Mar. 23—A majority owner of two large-scale, state-licensed marijuana producers in Spokane County is among nine people indicted on an alleged $100 million fraud scheme out of Utah being investigated by federal authorities.
The Washington Liquor and Cannabis Board confirmed Thursday that Robert McKinley, 45, co-owner of Grow Op Farms and Phat and Sticky, was named in a December indictment accusing him and eight others of devising a scheme to bilk customers of "nutraceutical, CBD, and dietary supplement products" out of millions of dollars.
They are accused of setting up phony companies and websites, and making untrue claims about the products' health benefits, while also hiding their fraudulent activity from banks and other financial institutions facilitating debit and credit card charges.
Charles Kreindler, a California attorney representing McKinley in the criminal matter, wrote in an email Thursday that the allegations have "nothing to do with businesses licensed for cannabis cultivation in Washington."
"Grow Op Farms," the brand name "Phat Panda" and "Phat and Sticky" do not appear anywhere in the indictment. CBD, or cannabidiol, is a chemical that is found in marijuana but can also be extracted from hemp, and does not have the same intoxicating effects as tetrahydrocannabinol, or THC, the element of the drug that gives the user a high.
"With respect to the Utah allegations themselves, as you can see from the indictment, Mr. McKinley is a fringe defendant who we fully expect to be dismissed or acquitted," Kreindler wrote.
The 31-page indictment was filed in the U.S. District Court of Utah on Dec. 7. McKinley's participation in the alleged offenses is listed as "the marketing of products to consumers." The U.S. Attorney's Office in Utah declined to comment on McKinley's alleged involvement beyond what was listed in the indictment.
McKinley is not in custody and is next scheduled to appear before a Utah judge in April.
The LCB is aware of the allegations in the indictment, and there is an "open complaint" based on the case, said Brian Smith, communications director for the board. They are working to determine whether the alleged criminal activity has anything to do with a state-licensed marijuana business, he said.
McKinley is accused of 15 criminal counts, including identity theft, wire fraud and several conspiracy charges. Convictions under those charges would not automatically prevent McKinley from continuing to work in Washington's legal cannabis industry under new regulations approved in 2021. Under an old point system, the LCB could deny an applicant for a cannabis license or renewal of a license if the person had a certain number of criminal conviction points, based on the severity of the crime and how long it had been since a conviction.