The United States Attorney's Office for the Northern District of California announced that Luther Thomas Dulaney III pled guilty today to one count each of establishment of a marijuana manufacturing operation and failure to report a financial transaction. 

Mr. Dulaney, 39, of San Rafael, California was the subject of an August 21, 2003, two count criminal information filed in U.S. District Court in San Francisco charging him with two felony offenses. Specifically, Mr. Dulaney was charged with one count of maintaining a building and place on or about August 28, 2001, for the purpose of unlawfully manufacturing and distributing marijuana, a Schedule I controlled substance, in violation of Title 21, United States Code, Section 856(a)(1); and of one count of knowingly and willfully evading the reporting requirements, and causing Wells Fargo Bank to fail to file a Currency Transaction Report as required by Title 31, United States Code, Section 5313, for a currency transaction in excess of $10,000 between May 14, 2001 and May 18, 2001, in violation of Title 31 United States Code, Section 5324(a).

According to the plea agreement, Mr.Dulaney admitted that beginning in 1994, he agreed to set up a commercial outdoor growing operation in Mendocino County, California.  The defendant subsequently supplied the money to buy the property where the marijuana was to be, and was in fact later grown, paid the costs to set up the necessary infrastructure and supplied the money to pay those whom would plant and care for the marijuana.  Mr. Dulaney admitted that he set up a corporation named "Blue Ridge, Inc." to disguise the nature of the business, which he falsely described in the corporate papers as a "real property development" business.  He then used this corporation to purchase a 76 acre plot of land in Mendocino County to use as the growing site. 

Mr. Dulaney admitted that between February 9, 1998 and August 27, 2001, he made 151 cash deposits totaling $1,197,645 into the "Blue Ridge, Inc." account, and that each deposit was purposely in an amount less than $10,000, because he was aware of the federal law that required banks to report all cash deposits over that amount to the Internal Revenue Service.  All of this money represented the proceeds of profits he had made from selling the marijuana that he grew to various distributors accross the United States.  Mr. Dulaney admitted that he used the money from his illegal sales to live an upscale lifestyle including purchasing a Cessna airplane for pleasure and to transport marijuana.

The sentencing of Mr.Dulaney is scheduled for February 3, 2004 before Judge Vaughn R. Walker in San Francisco.  The maximum statutory penalty for the count in violation of Title 21 U.S.C. Section 856(a)(1) is 20 years in prison and a fine of $500,000, plus mandatory and discretionary denial of federal benefits upon conviction of drug offenses. The maximum statutory penalty for the count in violation of Title 31 U.S.C. Section 5324(a)(1) is 5 years in prison and a fine of $250,000.  However, the actual sentence will be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and will be imposed in the discretion of the Court.

The prosecution is the result of a six month investigation by agents of IRS Criminal Investigation and the Drug Enforcement Administration . Michael Nerney is the Assistant U.S. Attorney who prosecuted the case with the assistance of Legal Technician Tania Korn. 

A copy of this press release and related court documents may be found on the U.S. Attorney's website at www.usdoj.gov/usao/can.