The United States Attorney's Office for the Northern District of California announced today that Mark Alexander Kesel and All Discount Laboratory Supply were sentenced on August 6, 2004, for their roles in a conspiracy to launder monetary instruments and conspiracy to distribute chemicals, equipment and other materials knowing, intending or having reasonable cause to believe that they would be used to manufacture methamphetamine.  Mr. Kesel was sentenced to  to six months home detention and three years probation (on standard and special conditions fixed by the Court).  In addition, he was ordered to forfeit $1.175 million to the government.  ADLS was ordered to dissolve, disband, and cease to exist, and all assets of ADLS were forfeited to the government.  In addition, ADLS was placed on three years probation (on standard and special conditions fixed by the Court), and ordered to forfeit $11,748,771, to the government.  The sentence was handed down by U.S. District Court Judge Claudia Wilken following guilty pleas by both Mr. Kesel and ADLS on two counts in violation of 18 U.S.C. § 1956(h) and 21 U.S.C. § 846.

Mr. Kesel, 48, of Kensington, CA, and ADLS were indicted by a federal grand jury on December 20, 2000.  A superseding indictment was returned on October 16, 2002.  Mr. Kesel and ADLS were charged with conspiracy to manufacture methamphetamine, distribution of chemicals, equipment, products or materials knowing, intending or having reasonable cause to believe they would be used to manufacture methamphetamine, conspiracy to do the same, laundering of monetary instruments, and conspiracy to launder monetary instruments.  Additionally, a forfeiture allegation charged that the defendants should forfeit $11,748,771, to the United States as proceeds from their illegal activities. 

According to the plea agreement, Mr. Kesel and ADLS admitted that ADLS sold chemicals and equipment that can be used to manufacture controlled substances such as methamphetamine.  Mr. Kesel and employees of ADLS agreed to sell these materials when they had reasonable cause to believe that they would be used to manufacture a controlled substance.  They also agreed to pay suppliers of ADLS  with money derived from selling materials which they had reasonable cause to believe would be used to manufacture a controlled substance.

Mr. Kesel and ADLS 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 ADLS' customers purchased large amount of chemicals, would not set up corporate accounts, paid for their 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 factors, and others, gave Kesel and employees of ADLS reasonable cause to believe that these customers were using the chemicals and items that we sold them to manufacture controlled substances.

Mr. Kesel and ADLS admitted that these sales generated substantial amounts of money, which they knew represented the proceeds of a specified unlawful activity (specifically, our agreement to sell chemicals and equipment that we had reasonable cause to believe would be used to manufacture a controlled substance, as outlined above).  Mr. Kesel agreed with Vladimir Kotlyarenko (ADLS' day manager) to use some of this money to purchase additional Freon (a chemical which can be used to manufacture methamphetamine), in order to continue to have inventory to sell to the customers they knew or had reasonable cause to believe would use the chemical to manufacture methamphetamine.

Mr. Kesel and ADLS admitted in their plea agreements that between 1998 and 2000, ADLS' 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 ADLS.  Mr. Kesel and ADLS agreed that as the proceeds of an illegal activity, some or all that money was forfeitable to the government.

Mr. Kesel's sentence included a downward departure from the otherwise applicable sentence based upon substantial assistance that Mr. Kesel provided to the government.  Mr. Kesel will begin serving his sentence in 30 days.  ADLS began serving its sentence immediately. 

The prosecution was the result of a three year investigation by agents of the Drug Enforcement Administration, the California Bureau of Narcotics Enforcement, the Internal Revenue Service, the Immigration and Naturalization Service, and numerous other federal and state law enforcement agencies.  Assistant United States Attorneys Karen Beausey and Audra Ibarra were the Assistant U.S. Attorneys who prosecuted the case with the assistance of Cherell Hallet, Lillian Arauz, Cynthia Daniel, Kathleen Glynn, David Siu, Sutton Peirce, and numerous other support staff.