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Landlord Challenges Feds In Calif. Medical Pot Case

ANAHEIM (AP) — The feds never kicked down the door of Tony Jalali's building and raided the medical pot shops that rented space from him.

Letters were sent to him informing him that having a dispensary in his Orange County office building violated U.S. law and it could be taken from him. Once a lawsuit was filed against him by the U.S. government, Jalali booted the lone remaining clinic.

Jalali now is fighting back, challenging the efforts of federal prosecutors who are using a well-established law that allows for the seizure of property linked to criminal activity. Jalali, 59, believes he's been unfairly targeted in an ongoing crackdown on pot shops across California.

"I have not even been charged with or convicted of a crime," said Jalali, who denies ever receiving notice letters. "What the government has done is wrong and we expect a federal court to stop it."

Jalali, joined by a Virginia-based public interest law firm, argues that it's unconstitutional to take his building, estimated to be worth $1.5 million, because forfeitures must be consistent with conduct. Jalali said he had no involvement with the dispensary, Releaf Health & Wellness.

As one of more than two dozen landlords ensnared in the efforts to close California pot stores, he likely faces a tough battle. The U.S. government has seized property linked to criminal activity for nearly three decades. Forfeitures accounted for nearly $4.2 billion last fiscal year.

Renting or using a property for the purpose of distributing drugs is a federal crime punishable by up to 20 years in prison. Federal prosecutors say the lawsuits are a measured approach targeting landlords who were notified that their tenants were operating illegally.

"Landlords across this district should be well aware by this time that if they continue to rent to pot stores, they will eventually be the recipient of a letter or the target of a lawsuit," said Thom Mrozek, a spokesman with the U.S. attorney's office in Los Angeles.

While there's little debate about the government's right to seize funds from money laundering or drug cartels, Jalali and his fellow pot landlords are not accused of selling the drug. Medical pot is legal in the state, but at odds with federal law.

Some observers said landlords are caught in the middle of conflicting state and federal laws.

"I think the dispensaries are a more reasonable target than the landlords," said John Worrall, a professor of criminology at University of Texas at Dallas. "But by providing the facilities they are in fact facilitating (a crime). They are doing their best to comply with the state. It's a bit of a gray area."

Critics say the civil forfeiture process is misguided because people have to prove their innocence to keep their property. Many property owners have settled out of fear while maintaining they did nothing wrong.

"It becomes unsafe for property owners to challenge the law," said lawyer Richard Hamlin, who represented a Santa Fe Springs building owner who reached a deal with federal prosecutors. "If you lose, you have a huge loss. It's like capital punishment for the property."

About two dozen of the 30 or so cases filed in the seven-county Central District of California, which stretches from San Luis Obispo to Riverside, have been settled with landlords agreeing not to rent space to dispensaries for several years.

In about half the settlements, landlords also forked over tens of thousands of dollars, including $100,000 from an Orange County building owner who had eight dispensaries as tenants.

Jalali, a software engineer who emigrated to the U.S. from Iran in the late 1970s, said he didn't think he'd get in trouble because medical pot is legal under state law. His building houses a dentist office and several other businesses.

"Civil forfeiture is the government's weapon of choice in enforcing drug laws," said attorney Scott Bullock of the Institute for Justice, the law firm that has joined Jalali in the lawsuit.

"We think it's important for this practice to be stopped and it will continue to be abused elsewhere unless a precedent is set that says it can't be done," Bullock said.

In Oakland, the city has intervened to try and halt the closure and forfeiture of Harborside Health Center, which is billed as the nation's largest pot dispensary. City officials have said closing down the store would lead to a health and safety crisis because many of the more than 100,000 patients would turn to the street to score the drug.

Richard Tamor, an attorney representing Harborside's landlord, said federal authorities could have insisted that the clinic close, rather than take legal action to seize the building.

"When you know something is going on and it's open and notorious, instead of filing a lawsuit and spending scarce government resources, just send a letter," said Tamor, who added his client would be willing to talk with federal prosecutors to resolve her case.

The four U.S. attorneys in the state targeted dispensaries because they were violating federal law and weren't complying with state law by making huge profits. More than 600 pot shops have closed in Southern California and federal prosecutors have filed criminal charges against only three dispensary operators. Jalali's former tenants were not among those who were charged.

Jalali's lawyers contend the city of Anaheim, which joined the suit, is colluding with federal prosecutors to share in the forfeiture spoils. Jalali would have to be convicted of a crime for the city to seize his building under state law, his attorneys said.

Jalali think it's hypocritical for Anaheim to crack down on dispensaries while it also benefits from the industry. The city, known as the home to Disneyland, hosts a medical marijuana expo at its convention center next week. A city official declined comment.

(© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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