Baldwin Park officials helped fraudulent business owner who applied for cannabis permit, claims claim – Whittier Daily News

A man who bought a cannabis manufacturing license in Baldwin Park now claims corrupt city officials helped the seller, a shell company with ties to a former prosecutor, sell the license for a profit of more than $150,000 in a scheme to turn around, which let the new owner down to blame.

Business owner David Ju entered into an agreement in late 2018 to purchase the cannabis development contract previously awarded by the city council to a company called Tier One Consulting, although at the time a city ordinance prohibited any transfer of ownership interests by permit holders to David Torres- Siegrist, Lawyer.

Despite this, Torres-Siegrist alleges in a damages lawsuit that city officials, including then-prosecutor Robert Tafoya, approved an amendment to the development agreement in April 2019 that replaced the former owners with Ju, in apparent violation of the city’s own laws represents . The amendment, signed by then-mayor Manny Lozano and Tafoya, was never submitted to the council for approval, according to Torres-Siegrist’s newly filed lawsuit against Baldwin Park.

“Ultimately, Mr. Ju found that he had actually bought nothing but an endless cycle of debt ‘negotiated’ in collusion between a current city attorney and a future city attorney that was doomed from the start. ‘ Torres-Siegrist wrote in the lawsuit.

The lawsuit, usually a precursor to a lawsuit, states that damages exceed $25,000 and will be proven in court.

Years after the sale to Ju, Tafoya hired Tier One’s publicly traded director, a lawyer named Anthony Willoughby II, as an assistant district attorney.

Robert Tafoya, Attorney for the City of Baldwin Park and Legal Counsel for the West Valley Water District in Rialto.  (Photo by Walt Mancini/Pasadena Star-News/FILE)
Robert Tafoya, Attorney for the City of Baldwin Park and Legal Counsel for the West Valley Water District in Rialto. (Photo by Walt Mancini/Pasadena Star-News/FILE)

Burdened with debt

Development agreements include annual “abatement fees” ranging from $235,000 in year one to $330,000 in year three and beyond. Those fees are due even when the company is down, which Torres-Siegrist said makes it harder to catch up.

Ju’s company, DJCBP Corp., finally opened its doors earlier this year but owes the city more than $600,000 in overdue abatement fees. Ju had experience with liquor royalties and didn’t expect to have to pay until it was up and running, Torres-Siegrist said.

“They have set up a system here that is an endless cycle of debt,” he said. “These owner-operators will never get out of that debt.”

Ju’s claim claims city officials and the figures behind Tier One “acted together to orchestrate a scam on an elderly man dying of cancer who invested his life savings in the purchase” after he was convinced he was finding “green gold.” .

Tafoya and one of the other figures involved, former Compton councilman Isaac Galvan — a broker who made $50,000 from the sale — were recently arrested in a by former Baldwin Park councilman Ricardo Pacheco, a former official who admitted has accused him of taking bribes he signed signed an agreement to support cannabis development deals.

In his plea agreement, Pacheco alleges that Tafoya, identified as Person 1, attended several meetings where Galvan, identified as Person 10, and Pacheco discussed illegal payments.

Pacheco later voted on an unidentified company’s “marijuana cultivation and manufacturing development agreement” on July 18, 2018 as part of an agreement with Galvan, federal prosecutors said. Tier One was one of three companies awarded this type of development contract at the same meeting.

The court further alleges that Galvan and Tafoya were “in business together” and applied for a marijuana license in the trading town. Public records also show that Tafoya’s wife was hired as an administrative analyst at Compton in 2017, with emails at the time suggesting she was originally recommended as Galvan’s liaison in the community.

Tier One owner Anthony Willoughby Sr., Willoughby II’s father, has served as Galvan’s personal attorney in the past. Galvan could not be reached for comment.

“Advisers” act as intermediaries

Pacheco’s plea agreement alleges that Tafoya inspired Pacheco to find an intermediary to act as “a consultant to companies seeking development agreements,” and suggested that the intermediary specifically pay $150,000 in exchange for a The plea agreement states that delivery promises are required.

Pacheco ended up enacting a very similar plan before he was arrested.

Now both he and his intermediary, former San Bernardino County Planning Commissioner Gabriel Chavez, have agreed to plead guilty to bribery charges and to cooperate with investigators in an ongoing, wide-ranging investigation into cannabis corruption across Southern California. Pacheco reportedly provided a template for a consulting agreement that Pachecho could use in the program.

Tafoya, Galvan, and Chavez were simultaneously searched by the FBI in November 2020, but neither Tafoya nor Galvan have been charged.

Torres-Siegrist accuses his client of being a victim of corruption. Torres-Siegrist, representing seven cannabis operators at Baldwin Park, claims “each one has their own little story to tell about the cops — that’s what happened.”

Tafoya resigned in October after the Pacheco agreement became public. In a statement, his attorney, Mark Werksman, said Tafoya “denies any involvement in this transaction and was not aware of the matters alleged in this lawsuit.” The former prosecutor has previously denied involvement in Pacheco’s corruption. Baldwin Park is now in the process of appointing Best, Best and Krieger for representation.

“Buyer’s Remorse”

In a statement, Willoughby II said he still works for the Tafoya law firm on a limited basis. He directed any questions regarding Tier One’s finances or Galvan’s involvement to his father and denied playing any role in the sale other than signing on Tier One’s behalf. He is listed in the sales contract as “Seller”.

In an email, Tier One owner Willoughby Sr. accused Ju of having “buyer’s regrets.” Tafoya played no role in negotiations between Willoughby and Ju, he wrote.

“Mr. Ju, like many cannabis investors, was caught up in the get-rich-quick euphoria and when his dream went awry, he is now trying to capitalize on Mr. Tafoya’s misfortune,” Willoughby wrote.

If Ju believes the “unsubstantiated libel allegation” that he was defrauded, “he should press charges,” Willoughby said.

Willoughby said he spent nearly a year paying rent on a site waiting for city approval and decided to cut his losses after realizing the idea was a waste because of the way the state and the Municipalities structured their approval procedures was “fool’s gold”. He refused to say how much he made selling the development contract to Ju.

Documents provided by Torres-Siegrist suggest Willoughby may have spent less than $4,000 in total.

In response to questions about the transfer, Willoughby cited “caveat emptor,” a common law doctrine that places a burden on buyers to adequately research their purchases in advance. The Latin expression means “let the buyer beware”.

“One look at Baldwin Park’s development agreement should have told even a blind person that there was no way to make money out of this program,” Willoughby said.

The Role of Compton City Council

Torres-Siegrist claims Galvan initiated and brokered the sale between Ju and the Willoughbys. The purchase agreement states that $50,000 of the $150,000 payment would go to Galvan “to repay a loan.”

Compton City Councilman Isaac Galvan and five others were charged on Friday, August 13, with conspiracy to voter fraud during a June runoff to ensure Galvan retains his seat.  Photo: City of Compton
Isaac Galvan, Compton City Councilman (Photo: City of Compton)

In his emails, Willoughby initially stated that Galvan was “not involved in the sale” between Tier One and Ju, but later conceded that “Gavan was paid out of the proceeds.” He did not respond to a follow-up asking him to clarify the former Compton councilman’s role.

Although Willoughby is referred to as Tier One Consulting on all city documents, Willoughby registered “Tier 1 Consulting & Advocacy LLC” with the state in 2015, but the company did not file subsequent informational statements, was declared in default in 2017, and was suspended in April 2018, according to the state’s website foreign minister.

Although the company did not have an active business license during negotiations, Tafoya and community development director Gustavo Romo recommended granting the LLC a development agreement on June 20, 2018, according to an employee report. The city council unanimously supported the recommendation to give Tier One an agreement on June 20, with Pacheco making the motion to support it.

The LLC’s business license was revived on June 21, 2018, although the company later failed to file its information statement and was again suspended until the end of the same year, according to the Secretary of State’s website.

The company, which employed just two people, received the development contract from the city and then sold it to Ju within six months.

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