walker is a “devoted family man, a very active parent” to young children. She declined to say how many.
“He is completely devastated that he is going to be separated from his children, and they’ll be separated from him,” Corrigan said. “They’re going to be growing up fatherless.”