Baldwin Park Officials Helped Fraudulent Business Owner Applying For Cannabis License, Allegations Say – San Gabriel Valley Tribune

A man who bought a cannabis manufacturing license in Baldwin Park now alleges corrupt city officials helped the seller, a front company linked to a former city lawyer, flip the license for more than $150,000 in profit in a scheme that left the new owner saddled with debt.

Company owner David Ju struck a deal to buy the cannabis development deal previously granted by the city council to a company identified as Tier One Consulting in late 2018, although at the time a city ordinance prohibited any transfer of ownership interests by licensees, according to David Torres-Siegrist, Ju’s attorney.

Despite this, Torres-Siegrist alleges in a claim for damages that city officials, including then-city attorney Robert Tafoya, approved an amendment to the development agreement in April 2019 that replaced the previous owners with Ju in an apparent violation of the city’s own laws. . The amendment, signed by then-mayor Manny Lozano and Tafoya, was never presented to council for approval, according to the new lawsuit Torres-Siegrist filed against Baldwin Park.

“In the end, Mr. Ju would eventually discover that he had in fact purchased nothing but an endless cycle of collusively ‘negotiated’ debts between a current city attorney and a future attorney. of the city that was set up for failure from the start,” Torres-Siegrist wrote in the claim.

The claim, usually a precursor to a lawsuit, states that damages exceed $25,000 and will be proven at trial.

Years after the sale to Ju, Tafoya hired the listed principal for Tier One, an attorney named Anthony Willoughby II, as assistant city attorney.

Struggling with debt

Development agreements include annual “mitigation fees” ranging from $235,000 in year one to $330,000 in year three and beyond. These fees are due even if the business is not in operation, which makes it difficult to catch up, according to Torres-Siegrist.

Ju’s company, DJCBP Corp., finally opened for business earlier this year, but it owes the city more than $600,000 in overdue mitigation fees. Ju had experience with liquor license fees and didn’t expect to have to pay until he was up and running, Torres-Siegrist said.

“They have a system in place here which is an endless cycle of debt,” he said. “These owner-operators will never be able to get out of this debt.”

Ju’s claim alleges that city officials and figures behind Tier One “acted in concert to orchestrate a scam on an elderly man dying of cancer who poured his life savings” into the purchase after being convinced that he would find “green gold”.

Tafoya and one of the other figures involved, former Compton adviser Isaac Galvan – a middleman who made $50,000 from the sale – were recently charged with bribery in a plea deal signed by the former Baldwin adviser Park Ricardo Pacheco, a former civil servant who admitted taking bribes to support cannabis development deals.

In his plea agreement, Pacheco alleges that Tafoya, identified as Person 1, participated in several meetings in which Galvan, identified as Person 10, and Pacheco discussed improper payments.

Pacheco then voted in favor of a “marijuana cultivation and manufacturing development agreement” from an unidentified company on July 18, 2018, as part of a settlement with Galvan, according to federal prosecutors. Tier One was one of three companies to be awarded this type of development agreement at the same meeting.

The court filing further alleges that Galvan and Tafoya were “in business together” and were seeking a marijuana license in Trade Town. Public records also show Tafoya’s wife was hired as an administrative analyst at Compton in 2017, with emails at the time indicating she was initially recommended as a community liaison for Galvan.

Tier One owner Anthony Willoughby Sr., Willoughby II’s father, has served as Galvan’s personal attorney in the past. Galvan could not be reached for comment.

“Consultants” act as intermediaries

Pacheco’s plea deal alleges that Tafoya came up with the idea for Pacheco to find an intermediary to act as a “consultant to companies seeking development deals” and suggested that the intermediary specifically request 150,000 $ in exchange for a promise of delivery, the plea agreement says.

Pacheco eventually followed a very similar plan before being arrested.

Now, he and his intermediary, former San Bernardino County Planning Commissioner Gabriel Chavez, have agreed to plead guilty to a corruption charge and to cooperate with investigators in an ongoing and wide-ranging investigation into the corruption in cannabis in Southern California. Pacheco reportedly provided a template counseling agreement that Pachecho could use in the program.

Tafoya, Galvan and Chavez were raided simultaneously by the FBI in November 2020, but neither Tafoya nor Galvan were charged.

Torres-Siegrist alleges that his client is a victim of corruption. Torres-Siegrist represents seven cannabis farmers at Baldwin Park and says “everyone has their own little story to tell about the bulls – what was going on.”

Tafoya resigned in October after Pacheco’s plea deal became public. In a statement, his attorney, Mark Werksman, said Tafoya “denies any involvement in this transaction and had no knowledge of the facts alleged in this claim.” The former city attorney has previously denied any involvement in Pacheco’s corruption. Baldwin Park is now preparing to hire the firm Best, Best and Krieger to represent him.

‘Buyer’s remorse’

In a statement, Willoughby II said he was still working for Tafoya’s law firm on a limited basis. He directed any questions about Tier One’s finances or Galvan’s involvement to his father and denied playing any role in the sale, other than signing on behalf of Tier One. He is listed as the “seller” on the purchase contract.

In an email, Tier One owner Willoughby Sr. accused Ju of having “buyer’s remorse.” Tafoya had no role in negotiations between Willoughby and Ju, he wrote.

“Mr Ju, like many cannabis investors, was caught up in the euphoria of getting rich and when his dream went south he is now looking to capitalize on Mr Tafoya’s misfortune,” Willoughby wrote.

If Ju believes the “baseless defamatory allegation” that he was defrauded, “he should file a criminal complaint,” Willoughby said.

Willoughby said he had been paying rent on a location for almost a year while waiting for city approval and decided to cut his losses after realizing the idea was “fool’s gold” in because of the way the state and municipalities structured their licensing processes. He declined to say how much he earned from selling the development deal to Ju.

Documents provided by Torres-Siegrist suggest Willoughby may have spent less than $4,000 in total.

In response to questions about the transfer, Willoughby cited the “caveat emptor,” a common law doctrine that places the onus on buyers to reasonably investigate their purchases in advance. The Latin phrase translates to “let the purchase beware”.

“A look at the Baldwin Park development agreement would and should have told even a blind man that there was no way to make money from this program,” Willoughby said. .

Role of the Compton Councilor

Torres-Siegrist alleges that Galvan introduced and brokered the sale between Ju and the Willoughbys. The purchase agreement states that $50,000 of the $150,000 payment would go to Galvan “for repayment of a loan.”

In his emails, Willoughby initially said that Galvan “was not involved in the sale” between Tier One and Ju, but then later acknowledged that “Gavan was paid on the product”. He did not respond to a follow-up asking him to clarify the role of the former Compton councilman.

Although referred to as Tier One Consulting in all city filings, Willoughby registered “Tier 1 Consulting & Advocacy LLC” with the state in 2015, but the company has not filed any subsequent information statements. , was declared overdue in 2017 and suspended in April. 2018, according to the Secretary of State’s website.

Still, even though the company did not have an active business license during negotiations, Tafoya and community development manager Gustavo Romo recommended awarding a development deal to the LLC on June 20, 2018, according to a staff report. City Council unanimously backed the recommendation to give a Level One deal on June 20, with Pacheco presenting the supporting motion.

The LLC’s business license was reinstated on June 21, 2018, though the company later failed to file its information return and was suspended again by the end of the same year, according to the secretary’s website. of state.

The business, which had just two employees, got the development approval from the city and then sold it to Ju during that six-month period.

The mayor tries to clean up

Mayor Emmanuel Estrada joined the city council in stride. The city, he said, is still trying to right past mistakes and wants to find a fair system for all cannabis companies.

“I think we’re all aware that it’s complex, that there’s a lot of controversy surrounding the program, but we’re definitely committed to making it work, not just for us, but for everyone.” he declared.

Estrada pledged to push for an investigation into the cannabis deployment to determine whether the corruption attributed to Pacheco involved other city officials or employees.

“I’m going to push for the city to know what’s going on and who’s involved,” he said. “And anyone involved should be held accountable.”