Marijuana Dispensary Operators Indicted on Drug Trafficking Charges

News Release
FOR IMMEDIATE RELEASE
July 17, 2007
Contact: SA Sarah Pullen
Public Information Officer
Number: 213-621-6827

Local Marijuana Dispensary Operators Indicted on Drug Trafficking Charges

JUL 17 --(LOS ANGELES) – The Drug Enforcement Administration (DEA) along
with the United States Attorney's Office of the Central District of
California, the Internal Revenue Service - Criminal Investigation, the San
Luis Obispo Sheriff's Department, the Corona Police Department and the Los
Angeles Police Department announced today the indictments of owners and
operators of four marijuana dispensaries ? in Morro Bay, Corona, and two in
West Hollywood. These individuals have been indicted on federal criminal
charges alleging that they conspired to distribute and distributed large
quantities of marijuana, including to minors, for significant profits. Also
indicted is a medical doctor who wrote marijuana recommendations for payment
including recommendations for minors with no medical examinations.

"The marijuana traffickers arrested today claimed to sell the drug for
medicinal value, but it's clear that marijuana's financial value was their
true motivation," said Timothy J. Landrum, Special Agent in Charge of the
DEA in Los Angeles. "These dispensary operators are no different than any
other drug trafficker: they prey on people in our communities to make a
profit. DEA and our law enforcement counterparts will not turn a blind eye
to flagrant disregard of our nation's essential drug laws—laws designed to
protect our citizens, communities, and children."

In 1996, voters in California adopted Proposition 215, which authorizes the
distribution of marijuana for medical reasons under certain circumstances.
Under federal law, however, distribution of marijuana for any purpose is
illegal.

In Morro Bay, Charles C. Lynch was the owner and operator of the "Central
Coast Compassionate Caregivers" marijuana store. The indictment against
Lynch alleges that he and his employees sold more than $2.1 million in
marijuana at the store in a one-year time period. The indictment further
charges, during the same one-year time period, that Lynch and his employees
sold marijuana to 281 minors. Also charged in the indictment is Dr. Armand
T. Tollette, Jr. for writing marijuana recommendations for patrons of the
Morro Bay marijuana store. The indictment alleges that Tollette wrote
recommendations for minors, failed to conduct physical examinations before
writing recommendations, and paid "finder's fees" in marijuana for client
referrals.

"This operation was nothing more than a super-sized retail drug-dealing
center working under the cloak and smoke of prop 215," said Steve Bolts,
Undersheriff, San Luis Obispo Sheriff's Department. "There was no care,
treatment or compassion shown to our operatives during any of our undercover
buys, and marijuana was sold to our agents for 2 to 3 times the cost on the
streets".

In a separate indictment, Larry R. Kristich and James Carberry have been
indicted for operating a chain of marijuana stores in seven different cities
in California. The stores, located in Oakland, San Francisco, San Leandro,
Ukiah, Bakersfield, San Diego and West Hollywood, did business under the
name "Compassionate Caregivers." The indictment alleges that sales of
marijuana and THC laced products at the stores totaled more than $95
million, and that Kristich used profits from marijuana sales to purchase
expensive automobiles and real estate in Costa Rica. The indictment charges
that, with a business associate, James L. Ealy, Kristich set-up non-drug
related businesses to launder the profits of the marijuana stores.

James Carberry was an employee of Kristich and the manager of a marijuana
store in West Hollywood known as "Yellow House." The indictment alleges that
Yellow House had an ATM machine and credit card readers in the store to
facilitate purchases. In a single month at Yellow House, it is alleged that
more than $1.7 million in marijuana and THC laced products were sold.

Debra D. King, Special Agent in Charge, Internal Revenue Service - Criminal
Investigation's Los Angeles Field Office, stated: "IRS – Criminal
Investigation plays a unique role in federal law enforcement's war on drugs.
Our agents target the profit and financial gains of narcotics traffickers,
essentially following the money, to disrupt and dismantle these
organizations and enhance criminal prosecutions and asset forfeitures. The
results of today's enforcement operations, including the execution of arrest
and search warrants, sends a clear message that selling drugs, and
laundering the profits earned from those drug sales, will lead to prison."

In a separate indictment, John C. Moreaux, a former "Compassionate
Caregivers" employee, was indicted for operating a second marijuana store in
West Hollywood. In the indictment, Moreaux is alleged to have possessed a
shotgun inside the West Hollywood marijuana store. The indictment further
alleges that Moreaux has a prior felony conviction, and therefore cannot
lawfully possess any firearms.

A fourth indictment charges Ronald B. Naulls, who operated the "Healing
Nations Collective" marijuana store in a shopping center in Corona. The
marijuana store opened in June 2006. In a nine-month time period, the store
conducted sales of more than $1.2 million.

Under federal law, conspiracy to distribute marijuana carries a sentence of
up to 40 years in prison, while a violation of the money-laundering statute
carries a sentence of up to 20 years in prison.

An indictment contains allegations that a defendant has committed a crime.
Every defendant is presumed to be innocent until proven guilty in court.

The following individuals were arrested earlier today: Ronald B. Naulls, of
Corona; Charles C. Lynch of Arroyo Grande; Armond Tennyson Tollette, Jr. of
Culver City; John C. Moreaux of Valencia ; James L. Ealy of Tujunga.

The cases were investigated by the Drug Enforcement Administration, the
Internal Revenue Service – Criminal Investigation, the Los Angeles Police
Department, the City of Corona Police Department and the San Luis Obispo
Sheriff's Department.

CONTACT:

Assistant United States Attorney David Kowal
(213) 894-5136 (Morro Bay dispensary)

Assistant United States Attorney Shannon Ryan
(213) 894-4586 ("Compassionate Caregivers" dispensaries)

Assistant United States Attorney Robert Stacy
(951) 276-6221 (Corona dispensary)

Timothy J. Landrum, Drug Enforcement Administration Special Agent in Charge,
Los Angeles Division has provided audio comments on this operation. The
audio can be accessed by doing the following: Dial 1-888-557-6494, and then
dial mailbox number 701 or 702. Listen and record.

Digital photos can be viewed on http://www.dea.gov. Photos are also available upon
request.

http://www.dea.gov/pubs/states/newsrel/la071707.html