CRUSADER'S IMAGE TAKES HIT

Under scrutiny: Testimony by two former co-workers is damaging to the
co-founder of a defunct pot center.

In little more than a year, the authorities' image of medicinal cannabis
crusader Peter Baez has dramatically shifted. To them, he's gone from a
good Samaritan trying to supply the seriously ill with much-needed medicine
to a con man who ripped off his clients and sold far more marijuana than he
can account for.

Baez's point of view on the accusations is as clear as it is contrary: He
believes himself an innocent target of an effort to discredit the medicinal
marijuana movement.

But a recently unsealed grand-jury transcript contains new damaging
testimony, some of it from people once close to the 34-year-old Gilroy
activist and co-founder of the now-defunct Santa Clara County Medical
Cannabis Center. Awaiting trial on seven felony charges as well as surgery
for his colon cancer, Baez still is convinced he can beat the rap.

``They basically took cops and paralegals in the DA's office and made them
doctors, accountants and lawyers,'' Baez scoffed. ``It's politics that are
screwing me in San Jose.''

In a three-day proceeding in mid-May, Santa Clara County Deputy District
Attorney Denise Raabe called 22 witnesses to support charges that Baez sold
marijuana to five patients without obtaining a prerequisite doctor's
recommendation, ran a drug house and committed grand theft. Baez faces up
to nine years in prison if convicted of the seven felonies.

The 350-page transcript veers from extremely technical financial
information to anecdotal evidence that Baez's business practices were
suspicious. But perhaps the most interesting testimony came from two people
who left the center long before it closed last month.

One of them wants to establish a new marijuana dispensary and the other had
once planned to. Baez alleges the two were ``disgruntled'' and their
interest in setting up pot centers prompted them to perjure themselves.
``Why? Because they want money,'' Baez said. ``I think they are very weak
witnesses.''

But one of those said he was telling the truth and that it was typical of
Baez to deny responsibility for his own actions. ``He's got a chip on his
shoulder the size of Mount Rushmore,'' said Dennis Augustine, the center's
former medical director, in an interview. ``It's not surprising to anyone
who has worked there.''

Doctors' orders at issue

One former employee, Judy Brunner, testified she became increasingly
uncomfortable with Baez during her four months at the center. As many as a
dozen times, she said, Baez claimed to have confirmed a doctor's
recommendation soon after receiving a file -- although she saw from her
master telephone console that he had not made a call.

Brunner said Baez would also recruit marijuana growers, giving them slips
of paper to signify that the cultivators were working for a pot dispensary
- -- and to give a veneer of legality. In exchange, Brunner said, Baez would
demand a pound of free pot.

Brunner said Baez also once bought marijuana from her at $150 an ounce and
sold it at $520 an ounce -- despite his promise to sell it at a reduced
rate.

``I felt that he was betraying everyone that had supported him in doing
this for the people who are very ill,'' Brunner testified.

Brunner said Baez wrote her a three-page letter defending himself against
her allegations.

`Buy low and sell high'

Responding to the accusation that he was overcharging clients, Baez said in
the alleged letter that he priced pot the same as Dennis Peron, the
controversial San Francisco-based medical marijuana advocate. ``His motto
to us was to buy low and sell high,'' Baez allegedly said in the letter.

Augustine, who is still hoping to start his own medicinal marijuana center
in San Jose, also testified things seemed awry during his stint with Baez.
In July 1997, he gave a $10,000 donation to the center on the condition he
join Baez and co-founder Jesse Garcia on the dispensary's board of
directors. His pledge was largely meant to pay back a loan the center had
incurred, Augustine said.

But soon after the donation, Baez bought a Toyota sport utility vehicle
that cost about $9,600, according to testimony. Later, Augustine said Baez
told him he never paid off the loan.

Baez, a former bank employee who now lives on disability because of colon
cancer and AIDS, has said he bought the vehicle with the help of his
father. He also says he has financial records that prove that's how the
vehicle was purchased.

As part of fundraising efforts, Augustine said he repeatedly asked to see
the center's books so he could provide potential donors with bona fide
information. But he said Baez responded by dismissing the requests.
Augustine also testified he later got a treasurer's report from Baez that
showed the center's profit from April to October of last year was less than
$200.

But according to testimony from authorities, the center sold about $150,000
in marijuana in its first year, some $74,000 of which couldn't be accounted
for. Investigators created a database out of the center's financial
records. Their days-long effort included several assumptions in Baez's
favor, prosecutors said.

``We were very careful in coming up with the numbers,'' Raabe said in an
interview.

Expenses scrutinized

According to testimony, Baez illegally supported himself with center funds
- -- paying for amenities such as satellite service, bowling and beer. He
also allegedly used center money to pay his rent, which would mean he was
not entitled to about $14,000 in federal subsidized housing aid that he
received.

Baez denies those charges and complains the lead investigator on the case,
Sgt. Scott Savage, always had been against Proposition 215 and eventually
tried to intimidate both him and at least one other center worker. But in
early press reports, Baez said he and partner Garcia got along well with
Savage.

``We were obviously stupid back then, thinking we were working with someone
who was honest and sincere,'' Baez said. ``There are some bad cops in the
San Jose Police Department, and unfortunately, I think I've got one
climbing all over my back.''

Police spokesman John Carrillo said Savage did not wish to comment, but
added that Savage was innocent of any wrongdoing.

Raabe also had a series of doctors testify for the grand jury that they did
not recommend marijuana for the five patients at the center of the
prosecution's case.

In some instances, the doctors said they never spoke to anyone affiliated
with the center. But in one case, a doctor acknowledged it's difficult to
advocate the use of marijuana in today's political climate -- a sentiment
Baez says has kept some physicians from supporting him during his legal
troubles.

``Now, did you ever approve the use of marijuana for Buyer Number 3?''
Raabe asked Dr. Morton Garfield.

``I don't think so, because you know, I'm caught in this difference between
the federal government and the California initiative,'' Garfield replied.
``And we've been warned that we can't do it, so I don't.''

Checked-by: (Joel W. Johnson)