Cannabis Business Seisure
Donation protected
Back in March of 2013 a business I had started up with my good friend Robert was shut down by the San Francisco Police Department. SF Care Network was a business devoted to producing and supplying medical cannabis to patients in need of this type of therapy.
We had spent a great deal of money and energy to ensure that we were operating within the law, hiring a private consultant, attorneys and accountants to advise us how to set things up properly.
After spending two days in jail, we were released and charged with three felonies each. The SFPD came in to our bank and seized all of our personal bank accounts totaling $117,000. Of course this is after dismantling the business and confiscating all the equipment and assets of the company.
We have spent the past 18 months fighting these bogus charges without success.
Instead, we were finally presented with a reasonable settlement that we could accept and move on with our lives. That settlement was we would each plead guilty to a lesser misdemeanor charge and let the court keep 25% of the funds they seized from our personal bank accounts.
And the kicker is we still have not received a straight answer as to why we were shut down. As far as we know, we were doing everything that we were supposed to.
From the beginning, Robert and I agreed that we would equally share all of the profit and all of the losses of the company. As most of the seized funds were from Robert’s bank accounts, I am now left with a bill of $14,625 to pay my half of this major loss. And this is after having to borrow $5000 to cover my half of the last attorney bill.
I am making a plea to my friends and family as well as the cannabis community to assist in paying this tab. Any bit of help is very much appreciated. You can donate here on this website or get a check to me directly.
Thank you in advance for your support through this lengthy ordeal. I don’t know where I would be without you all.
Matt Pausa
Following is our compliance narrative where we spell out the details we went through to ensure we were doing everything within the law.
Compliance Narrative, SF Care Network
In 2010, two middle class law abiding guys, one a long-term HIV survivor, pooled 150K and decided to legally start a medical cannabis grow. Matt Pausa is a 30 year SF resident, who owns his own home and was gainfully employed in a restaurant and had a small handy man business. His partner, Robert Schneider, is an ex resident of SF who currently has a massage therapist business in San Francisco. Neither of these men had criminal records of any kind…just two middle class guys who decided to start a nonprofit enterprise that would support the community and provide a modest income at the same time.
Robert Schneider’s life partner of 28 years, Jamie Summers, had been a volunteer at the Marin Aids Project (MAP) for years prior to the starting of SF Care Network. His being around disabled individuals who could benefit from medicinal cannabis was inspiration to get this project going. Most of our extensive hospice program focused on the needs of these immune compromised people, providing them with an alternative to powerful prescription medications for sleeping disorders, pain management and appetite enhancement.
Even before locating a warehouse to work out of, they invested over $10,000 in consultants to advise them how to do everything within the law. Their mantra was, “Do everything right.”
That mantra was what settled every decision that was made in the two and a half years that the organization was in operation. Every penny received was deposited into the company bank account. Every employee was paid through payroll using ADP payroll services. State and Federal taxes were filed and paid annually. Even the San Francisco Unsecured Property Taxes were paid on the equipment and the leasehold improvements that were made to the warehouse.
Our primary client, an SF dispensary, has refused requests to issue us a 1099 for the income that we received. They even refused to allow their name to be used in our case. Everyone is very afraid of repercussions any documented involvement would have on their livelihood.
After a string of burglaries in 2012 costing them over $125,000, the partners had a difficult time making up the losses. The SFPD was in their warehouse on at least two of these occasions and they assured the partners that they were doing everything properly. Shortly thereafter they hired their attorneys, Hallinan & Hallinan, specialists in the medical cannabis business, to pay a visit to the Bay View Station and inquire if there is anything else that they could do to conform to the law completely. He also invited the SFPD to come in and inspect to confirm they were in compliance with the law. He was told that everything was in order.
To combat the burglaries, they hired the SF Patrol Special Police to patrol the street in front of the warehouse 12 hours per night. They not only improved the security of the warehouse, but also the security of the neighborhood.
On March 5th, 2013 they were going about their day to day operations when a swat team of SFPD officers descended on them and terrorized the partners and all the employees of this non-profit organization. All persons present were hand cuffed and interrogated in the only part of the warehouse that did not have video surveillance. The partners were arrested and sent to jail for two days while the business was dismantled. Additionally, 10 people lost their jobs.
How can the court prove that there was scienter when these two men hired consultants and attorneys to advise them and followed their advice to the letter? Their actions only prove that it was their intent to do everything legally.
Instead of an orderly shutdown, all equipment, worth over $40,000, was confiscated by the SFPD. And most of it was destroyed in the process of its removal. The leasehold improvements worth $50,000 had to be abandoned with another $10,000 in security deposits. Also, attorney fees of $26,000 have had to be paid out.
Along with the equipment, finished product worth over $30,000 was also confiscated. $117,000 in cash was seized from the bank accounts of these near retirement-age men, not a penny of which was from proceeds of the grow.
And so their dreams were smashed.
These following facts support the preceding narrative. All of which are verifiable.
Early 2010: Met with Anthony Feldstein regarding the proper way of setting up a legal medical cannabis grow.
May, 2010: Met with Terrence Hallinan regarding current laws and how to operate within the law.
5/26/10: Met with Joan Varrone at One Stop Services & Consulting to discuss setting up the business. Cost: - $10,500. Specifically, One Stop advised us about:
Setting up the articles of corporation and business identity
Obtaining the proper insurance
Compliance with state and local law
Posting the proper documentation on site
6/11/2010: Obtained original lease from David Lai.
6/15/2010: Signed revised lease that includes proper verbiage for ”use conforming to state and local law” instead of “legal use” and the new rental rate of $4750 instead of the original $3500 per month.
6/22/2010: Warehouse fire insurance bound with Allstate.
7/1/2010: Hired Wells Electrical
9/15/2010: Warehouse liability insurance bound with Lloyds of London.
10/1/2010: Hired ADP to process all payroll and Chartis to cover our workers’ compensation insurance.
11/11/2010: Hired All Around Electric to inspect and review electrical installation to confirm that everything conformed with current building codes.
11/15/2011: Met with Terence and Brendan Hallinan for advise. $500
1/3/2011: Hired Dorgan Electrical to inspect electrical installation.
7/25/2011: Paid San Francisco Unsecured Property Taxes (571-L) $727.19
11/2011: Met with Brendan and Terence Hallinan to review compliance. Implemented the recommended postings.
5/6/2012: First burglary. Losses of approximately $40,000.
5/7/2012: Hired One Touch Media to install alarm and video surveillance system including “panic buttons” for employee safety
6/5/2012: Meeting with Brendan and Terrence Hallinan to discuss compliance and to deliver retainer fee of $5000.
6/25/2012: Second burglary: Losses of approximately $52,000.
6/26/2012: Meeting at 1435 Van Dyke to discuss security. Present at meeting: Matt Pausa, Robert Schneider, Rocky (from 1433) and David Lai. David suggested a “man trap” and razor wire in skylights. Rocky suggested Sonitrol (listening tech.) and agreed to share internet.
7/20/2012 ? : Brendan Hallinan visits SFPD Bayview Station to ask if there is anything that SF Care Network can do to be even more compliant.
7/30/2012: Third burglary: Losses of approximately $46,000. SFPD on the scene of the incident. We were assured by them not to worry. They confirmed that all of our paperwork was in order and we were allowed to operate.
7/30/2012: Felony burglary charges against Tabu Buggs pending in SF, Department 9. Prosecutor Lili Nguyen.
8/14/2012: Delivered narratives of the 6/25 and 7/30 burglaries to SFPD Bayview Station accompanied by Brendan Hallinan.
8/28/2012: Paid San Francisco Unsecured Property Taxes (571-L) $1094.91
9/1/2012: Hired SF Patrol Special Police for after-hours security. They are enlisted also to escort employees out of the building in the event that they are working past 5:00 pm.
2/6/2013: Matthew Pausa deposits $1000 in personal funds into SFCN account to pay bills.
2/12/2013: Matthew Pausa borrows $4000 from home equity line of credit and deposits funds into SFCN account to pay bills.
2/13/2013: Robert Schneider deposits $5000 in personal funds into SFCN account to pay bills.
2/27/2013: Matthew Pausa borrows $4000 from home equity line of credit and deposits funds into SFCN account to pay bills.
2/28/2013: Robert Schneider deposits $4000 in personal funds into SFCN account to pay bills.
3/5/2013: Raid by SFPD. All equipment destroyed and confiscated.
3/11/2013: SFPD seized $117,000 of personal assets from defendants’ bank accounts – INCLUDING INDIVIDUAL RETIREMENT ACCOUNTS
4/12/2013: Made California State income tax payment, $7517.00
6/27/2013: Made IRS income tax payment, $10,000.00
7/18/2013: Paid San Francisco Unsecured Property Taxes (571-L) $935.05
7/20/2013: Made IRS income tax payment, $5,000.00
8/1/2013: Made IRS income tax payment, $3,000.00
8/21/2013: Made IRS income tax payment, $3,000.00
We had spent a great deal of money and energy to ensure that we were operating within the law, hiring a private consultant, attorneys and accountants to advise us how to set things up properly.
After spending two days in jail, we were released and charged with three felonies each. The SFPD came in to our bank and seized all of our personal bank accounts totaling $117,000. Of course this is after dismantling the business and confiscating all the equipment and assets of the company.
We have spent the past 18 months fighting these bogus charges without success.
Instead, we were finally presented with a reasonable settlement that we could accept and move on with our lives. That settlement was we would each plead guilty to a lesser misdemeanor charge and let the court keep 25% of the funds they seized from our personal bank accounts.
And the kicker is we still have not received a straight answer as to why we were shut down. As far as we know, we were doing everything that we were supposed to.
From the beginning, Robert and I agreed that we would equally share all of the profit and all of the losses of the company. As most of the seized funds were from Robert’s bank accounts, I am now left with a bill of $14,625 to pay my half of this major loss. And this is after having to borrow $5000 to cover my half of the last attorney bill.
I am making a plea to my friends and family as well as the cannabis community to assist in paying this tab. Any bit of help is very much appreciated. You can donate here on this website or get a check to me directly.
Thank you in advance for your support through this lengthy ordeal. I don’t know where I would be without you all.
Matt Pausa
Following is our compliance narrative where we spell out the details we went through to ensure we were doing everything within the law.
Compliance Narrative, SF Care Network
In 2010, two middle class law abiding guys, one a long-term HIV survivor, pooled 150K and decided to legally start a medical cannabis grow. Matt Pausa is a 30 year SF resident, who owns his own home and was gainfully employed in a restaurant and had a small handy man business. His partner, Robert Schneider, is an ex resident of SF who currently has a massage therapist business in San Francisco. Neither of these men had criminal records of any kind…just two middle class guys who decided to start a nonprofit enterprise that would support the community and provide a modest income at the same time.
Robert Schneider’s life partner of 28 years, Jamie Summers, had been a volunteer at the Marin Aids Project (MAP) for years prior to the starting of SF Care Network. His being around disabled individuals who could benefit from medicinal cannabis was inspiration to get this project going. Most of our extensive hospice program focused on the needs of these immune compromised people, providing them with an alternative to powerful prescription medications for sleeping disorders, pain management and appetite enhancement.
Even before locating a warehouse to work out of, they invested over $10,000 in consultants to advise them how to do everything within the law. Their mantra was, “Do everything right.”
That mantra was what settled every decision that was made in the two and a half years that the organization was in operation. Every penny received was deposited into the company bank account. Every employee was paid through payroll using ADP payroll services. State and Federal taxes were filed and paid annually. Even the San Francisco Unsecured Property Taxes were paid on the equipment and the leasehold improvements that were made to the warehouse.
Our primary client, an SF dispensary, has refused requests to issue us a 1099 for the income that we received. They even refused to allow their name to be used in our case. Everyone is very afraid of repercussions any documented involvement would have on their livelihood.
After a string of burglaries in 2012 costing them over $125,000, the partners had a difficult time making up the losses. The SFPD was in their warehouse on at least two of these occasions and they assured the partners that they were doing everything properly. Shortly thereafter they hired their attorneys, Hallinan & Hallinan, specialists in the medical cannabis business, to pay a visit to the Bay View Station and inquire if there is anything else that they could do to conform to the law completely. He also invited the SFPD to come in and inspect to confirm they were in compliance with the law. He was told that everything was in order.
To combat the burglaries, they hired the SF Patrol Special Police to patrol the street in front of the warehouse 12 hours per night. They not only improved the security of the warehouse, but also the security of the neighborhood.
On March 5th, 2013 they were going about their day to day operations when a swat team of SFPD officers descended on them and terrorized the partners and all the employees of this non-profit organization. All persons present were hand cuffed and interrogated in the only part of the warehouse that did not have video surveillance. The partners were arrested and sent to jail for two days while the business was dismantled. Additionally, 10 people lost their jobs.
How can the court prove that there was scienter when these two men hired consultants and attorneys to advise them and followed their advice to the letter? Their actions only prove that it was their intent to do everything legally.
Instead of an orderly shutdown, all equipment, worth over $40,000, was confiscated by the SFPD. And most of it was destroyed in the process of its removal. The leasehold improvements worth $50,000 had to be abandoned with another $10,000 in security deposits. Also, attorney fees of $26,000 have had to be paid out.
Along with the equipment, finished product worth over $30,000 was also confiscated. $117,000 in cash was seized from the bank accounts of these near retirement-age men, not a penny of which was from proceeds of the grow.
And so their dreams were smashed.
These following facts support the preceding narrative. All of which are verifiable.
Early 2010: Met with Anthony Feldstein regarding the proper way of setting up a legal medical cannabis grow.
May, 2010: Met with Terrence Hallinan regarding current laws and how to operate within the law.
5/26/10: Met with Joan Varrone at One Stop Services & Consulting to discuss setting up the business. Cost: - $10,500. Specifically, One Stop advised us about:
Setting up the articles of corporation and business identity
Obtaining the proper insurance
Compliance with state and local law
Posting the proper documentation on site
6/11/2010: Obtained original lease from David Lai.
6/15/2010: Signed revised lease that includes proper verbiage for ”use conforming to state and local law” instead of “legal use” and the new rental rate of $4750 instead of the original $3500 per month.
6/22/2010: Warehouse fire insurance bound with Allstate.
7/1/2010: Hired Wells Electrical
9/15/2010: Warehouse liability insurance bound with Lloyds of London.
10/1/2010: Hired ADP to process all payroll and Chartis to cover our workers’ compensation insurance.
11/11/2010: Hired All Around Electric to inspect and review electrical installation to confirm that everything conformed with current building codes.
11/15/2011: Met with Terence and Brendan Hallinan for advise. $500
1/3/2011: Hired Dorgan Electrical to inspect electrical installation.
7/25/2011: Paid San Francisco Unsecured Property Taxes (571-L) $727.19
11/2011: Met with Brendan and Terence Hallinan to review compliance. Implemented the recommended postings.
5/6/2012: First burglary. Losses of approximately $40,000.
5/7/2012: Hired One Touch Media to install alarm and video surveillance system including “panic buttons” for employee safety
6/5/2012: Meeting with Brendan and Terrence Hallinan to discuss compliance and to deliver retainer fee of $5000.
6/25/2012: Second burglary: Losses of approximately $52,000.
6/26/2012: Meeting at 1435 Van Dyke to discuss security. Present at meeting: Matt Pausa, Robert Schneider, Rocky (from 1433) and David Lai. David suggested a “man trap” and razor wire in skylights. Rocky suggested Sonitrol (listening tech.) and agreed to share internet.
7/20/2012 ? : Brendan Hallinan visits SFPD Bayview Station to ask if there is anything that SF Care Network can do to be even more compliant.
7/30/2012: Third burglary: Losses of approximately $46,000. SFPD on the scene of the incident. We were assured by them not to worry. They confirmed that all of our paperwork was in order and we were allowed to operate.
7/30/2012: Felony burglary charges against Tabu Buggs pending in SF, Department 9. Prosecutor Lili Nguyen.
8/14/2012: Delivered narratives of the 6/25 and 7/30 burglaries to SFPD Bayview Station accompanied by Brendan Hallinan.
8/28/2012: Paid San Francisco Unsecured Property Taxes (571-L) $1094.91
9/1/2012: Hired SF Patrol Special Police for after-hours security. They are enlisted also to escort employees out of the building in the event that they are working past 5:00 pm.
2/6/2013: Matthew Pausa deposits $1000 in personal funds into SFCN account to pay bills.
2/12/2013: Matthew Pausa borrows $4000 from home equity line of credit and deposits funds into SFCN account to pay bills.
2/13/2013: Robert Schneider deposits $5000 in personal funds into SFCN account to pay bills.
2/27/2013: Matthew Pausa borrows $4000 from home equity line of credit and deposits funds into SFCN account to pay bills.
2/28/2013: Robert Schneider deposits $4000 in personal funds into SFCN account to pay bills.
3/5/2013: Raid by SFPD. All equipment destroyed and confiscated.
3/11/2013: SFPD seized $117,000 of personal assets from defendants’ bank accounts – INCLUDING INDIVIDUAL RETIREMENT ACCOUNTS
4/12/2013: Made California State income tax payment, $7517.00
6/27/2013: Made IRS income tax payment, $10,000.00
7/18/2013: Paid San Francisco Unsecured Property Taxes (571-L) $935.05
7/20/2013: Made IRS income tax payment, $5,000.00
8/1/2013: Made IRS income tax payment, $3,000.00
8/21/2013: Made IRS income tax payment, $3,000.00
Organizer
Matthew Pausa
Organizer
San Francisco, CA
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