Owner Of Smoke Shops In Bakersfield, Fresno And Visalia Pleads Guilty To Fraud Relating To The Sale Of Synthetic Drugs
Four others indicted in nationwide operation
FRESNO, Calif. - Victor Anthony Nottoli, 51, of Hillsborough, Calif., pleaded guilty today to one count of conspiracy to defraud the United States and one count of causing at least 24 tons of misbranded smokable synthetic (SSC) to be introduced into interstate commerce. Four defendants arrested last week for manufacturing and distributing SSC were indicted today.
Nottoli pleaded guilty to one count of conspiracy to defraud the United States by interfering with the lawful governmental regulatory and enforcement functions of the FDA and DEA. According to court documents, between April 1, 2011, and June 26, 2013, Nottoli generated more than $20 million by distributing the SSC products commonly known as K2 or spice in retail outlets throughout the U.S. and from his six smoke shops doing business under the name “The Stuffed Pipe,” and located at 5135 W. Shaw Ave., Fresno; 2377 E. Shaw Ave., Fresno; 7273 N. Blackstone Ave., Fresno; 516 E. Olive Ave., Fresno; 1318 S. Mooney Ave., Visalia; and 3719 Wilson Rd., Bakersfield. In 2012, Nottoli bought a Florida company that manufactured and distributed SSC products and brought the production and distribution operations to a warehouse in Millbrae, Calif. Then in January 18, 2013, Nottoli leased a warehouse in Stockton and began manufacturing and distributing SSC products from that location.
According to court documents, Nottoli and his co-conspirators manufactured and distributed SSC products containing hallucinogenic chemical compounds AM‑2201 and XLR11. They referred to the SSC products as herbal incense, spice, botanicals, and potpourri and marketed them under names such as “Bizarro,” “Posh,” “Sonic Zero,” “Headhunter,” “Neutronium,” and “Orgazmo.” The products were labeled, “Not for Human Consumption.”
As charged in count two, Nottoli pleaded guilty to causing misbranded SSC products or drugs to be introduced into interstate commerce. According to court documents, between August 1, 2012, and June 26, 2013, twenty-four tons of misbranded drugs intended for human consumption were packaged and sold without the labeling required by law and necessary to protect the user such as: the place of business of the manufacturer, packer, or distributor; an accurate statement of the contents; adequate directions for use; warnings against use by children or where its use may be dangerous to health; warning against unsafe dosage; or methods or duration of administration or application.
In pleading guilty, Nottoli specifically agreed to the forfeiture of more than $6.6 million of drug proceeds: $6,488,000 in cash and $191,000 in other assets, including a truck and an Airstream Trailer.
Also today, a federal grand jury indicted Douglas Jason Way, 41, of Evanston, Ill.; Timothy Ortiz, 43, of Waukegan, Ill.; Timothy New, 31, of Pensacola, Fla.; and Natalie Middleton, 28, of Clovis, Calif., for their roles in Nottoli’s synthetic drug enterprise. The indictment charges Way, Ortiz, and New with conspiring to manufacture and distribute synthetic cannabinoids and with manufacturing, distributing, and attempting to possess with intent to distribute SSC products. Middleton, along with Way, Ortiz, and New, are also charged with causing the introduction of misbranded drugs into interstate commerce. Middleton individually was charged with engaging in a monetary transaction in property derived from drug trafficking to buy a time share in Lake Tahoe, Nevada.
If convicted of the drug charges, Way, Ortiz, New, and Middleton face a maximum statutory penalty of 20 years in prison and a $1 million fine or twice the gain. The maximum statutory penalty for money laundering is 10 years in prison and a $250,000 fine. The FDA mislabeling charge carries a maximum penalty of three years in prison and a $10,000 fine or twice the gross gain. Any sentence imposed would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Way, Ortiz, and Middleton are scheduled for arraignment on May 21, 2014, in Fresno. New was ordered detained by a U.S. Magistrate Judge in Dallas, and is awaiting transportation to federal court in Fresno.
Today’s guilty plea and indictment follows on the heels of last week’s nationwide synthetic drug takedown in connection with Project Synergy Phase II. Project Synergy is a law enforcement initiative coordinated by the DEA that brings together federal, state, local, and international law enforcement resources to target the dangerous global synthetic designer drug industry.
President Obama signed the Synthetic Drug Abuse Prevention Act into law in 2012, making 26 types of synthetic cannabinoids, including AM-2201, Schedule I drugs under the Controlled Substance Act. Last May, DEA placed XLR11 in Schedule I after the Centers for Disease Control and Prevention found that acute kidney injury is associated with XLR11.
This case is the product of an Organized Crime Drug Enforcement Task (OCDETF) investigation by the DEA, IRS-CI, and U.S. Immigration and Customs Enforcement’(ICE) Homeland Security (HSI), with assistance from the Office of Criminal Investigations of the Food and Drug (FDA) and the Fresno County Sheriff’s Office. Assistant United States Attorney Karen A. Escobar is prosecuting the case and Assistant United States Attorney Heather Mardel Jones is handling the forfeiture of assets.
