Chapter 5: The Audit | Crooked Media
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June 28, 2023
Dreamtown: The Story of Adelanto
Chapter 5: The Audit

In This Episode

Stevevonna Evans, now on the city council, discovers multiple millions of dollars are missing from the city budget. She begins to investigate, and with every rock she turns over she learns another bonkers secret about what went down while Mayor Kerr, Jermaine Wright and Bug Woodard were in power.

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TRANSCRIPT

 

David Weinberg If you like Dream Town, The Story of Adelanto and want access to early add free episodes. Join Friends of the Pod. Crooked’s new subscription community at crooked dot com slash friends.

 

Betsy Zaiko Well, I don’t know about you, but I sure learned a whole lot about Stevevonna Evans in that last chapter. Primarily, she has no problem taking on the people and the systems in charge of things. She even won herself a city council seat. So did her allies, a few of them. So it’s a new era. New council, new mayor. No more Jermaine. No more bug either. But boy, they sure did leave an old mess behind.

 

Council Member I just want to thank the staff, all the staff to help out with the Christmas parade.

 

David Weinberg The December 12th Adelanto City Council meeting of 2018 was a festive one. The dais was decorated with a Christmas garland and red bows, and hanging above the heads of the council members was a giant wreath decked out with Christmas lights.

 

Council Member Thank you, Mayor Kerr, for your many years of service. Four years. Congratulations.

 

David Weinberg Every seat was filled and there was a crowd of people standing shoulder to shoulder in the back of the room. Many of them were friends and family members of the newly elected council members and mayor who were about to be sworn into office.

 

Council Member Before a prayer, I wanted to share one scripture, which comes from Isaiah 43 versus 19,20, 21. It says, Behold, I will do something new.

 

David Weinberg After a reading of the Scripture and the opening roll call. Stevevonna got her first chance to speak to the public as an elected official. She wore a white dress with a grid pattern, and she looked at home, seated beneath a wall hanging of the city seal and the words in God we trust the monarchy.

 

Council Member Councilwoman Stevevonna.

 

Stevevonna Evans You know it! So, as I sat down to write this, I searched my heart and soul, not to mention Google, a thesaurus and a dictionary that could give me a word to describe what I’m feeling. And the only word that even came remotely close to a one word expression and constantly resonated within every fiber of my being was gratitude. Today I stand. I sit. I stand before you in a state of overwhelming gratitude. I am challenged in my earnest attempt to express just how grateful and thankful for every last one of you today. The friends, family and supporters that didn’t think twice about knocking on doors.

 

David Weinberg Not only did Steve on to win a seat on the council, but her friend and ally, Jerry Hernandez, had won the other seat. Bug lost pretty badly. He finished a distant sixth, and the mayor, Rich Kerr, lost to Gabriel Reyes, another ally of Stevevonna’s. This was a huge change for the Council. Three brand new politicians, Stevevonna Reyes and Hernandez, now had the majority of votes on the five member council. And together, this new majority wanted to do a hard reset on Adelanto politics and put an end to the scandals and corruption that had plagued the city for the last four years. A few months into her term as a councilwoman, I met up with Stevevonna in an office at the Adelanto Stadium to talk about her new life as an elected official. When she took office, the city was behind on financial audits and one of her campaign promises was to get those budget audits back on track. What is the city budget like these days?

 

Stevevonna Evans You funny! So I have no idea how to answer your question. I read the budget from last year and I’m like, What the hell? Who approved this? It is just a bunch of made up numbers that they pulled from God knows where and put it to a book and called it a budget.

 

David Weinberg A few months into Stevevonna’s term, the city received the audit for the 2014 2015 fiscal year and the results were not pretty. After legalizing cannabis, Kerr and Bug had projected a budget surplus of $400,000. But the audit showed that the city actually had a $5.5 million deficit, which was a whopper of a number. Nearly half the total budget.

 

Stevevonna Evans So that kind of was depressing to know that there’s $4.8 million that we have no idea where it went. Very frustrating for us as a new council, like y’all just lost $4 billion and we all just call it that. It’s just write it off. It’s cool. What? You know, the mayor was like, I want to sue people. Who do we fire? What happens? So its deep.

 

David Weinberg From Crooked Media. This Is Dream Town, The Story of Adelanto. Chapter Five: The Audit. The work ahead for Stevevonna was daunting. Not only did she have to untangle the mess left behind by Bug, Kerr and Jermaine. She had to learn how government works. That in and of itself is a tall order that comes with a very steep learning curve.

 

Stevevonna Evans When I got my job at Staples, they put me through like two weeks of training. Then I had to be shadowed by some, but it was an intensive training process. There’s not that for government, Right. But you won. Yay! Good. Good luck. Our first meeting, we had to vote on stuff and I’m like, I don’t even know what this means. I. Can we table this? I don’t know. Is that a thing? I don’t know. You cannot know because then you look crazy or unprepared. But, you know, there’s no real training process.

 

David Weinberg The beauty and peril of democracy is that you don’t have to know anything about the government to run for office. There are no education requirements, no past experience necessary. One minute you could be a welder or a farmer or doctor, and the next day you could be deciding on complex issues like water rights or commercial zoning.

 

Stevevonna Evans Nothing prepares you for this, you know, and you’re under the microscope. And so it’s like you make a small mistake and it’s a magnified mistake, especially from the people that didn’t support you or don’t support you or whatever the reason, maybe.

 

David Weinberg Suddenly Stevevonna had real political power. It wasn’t like she could start making unilateral changes or anything. But now she was on the inside. She had the ability to pull back the curtain and get a firsthand glimpse at the chaos that had been going on at City Hall for the last four years. Or at least the paper trail that was left behind.

 

Stevevonna Evans It’s a whole lot of unwinding and unpacking and pulling off layers and trying to get the right information from the right people because you don’t really know who is involved in what. And not so much focus on the past because we want to move forward. Right. But if we don’t unpack and figure out where we went wrong, how do we move forward?

 

David Weinberg One of the keys to untangling this mess was to do some basic accounting. Figure out how much money was coming into the city and how much was going out. And the obvious place to start was in the Green Zone. Adelanto was the second city in Southern California to legalize commercial weed cultivation. The best way to think about their situation is that they were the second domino to fall in a long chain of dominoes. After Adelanto, more cities legalized weed cultivation. So now Adelanto had to compete with those cities to lure weed companies to town. And one way they did that was by keeping their tax rate on cannabis businesses very low.

 

Adam Wilks People think everybody’s making millions and millions of dollars, but the margins are so small, there’s so much competition. Everybody’s competing.

 

David Weinberg This is cannabis entrepreneur Adam Wilks. Adelanto’s low tax rate was one of the things that brought him to the city. He’s launched over 30 brands in Adelanto, and he’s the CEO of Tyson 2.0, a weed company run by Mike Tyson, who, if you haven’t noticed, has become a huge stoner in recent years. Tyson is also a podcast host. He has a show called Hotboxin with Mike Tyson where he chats with prominent stoners.

 

Hotboxin Clip Why did you fight without any socks? I thought that was the start. I didn’t know this poor motherfucker didn’t have shot, didn’t have socks.

 

David Weinberg In this interview, Tyson is wearing what I guess you could call a sombrero with pot leafs all over it as he chats with two of the world’s most famous marijuana connoisseurs.

 

Hotboxin Clip I’m Mike Tyson and who we have here is, man, can I tell you something? We have the Cheek and we have the Chong. And these are these men are legendary. These are the first guys. These are the prototypes. And they laid the foot work down for what we’re doing right now. Please sit down. Sit down. Let’s listen, man. First thing I’m going to say: Somebody scratch my balls. Please somebody scratch my balls. Well, okay.

 

David Weinberg What a time to be alive. The worlds of professional sports, stoner comedy, capitalism and podcasting united in a thick cloud of pot smoke.

 

Hotboxin Clip So go lick a toad. No, no, no. No you gotta smoke it. No really. I’ll lick a toad, you smoke a toad. I know where you’re going. I’ve been there. I’ve been there a couple of times.

 

David Weinberg Anyway, Tyson has used his celebrity and wealth to transition from the world of sports into this new era of legal weed, along with the help of a CEO.

 

Adam Wilks We’ve now entered 24 states that we’ve signed agreements and we’re operating in. 13 of them just executed Canada and have a vast menu of exciting products. The most viral one being the Mike bites. The gummi ears over here.

 

TV Clip What a chance. Behold.

 

David Weinberg In 1997, Mike Tyson fought Evander Holyfield, the World Boxing Association heavyweight championship.

 

TV Clip What happened here?

 

David Weinberg But in the third round, Tyson bit off a chunk of Holyfield’s ear.

 

TV Clip Oh, my goodness. He’s got a bloody right ear Holyfield hit by a dirty Mike Tyson

 

David Weinberg And spit it onto the floor of the ring.

 

TV Clip He certainly had a big fight. Oh, disgusting tactics here by Mike Tyson.

 

David Weinberg Tyson is now capitalizing on this historic fight by selling edibles in the shape of an ear.

 

TV Clip I can see the bite marks.

 

David Weinberg With a small chunk missing.

 

TV Clip Can you go on? Yeah.

 

David Weinberg In the shape of a bite mark.

 

TV Clip The fight will go on. Can you believe  this? We’re getting to see strange things happen in boxing. He should be disqualified for that.

 

Adam Wilks They’ve gone viral. I mean, we can’t keep up with the demand on these. And then some real new, exciting edibles coming out, including Mike’s favorite, The Ear on the Stick, which would be a lollipop ear. We got chocolate ears. Yeah. Just excited about bringing plant based medicine to the masses.

 

David Weinberg Clearly some people in Adelanto were making money off weed and for the past few years, Mayor Kerr, Bug, and Jermaine have been touting the success of the Green Zone and the city’s supposed budget surplus. But as the city audit later revealed, that budget was rife with errors. Bug and Kerr and Jermaine may have been great at luring weed companies to town, but their administration was not so great at accounting. That $400,000 budget surplus they bragged about. It ended up being a huge deficit and it wasn’t that the money was missing. It was that it was never there in the first place. On one hand, it was a relief for the new council to know that they didn’t have to go chasing down millions of dollars in missing funds. But it was also a rude awakening to find out that Adelanto was still struggling financially, even after legalizing weed. But what about the skyrocketing property values and the Green Zone and all the permit fees and the taxes that growers were paying on all those pot plants shimmering under high pressure sodium lights? Exactly how much money was the city actually taking in from wheat? Diviner continued her quest to find answers, and she started with a basic question How many weed companies are operating in Adelanto?

 

Stevevonna Evans When we started. They think they thought we had like 47.

 

David Weinberg But then Stevevonna reached out to a city employee named Kathy Bishop, who worked in the Department of Cannabis Control. We couldn’t confirm this, but Steve says that after months of legwork, Kathy discovered there were actually twice as many cannabis operators in the city.

 

Stevevonna Evans After her working on this for, I think, three or four months. We’re at a hundred operators in the city, right? How did we not know that we had 100 operators in the city? Welcome to Adelanto, right where we just do things that don’t keep records of anything. So she’s been able to make contact with these operators, get solid contact information, because we didn’t have that.

 

David Weinberg It’s very hard to collect taxes from companies when you don’t know they exist. And it was clear to Stevevonna, the previous administration, helmed by Bug, Kerr, Jermaine and Jesse Flores, the city manager at the time, were not the most organized folks. Also, some of the council members have their hands full doing crimes and trying to burn down their restaurant.

 

Stevevonna Evans You know, bringing in cannabis, which is such a controversial issue in itself. Right. And then to have our council people either fully being corrupt. You know, allegedly you’re on trial or whatever, to being investigated by the FBI to just watching some of the shady deals that have been brought to my attention. You know, he told me outside of the coffee shop that I could have a dispensary. Wait, what?

 

David Weinberg To actually pull Adelanto out of debt. The city had to be diligent about collecting taxes from cannabis operators and making sure they were in compliance with the law.

 

Stevevonna Evans Most of our operators are excited. Thank you so much for this. Like, we’ve been waiting for some structure so we know what to do. We didn’t know how much to pay. We didn’t know who to pay.

 

David Weinberg In the fall of 2019, about a year into Stevevonna’s first term, she and the new council were making progress. They had figured out how many weed companies were operating in Adelanto, and they were being more diligent about collecting taxes, enforcing regulations. So even if all the cats at Bug, Kerr, and Jermaine had let out of the bag and Adelanto hadn’t been wrangled, at least Stevevonna and the new council had gotten a count of how many cats there were. And then. A new cat came to town. A weed business started by one of the wealthiest individuals in the world who called his new company. Genius Fund. That’s after the break. When Adelanto opened its doors to the cannabis industry, it became a magnet for wealthy individuals with dreams of becoming even wealthier. I already told you about Mike Tyson, but he wasn’t the only one. The richest and most powerful of them all was a billionaire from the East named Dmitry Bosov.

 

Tami Abdollah Dmitry Bosov or D Bosov. He was a Russian oligarch who was involved in multiple coal businesses in Russia. He’s someone that, when ice skating, played hockey with Putin and he was trying to get into the cannabis business and, you know, cash in on the green rush in California.

 

David Weinberg This is Tami Abdollah, a journalist who wrote a series of stories about the spectacular rise and fall of Dmitry Bosov’s foray into the marijuana business.

 

Tami Abdollah And so he actually invested roughly $164 million in this venture that went belly up in less than two years.

 

David Weinberg Bosov called his Company Genius Fund. The business was spread all across California, but one of the epicenters was Adelanto.

 

Tami Abdollah So the Adelanto operation was one of the larger money grabbing operations of the whole thing.

 

David Weinberg Genius Fund came to Adelanto to build a state of the art cannabis processing facility inside the Green Zone, a place where products like pre-rolled joints and vape pens are manufactured and packaged.

 

Tami Abdollah People described it to me as like a James Bond style building with like sleek industrials. I mean, everything you would think when you think of like a James Bond esque lab, there was like a meeting room with this massive airplane wing.

 

David Weinberg If there’s one image that to me represents the hubris and folly of Genius Fund and the other wealthy newcomers to the cannabis industry. It’s this airplane wing.

 

Tami Abdollah I mean, it looked beautiful, but it couldn’t. How? Like not enough people could actually sit around the table. So it was like not exactly functional.

 

David Weinberg I like to imagine that it was at this comically large airplane wing table that the executives at Genius Fund were squeezed around awkwardly when one of them came up with the next genius idea to buy a bunch of wolves to guard their James Bond style building. Sadly, someone spoke up and suggested that maybe buying a bunch of wolves wasn’t a genius idea.

 

Tami Abdollah And so he ended up buying a bunch of dogs with company funds.

 

David Weinberg At the end of the day. They gave up on the dogs too, and sold them. The green rush created a kind of fervor that led to a lot of hasty ideas, many of which had substantial financial backing. And lots of people launching weed startups had never worked in the cannabis industry. People like Dmitry Bosov. Now, Bosov could have hired people to run his company who did have experience in the industry. Instead, he hired Ari Stiegler and Gabriel Borden.

 

Tami Abdollah Stiegler and Borden were basically two college friends. They met at USC and they both were interested in business and starting businesses quite entrepreneurial.

 

David Weinberg Stiegler and Borden first met in college and then reconnected at a party for cryptocurrency enthusiasts that Borden threw at his parents house in Santa monica. His dad, Bill Borden, is a TV producer who created Disney’s High School Musical.

 

Tami Abdollah In their early twenties. They met up again and started talking a bit about cannabis businesses. They had a friend who had some connection to Dima Bosov.

 

David Weinberg Both of had made billions of dollars in the coal industry in Russia, and now he was interested in cannabis. Both of knew another oligarch, Mikhail Abyzov of whose son went to school with Gabriel Borden. So both spoke to Borden, and Borden brought in his friend Stiegler.

 

Tami Abdollah And he thought, Hey, why not have these two young guys be the entrepreneurs in the West? And that’s basically he partnered up with these two young guys who’d never been in the cannabis business before. The way they described it, he saw them as real go getters.

 

David Weinberg So, Bosov hired two guys to run $164 million startup in an industry that is not only incredibly complicated, but also federally illegal. But Stiegler and Borden were undaunted.

 

Tami Abdollah And so they basically tapped into connections, their friends. They brought some in from working at bars, from a pizza shop, and brought them in to become analysts and folks who were doing specific specialized roles like growing hemp at a hemp farm.

 

David Weinberg They made some crucial mistakes right out of the gate, like not getting the proper permits.

 

Tami Abdollah They basically got on the bad side of law enforcement locally there and the sheriff at the time who I spoke with went on site. And, you know, they were like, hey, where are all the plants? And, you know, as some folks I spoke with told me, Genius Fund had like kind of in a panic, burned the plant seedlings because they didn’t have the proper paperwork for them.

 

David Weinberg So they made some mistakes. But in the words of salesman and motivational speaker Zig Ziglar, failure is a detour, not a dead end street, an idea that the founders of Genius Fund took to heart.

 

Tami Abdollah It was very much a high flying, luxurious, elaborate life for those at the top of the company. You know, last minute business trips, catered lunches for everyone every day. But at the same time, very much a boy’s club and a little bit of a frat mentality, if you will, is sort of what they described to me.

 

David Weinberg I am by no means a business expert, but I do wonder if Genius Fund failed because they tried to think a little too outside the box. Which brings me to the weed ATMs, or weed kiosks, as they were called at Genius Fund. On its surface, the weed ATMs were radically new approach to cannabis sales.

 

Tami Abdollah And the idea was that they would go to liquor stores or convenience stores and put them there and people could order them and they get their weed.

 

David Weinberg Let me paint a little picture for how these kiosks were supposed to work. It’s just after sundown and you get a hankering for some marijuana. So you take a little stroll down to your local liquor store and head over to what looks like an ATM over by the Hot Cheetos. And you put in your weed order and you wait. Because as you might be surprised to learn, as you’re punching in your credit card info, there is no weed inside the weed kiosk. It’s somewhere else. But don’t worry, whoever has your weed just got a notification on their phone and they’re on their way to deliver you your weed at the liquor store. The weed kiosks never took off. Maybe because they basically did what an app on your phone could do. Meanwhile, the company was hemorrhaging money.

 

Tami Abdollah All of this spending put a very, very hefty load on the company’s books.

 

David Weinberg After two years of terrible business decisions and lavish spending genius fun ended not with a bang, but with a bad phone connection. According to Tami Abdollah’s reporting, most of the 300 employees at the company were told that they needed to jump on a conference call. They were being let go. Unfortunately, the connection was so bad no one could understand what was being said.

 

Tami Abdollah All they heard was like background chatter and then the line like, went dead. And they didn’t realize that they had lost their jobs until they went to sign into their work accounts and they’d been logged off. A week later, I believe they got a notice that was like, Oh, yeah, you know, you’ve been laid off. A lot of people had left like good jobs and other places to take this, and they were sort of promised a long lasting work trajectory that could become something.

 

David Weinberg And does Genius Fund still exist today?

 

Tami Abdollah I mean, it’s a complicated question. There are parts of it that exist or parts of the company that once existed that now exist as separate entities. There is a store on Melrose in Los Angeles still. That was the the Genius flagship store. And it sits with its gate down and a mural of Kobe and Gianna on the front of it. And that has not been open since the pandemic really got going and the liquidation of staff, to my knowledge.

 

David Weinberg Today, the building is home to a different dispensary. I wrote to ask if they were affiliated with Genius Fund, but they didn’t respond. On May 6th of 2020, less than two years after Bosov founded Genius Fund, his wife found him inside their home gym dead from a gunshot wound to the head. Russian officials determined it was either suicide or an accident. Though his family believes he was murdered. Bosov of was scheduled to testify in court against a former business partner who had been charged with hiring hitmen to kill his enemies. There was a lot of drama and chaos that surrounded Genius Fund during its brief existence. And this is just one example of the types of companies that were operating inside the Green Zone. There were dozens more still up and running, and Stevevonna and the new council had made real progress on regulating them. Here’s Mayor Gabriel Reyes.

 

Gabriel Reyes So when we came in, it was one of those things that there was no structure, there was no systems, there was no organization. So no one really knew who was in our industry.

 

David Weinberg Now the council at least had a clear path to pulling the city out of bankruptcy. There were systems in place to ensure that these companies were paying their fair share in taxes. And to do that, the council relied on the city staff because the mayor and the city council were largely unaware of what happened inside these cannabis companies. Mainly because it wasn’t their job, it was the city staff’s job to regulate cannabis companies. These were the paid city employees whose job it was to do regular inspections, just like the health department inspects restaurants. And there were good reasons for keeping elected leaders out of the nitty gritty of regulation. For one, it prevented conflicts of interest. But it wasn’t easy to keep these two worlds completely separate. And only a few weeks after Stevevonna and the new council were elected. A scandal broke. One that involved the city council and a cannabis entrepreneur and at the center of this scandal was Stevevonna Evans.

 

Stevevonna Evans The game of politics are horrible and it makes people do ugly things. You know, it’s where I finally saw how ugly and nasty things can be.

 

David Weinberg That’s next time. If you loved this episode of Dream Town, The Story of Adelanto, you can hear the next episode right now. For early ad free access. Join Friends of the Pod, Crooked’s. New subscription community at crooked dot com slash friends. Adelanto is an original podcast from Crooked Media. It’s hosted, written and executive produced by me, David Weinberg. Nick White is our story editor. Angel Carreras is our associate producer. Sound Design Mix and Mastering by Brendan Baker of Phenomephon. Our theme song is by Icarus Himself, and our original score is by Eric Phillips. Fact Checking by Amy Tardif. Additional production help from Ines Mesa, Sydney Rapp and Kobe Copeland. Thanks to Betsy Zaiko for narrating portions of the show. From Crooked Media. Our executive producers are Sarah Geismer, Katie Long and Mary Knauf with special thanks to Allison Falzetta, Laura Smith, Andrew Leland, Richard Parks III, Shocker Molly, and Katya Apekina.