U.S. Attorney wants Delavan smoke shop owner's building, $766,097 from profits

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Kevin Murphy/Special to The Gazette
Tuesday, July 22, 2014

MADISON--Federal prosecutors want to take the Delavan Smoke Shop owner's store and the $766,097 they say he profited from the sale of controlled substances mislabeled as incense, according to documents filed Monday in federal court.

Federal officials in April temporarily seized two of David and Erin Yarmo's accounts at Walworth State Bank totaling $766,097. They contended the money was proceeds from the sale of controlled substances or was mingled with the shop's other receipts, according to the forfeiture petition.

The government also put a detainer on The Smoke Shop property at 127 Park Place in Delavan, claiming it was purchased with funds traceable to the sale of controlled substances there.

Assistant U.S. Attorney Scott Campbell wrote in the petition that Yarmo's actions violated the Controlled Substances Act and the Money Laundering Control Act. The petition asks District Judge J. P. Stadtmueller to order the funds and property forfeited.

Since 2012, Yarmo has sold tobacco, jewelry and clothing. More recently he has sold smokable synthetic cannabinoid products, including Spice and K2, according to the petition.

Shortly after Yarmo opened for business, the Walworth County Drug Enforcement Unit and the U.S. Drug Enforcement Administration began investigating the possibility that illegal smokable synthetic cannabinoid products were sold at The Smoke Shop mislabeled or disguised as herbal incense or potpourri.

In August 2013, a confidential informant purchased a packet of “Wild Cherry,” which tested positive at the State Crime Laboratory for a controlled substance. A similar purchase on Feb. 21 also tested positive for an illegal smokable synthetic cannabinoid product, according to the petition.

Yarmo's attorney, John Markham of Boston, said his client beat a similar prosecution in 2012 and will win this one, too.

“He's trying to stay within the bounds of the law, but when you sell incense, there's always a suspicion that it's against the law even when it's not. You can't fault the community for being concerned, but you also can't fault a guy who's trying to stay within the law who was previously right,” Markham said.

District Judge Rudolph Randa ruled in May 2013 that the seized products valued at more than $100,000 in September 2012 were not substantially similar in composition to controlled substances. He would have ordered them returned to Yarmo, but before Randa ruled the DEA declared the substances to be illegal, according to court documents.

Markham said chemists try to keep ahead of government efforts to make certain chemical compounds illegal. They change single molecules of compounds previously declared to be controlled substance.

In response, Congress gave the DEA emergency authority to declare substances as controlled substances if they are substantially similar to and have the same pharmacological effect as already earlier declared controlled substance, Markham said.

Yarmo is not playing the game, said Markham. The mixtures undercover agents purchased from him were not illegal at the time, and he cannot be successfully prosecuted for their sale now, he said.

Walworth Country District Attorney Daniel Necci this month dismissed drug distribution charges his office brought against Yarmo after a federal official said federal drug charges would be brought against Yarmo.

“The U.S. Attorney will prosecute him criminally, as well,” Necci said.

A spokesman for U.S. Attorney James Santelle declined to confirm Necci's statement, saying it is policy not to comment on matters that may go to a grand jury.

Markham said he also will contest that Yarmo made $766,000 from the sale of products the government alleged are illegal.

“They overestimated … That's a lot of money,” he said.

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