BAEZ FACING NEW THEFT CHARGES

Indictment: He is accused of stealing funds from the marijuana club he
co-founded.

In another legal salvo against the co-founder of the now-defunct Santa
Clara County Medical Cannabis Center, a grand jury has indicted Peter Baez
on seven felonies including two new counts of grand theft and maintaining a
drug house.

Prosecutors contend that further investigation of their case against Baez
revealed that the 36-year-old medicinal marijuana activist not only sold
pot without a doctor's approval, but illegally supported himself with
center funds while also receiving about $14,000 in federal subsidized
housing aid to which he was not entitled.

In addition, authorities say that $73,454 taken in by the center could not
be traced to any legal drug sales.

Baez, who suffers from colon cancer, surrendered at the Santa Clara County
Sheriff's Department Monday on the new indictment, handed up by a grand
jury Thursday. He was released on his own recognizance and is scheduled to
be arraigned in Superior Court on Wednesday. If convicted of these new
counts, he could face nine years and four months in prison.

These new counts are ``ridiculous'' according to Baez's defense attorney
Ricardo Ippolito.

``They're barking up the wrong tree,'' Ippolito said. ``Here's a guy who,
at huge risk, is trying to help the community, and this is what happens?''

Baez declined to comment on the new indictment, his lawyer said.

By presenting its case to a grand jury, the district attorney's office not
only avoided the more time-consuming process of holding a preliminary
hearing but also protected the identity of individual buyers -- one of the
primary reasons prosecutors say they chose this route. Grand jury hearings
are closed.

Baez had been charged with six counts of illegally selling marijuana, but
those charges are superseded by the new indictment. He was first arrested
on March 23, at which time copies of center patient records were seized and
$29,000 in center assets were frozen.

Now Baez faces a total of five felony counts of illegally selling marijuana
and one felony count each of grand theft and maintaining a drug house.

``We're trying to show that there's a large discrepancy in the amount of
money that went through the cannabis center that cannot be directly
attributed to client sales,'' Deputy District Attorney Denise Raabe said,
adding that the majority of the sales Baez made were illegal.

Of the center's 265 clients, 180 had no apparent recommendation from a
doctor -- half of those clients indicated only that their doctors were
aware of their marijuana use, Raabe added. She said it turned out that
about only 70 clients actually had valid recommendations required under
Proposition 215, the 1996 voter-approved measure that legalized use of the
drug for medical reasons.

Baez, prosecutors allege, also used the center's funds to pay for most, if
not all, of his living expenses including his rent, cable television,
satellite TV system, alarm system, entertainment, cigarettes, beer and
food.

In addition to $51,000 in checks written to Baez for cash and a $1,000
year-end bonus paid to himself before he left on a cruise, Baez also bought
a brand new Toyota RAV4 last year, prosecutors say.

``They weren't quite as non-profit as they said they were,'' said Assistant
District Attorney Karyn Sinunu.

According to prosecutors, Baez also had been receiving assistance from the
federal Department of Housing and Urban Development since 1995, and that as
recently as January had reported his only income was $766 a month in
disability and that he did not have a checking or savings accounts. Raabe
said he was ineligible for assistance because the living expense by the
center was unreported income.

But Ippolito disputed prosecutors' characterization of the case. He said
that the Toyota was bought with Baez's own personal funds and with money
his father loaned him.

Ippolito also said that many of those expenses were business related, and
that Baez would pay the suppliers with cash because many did not want to be
paid with a check.

``Every single penny can be explained if we go over it with them,'' said
Ippolito, who criticized the prosecution for taking the case to a grand
jury because of its secret proceedings.

Baez closed the center earlier this month because he and the center's
co-founder, Jesse Garcia, said they could not continue operating, but
prosecutors maintain that their intention was never to have the center
close.

``Our purpose from the beginning has been to regulate the practices of
Peter Baez . . . not to close down the cannabis center,'' Raabe said.

Checked-by: jwjohnson@netmagic.net (Joel W. Johnson)