A national drug syndicate disguising itself as a small Greeley medical marijuana grow traded in cryptocurrency and had drug pipelines to eight states, federal documents in Denver U.S. District Court reveal.
The sophisticated drug operation used bitcoin as currency in drug deals in Florida, Iowa, Kentucky, New York, Oklahoma, Ohio, Texas and Wyoming, according to federal court documents.
Prosecutors from U.S. Attorney Robert Troyer’s office on Tuesday filed a forfeiture claim seeking court authorization to seize drug ring assets including four homes, 31.4 bitcoin worth about $279,143 at one point Friday, and $912,443 found in bank safe-deposit boxes, storage sheds, cars and homes.
The case demonstrates the lengths syndicates will go to launder drug proceeds without putting large sums of currency into federally insured banks to avoid discovery, Troyer’s office said in a news release.
Six members of the alleged illegal marijuana grow operation have been charged with various felonies in Weld County District Court.
Randall Zandstra of Longmont, the alleged leader of the drug ring, has been charged in two separate cases. He is accused of drug conspiracy, marijuana cultivation and distribution, money laundering and tax evasion. Others facing drug conspiracy charges include Jesus Perez and Donald Saathoff, each of whom also face marijuana related charges. Tyler Greco, Michael Conway and David Tobias have been charged with marijuana-related charges.
The legal status of numerous other purported members of the drug ring arrested across the country, were not detailed in the federal court document.
Zandstra, 55, has been involved in crime long enough to earn his own episode on the crime documentary TV series “I (Almost) Got Away With It.” In 2007, he was arrested when cops found an illegal pot grow in a suburban Greeley neighborhood and later was sent to prison for nine years.
Federal and local investigators first caught wind of Zandstra’s new drug enterprise in June 2016, after one of his neighbors called and said he often saw Zandstra carrying large duffel bags out of his home.
Zandstra explained it away, saying he had a medical marijuana license to possess 99 marijuana plants and up to 33 ounces of marijuana. He gave officers his red card, but wouldn’t let them enter his home.
By July 8, 2016, a Colorado administrative search had discovered 97 plants at 5308 W. Fifth St., in Greeley.
Investigators learned that Zandstra also had ties to marijuana grows in Brighton, Erie, Greeley and Longmont. He also supplied marijuana to Saathoff, the owner of Green Thumb Garden Supply at 2380 W. 27th St. in Greeley.
Green Thumb was a hub for receiving processed marijuana and distributing it around the country, federal documents say.
FBI agents and local law enforcement began a wide-scale surveillance operation. Zandstra and several other members of the ring were spotted throughout September and October of 2017 entering and leaving Green Thumb several times carrying black trash bags and duffel bags. Drug arrests in Ohio, Kansas and Nebraska followed.
On Sept. 30, FBI agents saw Nathan Baumhover carry a duffel bag out of Green Thumb and put it into a GMC Yukon owned by Joseph Kyle Markley, purportedly a member of the drug ring, according to federal court records. The officers followed Baumhover as he drove the Yukon northeast on Interstate 76 to Interstate 80. Officers pulled him over in North Platte, Neb.
When asked about a distinctive odor emanating from the SUV, Baumhover opened his glove box and pulled out his “personal” stash of marijuana. But when officers searched the vehicle they found a duffel bag filled with 19 bags of processed marijuana and a container of hash oil weighing 21.4 pounds. He admitted that he paid $37,000 for the drugs and that he was on his third trip out of Colorado.
In October, David Farrow rented a white Nissan Maxima in Lexington, Ky., and drove to 3527 Pueblo St. in Greeley. He got out of the car, entered the home. He later carried a suitcase and a large duffel bag out of the home and put it in his car. Officers pulled him over in Colby, Kansas. Investigators found 24.5 pounds of marijuana in the duffel bag and suitcase. He told officers he was driving to Columbus, Ohio. to deliver the drugs.
Four days later, agents arrested Patrick Gibbons in Columbus after he walked from his the pool in his backyard, where his kids were swimming, to the front of his home, where he opened the trunk of the rented Maxima. Farrow had just sent him a text saying $11,000 was in the trunk.
Surveillance officers followed members of the drug ring to a U.S. Post Office, and watched them mail parcels to New City, N.Y., and Jacksonville, Fla.
“Both packages smelled strongly of dryer sheets, which are often used to mask the odor of marijuana,” the document says.
Agents recorded a telephone conversation between Zandstra and a woman in which he explained that he didn’t like using his credit card because people could track his financial transactions.
One way he disguised his transactions was through by exchanging bitcoin through various online cryptocurrency wallets, including Exodus, Jaxx, Electrum and Celium, the lawsuit says.
A source told law enforcement Zandstra traded about 50 bitcoin over time and that half of that was for marijuana transactions.
During his taped phone conversation, Zandstra also told the woman that he tells people he’s just a hemp farmer because “people are dumb.” Zandstra also used various aliases including Hans Zandstra and Dirk DeHaan, Ph.D.
He indicated on bank documents that he was a “consul” (attorney). His business card indicated he was a marijuana grow consultant for Dutch Gardens when renting properties for grow operations.
On Nov. 1, federal and local law enforcement agents fanned out and served search warrants at various homes, horse barns and sheds tied to the drug ring. They seized stacks of cash, 291 pounds of processed marijuana found in 25 storage tubs and 1,536 marijuana plants. The discovered $240,700 in cash in a gun safe kept inside a storage unit at Guardian Storage, 721 S. Emery St. in Longmont.
At 11816 Quail Road in Longmont, they seized a computer. When agents searched files in the computer they discovered a bitcoin wallet containing 9.33 bitcoin. Another bitcoin wallet owned by Zandstra contained 22.1 bitcoin.
The U.S. Attorney’s office indicated the bitcoin transfers for drugs constituted money laundering.
Though hundreds of thousands of dollars moved through Zanstra’s accounts he did not pay federal taxes for four years.