The United States Attorney's Office for the Northern District of California announced that two individuals and a corporation, All Discount Laboratory Supply of Hayward, California, have now pled guilty to charges in connection with a methamphetamine conspiracy.

The two individuals, Vladimir Kotlyarenko and Mark Alexander Kesel, and All Discount Labs were charged in a superseding indictment returned October 16, 2002 by an Oakland federal grand jury, and charged with multiple offenses relating to the manufacture of methamphetamine and the distribution of chemicals and equipment used in the manufacture of methamphetamine.  The most recent guilty plea was the company's, which pled guilty earlier this week on Decmeber 10.  Vladimir Kotlyarenko pled guilty on October 17, 2003 and Mark Alexander Kesel pled guilty on November 10.  All the pleas were before U.S. District Court Judge Claudia Wilken to two counts.  The first count was conspiracy to distribute chemicals and equipment used in the manufacture of methamphetamine in violation of Title 21, United States Code, sections 843(a)(7) and 846, and the second count was conspiracy to launder monetary instruments in violation of Title 18, United States Code, section 1956(h).  All three defendants agreed that proceeds derived from these conspiracies are forfeitable to the government.

According to his plea agreement, Mr. Kesel had been a partner in All Discount Labs since its creation in 1996, and became the managing partner in July 1997.  According to Mr. Kotlyarenko's plea agreement, he became the manager of All Discount Labs in July 1997.  Kesel and Kotlyarenko admitted that All Discount Labs knowingly sold chemicals and equipment that could be used to manufacture controlled substances such as methamphetamine.  They further admitted that they agreed with others to sell such materials to people that the management and employees knew or had reasonable cause to believe would use them to manufacture drugs, and to pay All Discount Labs' suppliers with money derived from such sales.  Each further admitted having received numerous visits at All Discount Labs by DEA and BNE representatives, who told the employees several times about the rules and regulations concerning the sale of chemicals and equipment that can be used to manufacture drugs such as methamphetamine.

According to court documents, Kesel and Kotlyarenko, through All Discount Labs, sold large amounts of chemicals and equipment to people that they knew or had reasonable cause to believe would use them to manufacture drugs.  Some of All Discount Labs' customers purchased large amounts of chemicals, would not set up corporate accounts, paid for the purchases with large amounts of cash and bought more than one type of chemical or other item at the same time that in combination created suspicion that they would be used to make a controlled substance.  These sales generated substantial amounts of money, which was used to purchase additional chemicals to continue to have inventory to sell to customers who they knew or suspected would manufacture controlled substances.

All Discount Labs, Kotlyarenko and Kesel admitted that between 1998 and 2000, their sales of chemicals and equipment to customers they knew or had reasonable cause to believe would use them to manufacture controlled substances generated approximately $11,748,771 in gross sales to All Discount Labs.  They have agreed that as the proceeds of an illegal activity, some or all of this money is forfeitable to the government.

The maximum statutory penalty for each count in violation of 21 U.S.C. § 843(a)(7) is 10 years imprisonment, a $250,000 fine, and 3 years of supervised release.    The maximum statutory penalty for each count in violation of 18 U.S.C. §§ 1956(h) is 20 years imprisonment and/or the greater of $500,000 or twice the value of the property involved in the transaction, up to 5 years supervised release, $100 special assessment.  All Discount Labs, because it is a business, faces a maximum penalty of a $500,000 fine or up to twice the gross gain from the alleged criminal activity.

However, any sentence following conviction would be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and would be imposed in the discretion of the Court. 

The defendants are scheduled to be sentenced January 22, 2004 in Oakland before Judge Wilken.

The prosecution is the result of a three-year investigation by agents of the Drug Enforcement Administration, the California Bureau of Narcotic Enforcement, the Internal Revenue Service, and the Immigration and Naturalization Service.  Karen Beausey and Audra Ibarra are the Assistant U.S. Attorneys prosecuting the case with the assistance of Cherell Hallett and Karen Morgan.

All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Matthew J. Jacobs at (415) 436-7181.