Published September 28, 2006 by Adam Ashton, Bee Staff Writer

U.S. Drug Enforcement Administration agents on Wednesday busted up Modesto's only medical marijuana dispensary just one day after the City Council discussed a strategy to shut it down.

A morning raid on the California Healthcare Collective and seven homes associated with its directors netted four arrests, three handguns, $16,000 in cash, 60 pounds of processed marijuana and 34 pounds of baked goods laced with the drug.

Authorities also froze eight bank accounts linked to the collective's directors.

The raid followed a 15-month investigation in which Modesto police and DEA agents purchased cannabis from the clinic with fake doctor recommendations and repeatedly found medical marijuana bought from the collective in the hands of healthy people, according to an affidavit the Department of Justice filed in federal court.

Authorities arrested Healthcare Collective directors Luke Scarmazzo and Ricardo Montes, both 26. They are due to be arraigned in federal court in Fresno on Friday on suspicion of distributing marijuana and conspiring to distribute marijuana.

Employees Jose Malagon, 33, and Antonio Malagon, 28, also were arrested and face the same charges and also will be arraigned Friday in Fresno. Authorities said the Malagons live together, but it was unknown if they are related.

If convicted, they would serve a minimum sentence of 10 years in prison, said Assistant U.S. Attorney Larry Brown.


DEA Agent Gordon Taylor said the clinic's directors shielded a drug ring behind Proposition 215, a state law that allows chronically ill people to use medical marijuana. Federal law does not permit marijuana use.

"This case is just another example of where state medical marijuana laws have been exploited to the point of being a joke," said Taylor, calling the clinic's directors "common drug dealers."

An attorney defending the clinic's directors said they were in compliance with state law.

"They pay their taxes," said Robert Forkner. "They provide a necessary service for the citizens of the community and they're not guilty of all the charges."

Brown described the collective as a "flagrant violation" of federal law.

He and Taylor pointed to the $4.5 million the collective earned since it opened in late 2004 to show that it was violating a state law that allows only nonprofit cooperatives to distribute the drug.

The affidavit depicts the clinic directors as criminals who carried guns and stacks of cash.

"This is not a medical marijuana issue. This is a lot of drugs getting into our community," Police Chief Roy Wasden said.

Scarmazzo recently released a music video in which he raps, "I'm a businessman. Let me do my business, man." The song includes a line "Put your fingers in the air and yell (expletive) the feds."

"This is organized crime," police Sgt. Craig Gundlach said. "It's sickening to see someone like this take advantage of something the California voters thought was compassionate."

Forkner said the collective opened its books to the city to show it was operating as a nonprofit. He said the directors carried cash they intended to deposit. They sometimes had guns for security, Forkner said.

The raids began about 8 a.m., with agents serving warrants at the clinic and the seven resi-dences around the city.

Santos Lopez, a clinic employee who drove to one of the homes on Edgebrook Drive, was detained and released by DEA agents.

He said he was roughed up by agents who kicked him and rubbed his face in the ground even though he complied with their demands. He had a reddish bruise under his right eye.

"They were basically manhandling me," he said.

Gundlach said Lopez's detainment was appropriate because he drove up to the house and tried to speed away.

"I know that he may feel differently, but as far as the indicators we see, this was a justified detention and a justified use of force," Gundlach said.

Brown, the federal attorney, said the arrests would not do anything to clear confusion between state and federal marijuana laws. He and Taylor refused to describe the criteria they use when deciding whether to break up a pot dispensary.


Some medical marijuana advocates note that raids tend to take place where local governments oppose any use of the drug, such as in San Diego County.

Other communities that regulate pot dispensaries, such as Oakland, tend to avoid conflicts with federal drug agents, said William Dolphin, a spokesman for the advocacy group Americans for Safe Access.

"When local authorities become antagonistic to medical marijuana patients, then the DEA becomes more active," Dolphin said.

Wasden said it was a coincidence that the raids took place a day after the council discussion.

The council first tried to close the clinic in December when it passed a law banning for-profit pot dispensaries; the collective later registered as a nonprofit in the secretary of state's office.

City Manager George Britton declined to say whether he knew about the raids in advance. He said it was unlikely that the failure of the city's first attempt at banning medical marijuana dispensaries prompted the crackdown.

Councilman Will O'Bryant said he "had an inkling" about the investigation that led to the raids, although he said it was a coincidence they took place a day after the council discussion.

He said he sympathized with people who need medical marijuana to ease the symptoms of chronic illnesses, but he said the clinic made it too easy for young people to get drugs from others who used the collective.

"It really did have a heavy influence on the youth and I'm glad it's gone," he said.

Some of the patients who got marijuana from the clinic said they were dismayed they would have to travel to the Bay Area to find a cannabis dispensary.

"I'm not sure where I'd go," said Louis Sun, 50, a Modesto man who suffers from arthritis.

Patrick Clements, 39, said the crackdown would most harm seriously ill people who cannot leave town or grow their own marijuana.

"The people getting hurt are the ones who need it most. They're going to have to go the Bay Area," said Clements, a collective customer who carries a doctor's recommendation for medical marijuana.