Dan Rush, the former head of Berkeley’s Medical Cannabis Commission, plead guilty to money laundering and two additional felony counts on June 22, according to Berkeleyside.
Rush borrowed about $600,000 from Martin Kaufman, a marijuana entrepreneur, to convert his Oakland family home into a medical marijuana dispensary. Rush then covered up the loan repayments by filing them as a “consultancy fee,” according to the affidavit.
One of the three felony counts Rush plead guilty to was conspiring with his former attorney, Marc Terbeek.
According to the affidavit, Rush had begun struggling to pay off his debts, so he and Terbeek formed a plan to unionize MediFarm, a medical marijuana dispensary in which Kaufman was on the board of directors and served as the director of quality assurance.
“In exchange for forgiveness of this personal debt, Rush and his associate Marc Terbeek, an attorney, proposed and took steps to provide various labor benefits to Kaufman,” the affidavit filed against Rush reads, “including union support for opening dispensaries and reducing or eliminating pressure to unionize dispensary workers.”
Individuals in the medical marijuana industry cooperated with the FBI and reported Rush’s allegedly corrupt activities, according to a press release by the U.S. Attorney’s Office for the Northern District of California.
The affidavit suggests that Martin Kaufman might have had reason to lend Rush the money, as his wife was the executive director of Blüm, a medical marijuana dispensary that was one of the options for the new dispensary locations.
Terbeek had been making payments to Rush since 2004 in exchange for recommending Terbeek to clients seeking workers’ compensation.
According to the press release, Rush referred Terbeek’s law services to other dispensaries.
Terbeek also gave Rush a credit card on which Rush spent $110,000 on personal expenses, according to the affidavit.
Rush is looking at the possibility of 30 years in prison as well as a $565,000 fine but is currently free on a $100,000 bond, according to Berkeleyside.
Terbeek plead guilty Feb. 16 to two counts — paying a union employee and a willful violation of anti-structuring regulations.
U.S. District Court will determine Rush’s sentence in a court hearing Oct. 2, and Terbeek will be sentenced Aug. 21.
David Lampach, the current chair of the Medical Cannabis Commission, said this sort of scandal tends to occur in any sort of industry, adding that it likely will not significantly affect the cannabis commission or the marijuana industry.
“California has pretty strict rules in place preventing this kind of fraud,” Lampach said. “I believe we just have to abide the law and trust that others around us do as well. We will just have to try to root out the corruption.”