OPERATION ICE PALACE
Jury Convicts Springfield Business CEO in Meth-Related Conspiracy

SEP 1-- SPRINGFIELD, MISSOURI: Preston L. Grubbs, Special Agent in Charge of the Drug Enforcement Administration St. Louis Division Office, and Bradley J. Schlozman, United States Attorney for the Western District of Missouri, announced that the CEO of a Springfield, Missouri, business was convicted by a federal jury today for his role in a conspiracy to distribute ingredients used to manufacture methamphetamine.

Today’s conviction is the result of Operation Ice Palace, a long-term investigation into the illegal sale of large quantities of over-the-counter cold medications to methamphetamine manufacturers in southwest Missouri. Operation Ice Palace resulted in a series of indictments by a federal grand jury against a total of 53 defendants.

“Handi-Rak wholesale company sold massive quantities of cold medication to small stores throughout southern Missouri. These sales far exceeded the amount a legitimate business would be able to sell to its legal customers. This was the source of an illegal supply line that provided meth cooks with the ingredients needed to manufacture methamphetamine,” Schlozman said.

Roy James Hudspeth, 42, of Springfield, Missouri was found guilty of participating in a conspiracy to distribute pseudoephedrine, knowing that it would be used to manufacture methamphetamine, in Greene, Barry, Camden, Jackson, McDonald, Ozark, Taney and Texas counties in Missouri from January 2001 to November 13, 2003. Hudspeth was also found guilty of conspiracy to commit money laundering and two counts of money laundering.

Hudspeth is the vice president and CEO of Handi-Rak, a distributor of products to convenience stores. Among the co-defendants in this case are a sales manager and four sales agents of Handi-Rak, as well as the owners and employees of several convenience stores.

“We are committed to attacking the scourge of methamphetamine on every front,” Schlozman said. “We will prosecute the dealer on the street or the cook who supplies the illegal poison just as aggressively as we prosecute the corporate criminal in a suit and tie who provides them with the ingredients to make it possible.”

“Internal Revenue Service-Criminal Investigation (IRS-CI) has a unique role in federal law enforcement's counter-drug effort, in that we have the financial investigators and expertise that are critical to locating the money and prosecute the offenders,” added James D. Vickery, Special Agent in Charge of IRS-CI. Following the presentation of evidence, the jury in United States District Court in Springfield, Missouri deliberated about three hours before returning the guilty verdict to United States Chief District Judge Dean Whipple, ending a trial that began Monday, August 28, 2006.

In a separate but related case, also resulting from Operation Ice Palace, a federal jury convicted David L. Deputy, 54, of Powersite, Missouri, the owner of The Castle head shop in Forsyth, Missouri, and D and D Distributors, which distributes pseudoephedrine to convenience stores and other businesses, on May 6, 2005. Deputy was found guilty of leading a criminal conspiracy to possess and distribute at least three kilograms of pseudoephedrine, knowing that it would be used to manufacture methamphetamine, in Greene, Jasper, Taney, Barry, Lawrence, and Ozark counties in Missouri from May 2000 to June 4, 2003. “Deputy used his wholesale company to distribute large amounts of pseudoephedrine products to convenience stores and other businesses in southwest Missouri and northwest Arkansas,” Schlozman explained. Many of these stores in turn sold the pseudoephedrine to individuals who used it to manufacture methamphetamine. Deputy and employees at the Castle also sold large amounts of pseudoephedrine products directly to persons they knew were using it to manufacture methamphetamine. Thirteen co-defendants pleaded guilty to charges contained in the federal indictment, including four of Deputy’s employees and the owners and employees of several convenience stores and liquor stores.

Five co-defendants in this case have been sentenced, among the 14 who pleaded guilty to charges contained in an indictment returned by a federal grand jury in Springfield on March 31, 2004, and later replaced by superseding indictments. Among those co-defendants:

* Gabriel Delossantos, 30, of Rogers, Arkansas, was sentenced on August 3, 2006, to eight years and four months in federal prison without parole. On April 14, 2005, Delossantos pleaded guilty to his role in the conspiracy to distribute pseudoephedrine, knowing that it would be used to manufacture methamphetamine. Delossantos admitted that in October 2002, he had an agreement with others to obtain pseudoephedrine in order to provide it to individuals to manufacture methamphetamine. On October 16, 2002, Delossantos purchased 2,568 pills of 30-milligram dosage pseudoephedrine, which he intended to distribute to others to make methamphetamine.

* Benjamin Paine, 30, of Purdy, Missouri, was sentenced on November 10, 2005, to seven years and three months in federal prison without parole. On April 18, 2005, Paine pleaded guilty to his role in the conspiracy to distribute methamphetamine, knowing that it would be used to manufacture methamphetamine.

Tracy J. Van Bibber, 40, of Camdenton, Missouri, was sentenced to three years and one month in federal prison without parole. On April 15, 2005, Van Bibber pleaded guilty to distributing pseudoephedrine, knowing that it would be used to manufacture methamphetamine. Van Bibber was an employee of County Corner Convenience Store in Sunrise Beach, Missouri, in August 2002, when she sold a total of 360 pseudoephedrine pills to an undercover officer with the Missouri State Highway Patrol.

* Russell Brown, 43, of Seligman, Missouri, was sentenced on November 9, 2005, to one year in federal prison without parole. Brown was the manager of the Pit Stop in Seligman. On May 16, 2005, Brown pleaded guilty to his role in the conspiracy. Brown admitted that he had an agreement with others to obtain pseudoephedrine in order to provide it to individuals to use to manufacture methamphetamine. On September 17, 2002, Brown was in possession of 720 pills of 30-milligram dosage pseudoephedrine to distribute to another person in order to manufacture methamphetamine.

* Charles Laffoon, 65, of Harrison, Arkansas, was sentenced on May 4, 2005, to three years of probation. On June 4, 2004, Laffoon pleaded guilty to his role in the conspiracy to distribute pseudoephedrine, knowing that it would be used to manufacture methamphetamine. Laffoon was a sales agent for Handi-Rak, a convenience store supply company from January 2001 until November 2003.

* Louie M. Bunch, Jr., 35, of Springfield, pleaded guilty on May 13, 2005, to his role in the conspiracy to distribute pseudoephedrine, knowing that it would be used to manufacture methamphetamine. Bunch, a sales manager for Handi-Rak, admitted that he assisted Hudspeth in the sale of pseudoephedrine-based cold tablets to various retail stores located in southwest Missouri. Hudspeth advised Bunch to falsify invoices in order to evade a company-imposed limit of 48 boxes per week sold to C and M Country Store in Willow Springs, Missouri. “On one occasion in May 2002, Bunch sold 126 boxes of pseudoephedrine to the store. On another occasion that same month, Bunch sold 144 boxes of pseudoephedrine to the store. Based upon the circumstances of the sale, Bunch had reasonable cause to believe that some of the pseudoephedrine sold to C and M was going to be sold to others who would use it in the production of methamphetamine,” Schlozman said.

* Michael Higgins, 48, of Kansas City, Missouri, pleaded guilty on June 3, 2005, to his role in the conspiracy to distribute pseudoephedrine, knowing that it would be used to manufacture methamphetamine. Higgins, a sales agent for Handi-Rak, admitted that he assisted Hudspeth in the sale of pseudoephedrine-based cold tablets to various retail stores located in the Kansas City, Missouri, area. “For example,” Schlozman said, “Higgins supplied the owner of the Quick Stop in Grandview, Missouri, with a shipment of Swan brand pseudoephedrine tablets on December 10, 2001, having reasonable cause to believe that some of them would be diverted to the manufacture of methamphetamine. Undercover Federal Bureau of Investigation agents, posing as methamphetamine cooks, later purchased that pseudoephedrine from the store.”

In a separate case, Quick Stop owners Rady I. Sdoulam, 35, of Kansas City, Missouri, and Eiad M. Musallet, 29, of Olathe, Kansas, who also owned a Quik Stop Convenience Store in Kansas City, Kansas, were convicted by a federal jury in Kansas City on May 20, 2003, of conspiring to distribute pseudoephedrine, having reasonable cause to believe that it would be used to manufacture methamphetamine. Sdoulam and Musallet were also each found guilty on separate counts of distributing pseudoephedrine to an undercover officer, believing that it would be used to manufacture methamphetamine. Sdoulam was sentenced to five years and six months in federal prison without parole and Musallet was sentenced to five years in federal prison without parole.

* Norman R. Weaver, 46, of Seligman, pleaded guilty on May 6, 2005, to his role in the conspiracy. Weaver is the owner of Norm’s Grocery Store and the Pit Stop in Seligman. Weaver admitted that he had an agreement with co-defendants Delossantos and Paine to distribute pseudoephedrine in order to have the pseudoephedrine be used to manufacture methamphetamine. Weaver admitted that he sold 2,568 pills of 30-milligram dosage pseudoephedrine to Delossantos and Paine on October 16, 2002, knowing that it would be used to manufacture methamphetamine.

* Michael G. Williams, 37, of Springfield, Missouri pleaded guilty on May 6, 2005, to his role in the conspiracy. Williams was a salesman for Handi-Rak, a convenience store supply company located in Springfield, Missouri. From January 2001 to July 2002, Williams supplied The Castle and a Taney County, Missouri, head shop with large amounts of pseudoephedrine. On April 11, 2002, Williams delivered 96 boxes of cold medications containing pseudoephedrine to The Castle, for which Handi-Rak was paid $249. During the time Williams was in the store, he talked to the store clerks about obtaining even more pseudoephedrine, in higher milligram dosages, for The Castle. The most readily provable amount that Williams was responsible for distributing is 40 to 70 grams of pseudoephedrine.

* Troy K. Kelly, 35, of Gerard, Kansas, pleaded guilty on April 22, 2005. Kelly was a sales agent for Handi-Rak.

* Gerri Deering, 48, of Shell Knob, Missouri, pleaded guilty on April 18, 2005, to her role in the conspiracy. Deering admitted that, while employed at Rapid Roberts in Shell Knob, Missouri, she sold a total of 936 pseudoephedrine pills of 30 and 60-milligram dosage to an undercover officer with the Missouri State Highway Patrol in July and August of 2002.

* William Blair, 72, of Bradleyville, Missouri, pleaded guilty on May 13, 2005, to distributing pseudoephedrine, knowing that it would be used to manufacture methamphetamine. Blair is the owner of Billy Jack’s Package Store in Bradleyville.

* Deborah Parker, 46, address unknown, and Margaret Vinson, 35, of Garfield, Kansas, each pleaded guilty on May 13, 2005, to distributing pseudoephedrine, knowing that it would be used to manufacture methamphetamine. Parker and Vinson were employees at the Missouri Package Store in Seligman, Missouri which had reportedly sold large amounts of pseudoephedrine to persons who were using it to manufacture methamphetamine. Based on those reports, undercover law enforcement officers visited the store on August 14, 2002. During that visit, Parker and Vinson offered to sell the entire inventory of pseudoephedrine products contained in the store. Parker and Vinson then sold the officers 780 pseudoephedrine tables of various dosages, for which the officers paid $157.

This case is being prosecuted by Assistant United States Attorney Randall D. Eggert. Operation Ice Palace was investigated by Internal Revenue Service-Criminal Investigation, the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, COMET (the Combined Ozarks Multi-jurisdictional Enforcement Team), the Missouri State Highway Patrol, the Greene County, Missouri, Sheriff’s Department, the Lawrence County, Missouri, Sheriff’s Department, the Ozark County, Missouri, Sheriff’s Department, the Arkansas State Police, and the Springfield, Missouri, Police Department.

Requests for additional information should be directed to Springfield, Missouri Resident Agent in Charge Eric Siweck at 417-831-3948.