Report: Oregon grows too much pot

KPTV file photo.

"Nine people face criminal charges after authorities say they worked together to steal more than one million dollars from financial institutions and used the money to open a marijuana business in Corvallis, according to the U.S Attorney’s Office District of Oregon.

The defendants, who live in and around Corvallis, face conspiracy charges related to a credit card “bust-out” scheme, the attorney’s office said.

A “bust-out” scheme occurs when a person obtains a credit card and accumulates large balances. Payments are made from a co-conspirator’s bank account, which reduces the credit card balance and allows for additional purchases, according to the attorney’s office.

After a number of purchases and payments are made, a co-conspirator reports the payments as unauthorized to their bank. Their bank seeks and obtains reimbursement from the credit card company and puts the funds back into the co-conspirators bank account.

No further payments are made on the credit cards, resulting in losses to the credit card companies that often exceed a card’s spending limit, the attorney’s office said.

Three defendants were arrested in connection to the crime Tuesday.Sherry Haywood watched the raid this morning. She’s the owner of this shop Mother Goose resale next door."I knew immediately what was going on," she said.

She said she knew something wasn’t right and is glad the shop is closed as she said it attracted the wrong crowd.

The attorney’s office said the fraud resulted in a more than a one-million-dollar loss to multiple financial institutions. Proceeds from the fraud were allegedly used to establish and operate illegal marijuana grows and fund a state-licensed marijuana retail business.

Some of the marijuana grown was sold at the Corvallis Cannabis Club and some of it was transported and sold outside of Oregon, according to authorities.And for many marijuana dispensaries like High Quality here in Corvallis, the owner said that this is not true to the character of many shops that have been around for years."You know we’re trying to do our best to show that we’re legitimate you know we already face really difficult circumstances with our taxation and the banking regulations," owner Brock Binder said.Binder is the owner of High Quality, the first licensed dispensary he said in Benton County.Binder noted the damage this could have on the marijuana dispensary industry from a federal standpoint."A federal or anyone from outside of state sees a headline like this it’s going to look at how is Oregon not correcting this when really you know if you read the fine print of the situation this isn’t necessarily representation of the current legal regulated industry," he said.Not just a hurt to the industry, Binder said, but to the patients who’d been receiving their marijuana from this shop, that’s now closed.

The three people arrested on Tuesday will make their first court appearance in Eugene on June 13.

The case was investigated by the FBI, Drug Enforcement Administration and the U.S Postal Inspection Service, with assistance from Oregon State Patrol and the Corvallis and Philomath Police Departments.

It is the first case involving marijuana-related charges prosecuted by U.S. Attorney Billy Williams since he issued a memo criticizing Oregon's pot surplus.

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