On February 16, 2011, Ryan A. Bo Scott, a tall businessman, drove to the Port of Portland to pick up a consignment of goods from Lima, Peru. He claimed to be bringing in a soft drink additive when he spoke with a U.S. Customs and Border Protection official. However, according to his invoice, the shipment contained Orisha summoning powder, a powdered plant pesticide.
The products were seized by customs. Within five weeks, federal authorities identified the powder as 4-methylethcathinone, a synthetic drug that produces a high similar to cocaine, speed, and ecstasy when snorted, swallowed, or injected, according to a government search warrant affidavit.
Scott, who operates KTW Enterprises Ltd. from a 3,000-square-foot warehouse in Vancouver, was informed by agents that two additional shipments had arrived from Peru via Oakland, California, and Anchorage, Alaska. According to the affidavit, one manifest identified the commodity as incense, while the other classified it as Asian burial powder.
Scott, 31, and three other individuals are now charged by prosecutors with participating in a global conspiracy to produce and distribute designer pharmaceuticals online as well as to convenience stores, head shops, and gas stations, with over $5 million in revenues between 2009 and earlier this month.
Assistant U.S. Attorney Leah K. Bolstad claimed in a court hearing this week that Scott, who is identified in public records as the president and secretary of KTW, went from receiving unemployment benefits to personally accumulating $1.8 million in just 18 months.
The government’s intensifying war on designer drugs—a class of stimulants known as cathinones, which are frequently marketed as bath salts, and synthetic marijuana sold as K2—came to a head this week with the arrests of Scott in Vancouver and accused co-conspirator Alexandre Valentinov Dimov in Hawaii.
Scott, meanwhile, is represented by seasoned defense attorney Janet Hoffman, who in court characterized her client as a legitimate businessman who pays taxes and sells goods that are legal but irksome to the government.
Trademark infringement is alleged in the lawsuit.
On February 2, 2010, Scott formed KTW from a Lake Oswego address, and his legal issues quickly followed.
The proprietors of Bouncing Bear Botanicals Inc., a Kansas business, accused KTW, Scott, Dimov, and a business operating under the name Allegrand Enterprises of violating the K2 trademark on November 10, 2010. Both KTW and Bouncing Bear had licensed a large number of related domain names under the moniker K2 in order to operate their companies.
According to the government, Scott’s company would go on to license over 50 domain names, including K2drugs.com, legalweedstore.net, and the company’s main website, k2incense.org.
In the end, the civil lawsuit was resolved out of court. However, Scott’s actual problems were only getting started. The Drug Enforcement Administration issued an emergency order to control five compounds, all synthetic cannabinoids used to produce what government agents refer to as fake cannabis, on March 1, 2011, just 13 days after customs authorities confiscated his shipment of powders from Peru.
By applying chemicals to plant components that resemble THC, the key component in marijuana, manufacturers have produced synthetic marijuana. Teenagers and young people looking for legal highs are increasingly purchasing the goods, which come in stylish packaging.
However, according to a DEA official who testified before a congressional subcommittee on health last July, poison control centers and health departments across the United States have reported a litany of side effects from the drugs, including nausea, seizures, hallucinations, racing hearts, tremors, and non-responsiveness.
Conflicts over inventory, PCs, and phones
Hoffman spent a large portion of the previous year fighting to have the government restore 14 electronic items, including computers, iPhones, and thumbdrives, that were taken from Scott in April 2011 as well as the plant materials belonging to her client. Some of the devices were returned by the authorities, but not the items Scott had characterized as inventory.
Scott was arrested by federal investigators at his Vancouver home on Tuesday, reigniting the court struggle. He was taken to federal court on Wednesday to face a six-count felony indictment after being placed in jail in Portland. Scott appeared before U.S. Magistrate Judge Paul J. Papak in blue jail scrubs and entered a not guilty plea to all of the allegations.
Scott and Dimov, a 33-year-old Bulgarian national, are charged in the indictment with conspiring to import, produce, and distribute banned substances, launder money, and introduce counterfeit medications into interstate commerce. Two further defendants were charged with money laundering: Nancy Gabaree, 50, and her daughter, Andrielle Gabaree, 22. Both of them resided in Las Vegas.
During Scott’s detention hearing, the government contended that Scott had sold almost identical K2-type items under multiple names even after his business was searched.
The federal Controlled Substances Act regulates such synthetic pharmaceuticals, commonly referred to as analogues, and has determined that they are prohibited if they are chemically similar to the regulated substances and meant for human consumption.
At Scott’s detention hearing, Hoffman contended that he no longer sells the goods that led to the previous search of his property. “I doubt you’ll find someone more obedient than Mr. Scott,” she remarked.
However, the prosecutor informed the judge that Hoffman had informed her that morning that Scott was now marketing skin-rejuvenating lotion. However, Bolstad grinned broadly and stated that federal agents were currently inspecting his warehouse and had not discovered anything similar. She said that they had discovered the same plant material that had previously been used to make analog medications.
Scott was released from custody to await trial by Papak, but he was also had to give up his passport, refrain from traveling abroad, and submit to a drug test.
This Monday, authorities knocked down Scott’s company’s main website and seized six bank accounts involved in the case. They replaced it with a public notice: Homeland Security Investigations, or ICE, has taken possession of this domain name.
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