DETAILS EMERGE IN MEDICAL MARIJUANA MONEY-LAUNDERING CASE

The discovery of 1,000 marijuana plants inside a Lockwood Valley house
led detectives to a San Fernando Valley dispensary. Investigators
later determined the dispensary sold millions of dollars worth of pot
illegally and tried to hide the profits by moving the money between
fake businesses, authorities say.

Three co-owners of the dispensary were arrested recently on suspicion
of money laundering, and details of the allegations emerged this week
in a search warrant affidavit and interviews with officials.

Steven Kall, 55, and Anne Adams, 47, both of Sherman Oaks, and Jimmy
Silva, 26, of Northridge are suspected of laundering $2.18 million
from 2007 to 2009, according to the affidavit.

Arrested July 3 in Las Vegas, Kall and Adams remained in custody
Friday in lieu of $750,000 and $250,000 bail, respectively. Silva,
arrested June 11 in Northridge, was released on $250,000 bail after
pleading not guilty to all charges.

The arrests stemmed from a year-long investigation by the Ventura
County Combined Agency Task Force. The case began in May 2009 with a
tip about marijuana cultivation at a home in Lockwood Valley, said
Sgt. Mike Horne of the Ventura County sheriff's Narcotics Unit.

When authorities served a search warrant at the house, which was owned
by Kall, they found about 1,000 pot plants, Horne said. "This was a
commercial operation," Horne said.

Kall told authorities the pot was being grown for the Golden State
Collective medical marijuana dispensary in Granada Hills, according to
a sworn statement filed in support of a search warrant by Ventura
County district attorney Investigator Jeff Barry.

During the June 2009 interview, Kall told investigators: "I'm not
saying that two-thirds of the people who walk in the (dispensary) door
aren't using it recreationally," Barry wrote.

Kall was arrested on suspicion of possessing marijuana for sale
following the interview.

Later that month, Los Angeles police detectives investigating
complaints of narcotics activity arrested Kall and contacted the
Ventura County sheriff's detective investigating the dispensary owner,
authorities said.

Authorities later searched the dispensary; several residences,
including one shared by Kall and Adams; and bank accounts associated
with the suspects.

Records found during a search of Kall and Adams' Sherman Oaks
apartment led authorities to estimate the collective sold more than $3
million worth of marijuana annually, with the profits laundered,
according to Barry's 46-page statement.

Investigators said they found records of large amounts of money
deposited in bank accounts held in the names of four corporations. The
money was "moved from one account to the other in an attempt to
conceal its true source," Barry wrote in his affidavit.

Financial analyses showed a lot of money was missing, and
investigators asked for permission to search for "evidence of buried
or hidden" cash, Barry wrote.

"There are millions of dollars in drug profits which are missing,"
Barry wrote.

In an interview, a former employee of the collective told
investigators he suspected Kall and Adams were burying cash, according
to the affidavit. The employee also told investigators Kall and Adams
purchased pot from some people who were not members of the collective
and members of a San Fernando Valley gang, the document states.

Asked by investigators about the dispensary sign that read "Center for
the Sick and Dying, Prop 215 Patients Welcome," the former employee
"laughed and said he thought that 99.9 percent of the people buying
marijuana were recreational users," according to the document.

"Nowhere does California law authorize cultivating, selling or
providing marijuana - medicinal or non-medicinal - for profit," the
document states, citing guidelines from the state attorney general on
Prop. 215.

Authorities also allege the suspects used the money to purchase goods
and vehicles, including a yacht.

Kall was indicted last month on 109 counts of felony money laundering
and one count of allowing a place for preparing or storing marijuana.
Adams was indicted on 13 counts of felony money laundering, and Silva
is facing nine felony counts of money laundering, prosecutors said.

While they await arraignment in the money-laundering case, Kall and
Adams are also facing sentences for felony drug-related charges to
which they pleaded guilty in Los Angeles, authorities said.