Prohibition and Plunder: The Respectable Racketeers of Malheur County, Oregon

Yes, crime pays -- for criminals on the "respectable" side of the law.

 

“The court should not allow this defendant to profit from the illegal delivery of controlled substances,” insisted Malheur County Deputy DA Mike Dugan as he demanded the imprisonment of William Esbensen for the supposed crime of providing medical marijuana to willing clients. This isn't to say that Dugan rejected such profits as a matter of principle; he simply believed that he and his comrades in the Malheur County Sheriff's Office should be the ones enjoying the windfall.

Dugan’s desire to imprison Esbensen and his business partner, Raymond Kangas, was left unrealized: They were sentenced to probation after being found guilty of “providing marijuana for consideration” under a statute that is no longer in effect. The dead-letter law under which they were convicted was so abstruse that Oregon's incumbent Attorney General, Ellen Rosenblum, has said that neither she nor her subordinates fully understood it.

Esbensen and Kangas were among the co-founders of the 45^th Parallel, a medical marijuana co-op in Ontario that was raided by police in September 2012 following an investigation started – without authorization – by Boise-based DEA Special Agent Dustin Bloxham. A pretext stop and illegal search of a vehicle driven by Esbensen left the High Desert Drug Enforcement Task Force (HDDE) in possession of a briefcase containing all of the financial and client information from the 45^th Parallel.

 

Be on the lookout: Undercover Narc Bloxham.

Bloxham tried, unsuccessfully, to get the US Attorney for Idaho interested in investigating the Oregon-based clinic -- then mounted an operation on his own. This involved committing several acts of interstate wire fraud and inducing a doctor to falsify medical records in order for Bloxham – in the guise of “Dustin Hankins” – to obtain medical marijuana from staffers at the 45^th Parallel, who scrupulously followed state regulations in providing it to him, not realizing that he had defrauded them.

A few weeks later, the HDDE carried out raids targeting the 45^th Parallel and related sites across the Treasure Valley. Nineteen people associated with the 45^th Parallel faced criminal charges. Several hundred mature marijuana plants – enough to fill at least one dump truck and a U-Haul trailer -- were confiscated by the HDDE at roughly a dozen grow sites on both sides of the Oregon-Idaho border. In court testimony MCSO Detective Brad Williams claimed to have buried the plants at the Lytle Landfill outside of Vale, Oregon, but no record of their disposal has yet been produced.

 

SWAT team carries out a marijuana raid, 9/11/12.

Sixteen of the 45^th Parallel defendants were offered deals sparing them prison time in exchange for fines paid directly to the Malheur County Sheriff's Office. Esbensen, who was the public face of the 45^th Parallel – which was part of the local Chamber of Commerce, and sponsored open houses to which the police were invited – was designated the “ringleader” of what was treated as a “syndicate.”

 The Malheur County DA’s office charged Esbensen under the RICO Act and offered him a “deal” that would have involved mandatory prison time as punishment for being part of an open “conspiracy” to provide a legally recognized palliative medicine to qualifying patients.

On the eve of his joint trial with Esbensen, Mr. Kangas was presented with a deal: Testify against Esbensen, and you'll get a fine and probation; otherwise, you'll go to prison with him. Displaying resolve and character rarely seen outside of Scottish border ballads, Kangas deflected the offer.

Kangas is a quiet, middle-aged man with no previous criminal record. Several years ago, after the housing market collapsed in Nevada, he cashed out his pension with the pipe-fitter's union and moved his family – his wife Cindy and their two young sons – to eastern Oregon. Like many others, Kangas became involved in medical marijuana activism because of his family's experience with addiction to prescription painkillers.

In testimony during the June 23 sentencing hearing in Vale, Cindy Hunter-Kangas described how a severe back injury left her addicted to legally prescribed opiates. For the better part of two years she underwent treatment in a methadone clinic. Currently employed at a local hospital, Mrs. Kangas still suffers from chronic pain, which she treats through the legal use of medical marijuana.

In his June 6 bench verdict, trial Judge Gregory Baxter decreed that “the goal of the defendants and other co-founders of the 45^th Parallel was to make lots of money through the sale of marijuana through the guise of a medical marijuana dispensary.”

Where is it? Task Force operatives fill a dump truck with pot plants.

Raymond Kangas, who contributed $5,000 to fund the purchase of the former butcher's shop used by the co-op, never profited from the enterprise. His primary motivation was to ensure that his wife, and people in similar predicaments, would be able to obtain a substance recognized by law as providing effective, non-addictive pain relief.

The role played by Kangas in the co-op was to supervise the 45^th Parallel “Compassion Group,” through which a local medical doctor would evaluate patients and review their applications. Rather than living on the proceeds of marijuana “trafficking,” Kangas has been working for a sand and gravel company in Payette, Idaho, earning roughly $30,000 a year to complement the meager salary Cindy receives for cleaning hospital rooms. This supposed drug dealer’s pimped-out ride is a high-mileage 1999 Dodge.

“Al Capone is not sitting in this courtroom today,” pointed out Kangas's defense attorney, Gary Kiyuna. “My client is not an individual that [deserves] punishment. His actions resulted in medical marijuana patients getting the medicine they needed.... There is no victim here.”

For his June 6 court appearance, Kangas was allowed to wear a nice suit and sit at the table next to his defense attorney with his hands free. William Esbensen, however, was forced to appear in prison clothes, shackled in handcuffs and leg restraints. No policy or safety consideration dictated this treatment; it was simply a gesture of proprietary malice by the Malheur County Sheriff's Office.

Looking for his share of the loot: Deputy DA Dugan.

Malheur County Deputy DA Dugan, who had tried the case, persisted in his effort to portray Esbensen as a high-living vice lord and public menace.

Acting as a character witness for her husband, Diane Esbensen described how the HDDE seized cash, computers, and antique firearms from their home. She pointed out that the family – which lives in an unprepossessing house in Boise, and has never owned a new vehicle – had to liquidate its properties and other assets in order to pay legal costs.

In a moment of rarefied malice, Dugan asked Mrs. Esbensen if her husband had filed income taxes on the proceeds from the 45th Parallel. She truthfully answered that he had not. On redirect, defense attorney Susan Gerber asked Mrs. Esbensen why the tax returns hadn't been completed. The witness replied that the prosecutor's office was still in possession of the relevant financial and business records.

Dugan was aware of this when he posed the question, of course, but he appears to be a person unburdened by professional scruples or rudimentary decency. The vacancy created by the absence of those virtues has most likely been filled with ambition and simple avarice.

In his sentencing memorandum, Dugan claimed that a forensic analysis of Esbensen's finances revealed that he “received over $40,000 in checks from the 45^th Parallel.” He also calculated that his “prosecution costs” for the 45^th Parallel case are “equal to $39,500” – but that his office would be satisfied to receive $33,500 derived from Esbensen's supposedly illicit proceeds.

 

Above,and below right: Raiders collect hundreds of pounds of pot.

“The costs of investigation are being recovered by the imposition of compensatory fines payable to the Malheur County Sheriff,” noted Dugan's memorandum. “To date the total amount of compensatory fines ordered to the sheriff has been $31,957. Additionally they have received, through equitable sharing, an additional $30-$40,000.”

“Equitable sharing” is the process through which local police agencies and sheriff's offices confiscate money and property through “asset forfeiture,” and kick back a percentage to their Federal partners in plunder. By allowing the Feds to claim control over confiscated proceeds, police departments and sheriff’s offices can circumvent their own state laws.

Assuming that it is a crime to “profit” from marijuana proceeds, Dugan's memorandum offers irrefutable proof that the Malheur County Sheriff and District Attorney are partners in a criminal syndicate. Their acknowledged “take” from the 45^th Parallel case, as set forth by Dugan, would be more than $100,000. And this is by no means a comprehensive accounting for all of the proceeds collected by the MCSO and the DA's office.

Recall that this case began when DEA Agent Bloxham discovered that there was money to be seized at the 45^th Parallel. It's reasonable to believe that his office received at least part of the loot, but the opacity of the asset forfeiture process will make it difficult to determine how large of a share that would be.

When the HDDE searched the Esbensen home, they found $55,000 in cash that was never connected to the 45^th Parallel. The Malheur County Sheriff’s Office appropriated at least $40,000 of that money before Esbensen was brought to trial, and at least $7,000 of confiscated funds were used to pay for the prosecution of the case. Hundreds of thousands of dollars were frozen in various bank accounts, and unspecified amounts of cash and property were seized during searches of carried out on September 11, 2012.

There is also the matter of the missing marijuana – several hundred pounds of a valuable cash crop for which no satisfactory accounting has been made. 

In his slim but informative book Memoirs of an Oregon Moonshiner, Ray Nelson described what it was like to live in Malheur County during the period of official derangement known as alcohol prohibition. 

Like countless others Nelson -- a World War I veteran and cowboy by training and inclination -- got involved in the manufacture and "illegal delivery" of a controlled substance out of economic necessity. During a business trip to Vale in 1923, Nelson and his first partner were ratted out by an informant, the type of person "which Vale was accursed with," and then arrested by "three old ex-barflies" who had been deputized by the Malheur County Sheriff's Office."

Nelson and his friend pleaded guilty to "possession of whiskey" in the hope that as first-time offenders they would receive leniency. Instead, the Justice of the Peace, who "looked at us with a hangman's-gallows look on his mug," sent them to jail for ninety days and imposed a $300 fine -- a considerable sum at the time. 

After it was made clear that the judge and his fellow parasites were interested only in the fine, and would commute the jail term if it were paid,  Nelson and his colleague --  in an entirely admirable display of contemptuous defiance -- refused to pay the ransom and rejected offers by their friends to pay it on their behalf. Once he was set free, Nelson resumed his career, providing a high-quality product for willing customers at a reasonable price. Nelson would eventually serve time in prison after the Malheur County Sheriff's Office and district attorney struck a deal with an ex-convict to testify against the bootlegger.

"I was never a criminal, so I never shall reform," Nelson testified decades later. "Robbing, stealing, killing, swindling, and the like are something I never did believe in. I hate and despise anybody who goes in for anything like that and want to see them justly prosecuted. Those who bucked the prohibition law were the same stock of people who, back in Colonial days, comprised the Boston Tea Party ... people who had nerve enough to contest a law that was a direct infringement on their rights." 

In contrast with the honest and honorable businessmen who defied prohibition to make a modest living, "Crooked county and state officials were getting rich from it." The same was true of politically protected gangsters who in collusion with bureaucrats and law enforcement officers "branched out into other rackets such as extortion, kidnapping, and bank robbery."

Wherever prohibition exists, the most dangerous criminals – and the largest illicit profits – are always found on what is called the “respectable” side of the law. 

 

Dum spiro, pugno!