US Seizes Pot-Growing Houses in Sacramento Area Tied to China-Based Crime Organization

SACRAMENTO (AP) — Hundreds of federal and local law enforcement agents have seized roughly 100 Northern California houses purchased with money wired to the United States by a Chinese-based crime organization and used to grow massive amounts of marijuana illegally, authorities said Wednesday.

The raids culminate a monthslong investigation focusing on dozens of Chinese nationals who bought homes in seven counties. Most of the buyers were in the country legally and came from as far away as Georgia, Illinois New York, Ohio and Pennsylvania, U.S. Attorney McGregor Scott said.

Much of the pot was shipped back to those states through Atlanta, Chicago and New York City.

The drug is legal in California but requires permits to grow and can't be sent across state lines. It is still banned by the U.S. government. Black-market pot farms are often set up in the inland region where authorities carried out the raids because it's cheaper than the San Francisco Bay Area.

"This criminal organization has put a tremendous amount of equity into these homes through these wire transfers coming in from China and elsewhere," Scott said in an interview with The Associated Press. "We're going to take it. We're going to take the house. We're going to take the equity."

None of the buyers was arrested as authorities seized the houses in what the U.S. Department of Justice called one of the largest residential forfeiture operations ever. Prosecutors will now ask judges to transfer ownership to the U.S. government.

Authorities were trying to learn if the buyers were brought to the United States for the purpose of buying the houses and were indebted to the criminal organization. They are not ruling out criminal charges but have filed none at this stage of the investigation.

Down payments were financed by money wired from Fujian Province in China, authorities said. Many of the transfers stayed just below the $50,000 limit imposed by the Chinese government.

The buyers generally used the same Sacramento real estate agents, borrowed from private lenders who usually charge higher interest rates and require larger down payments than traditional banks, and used straw buyers who purchased the properties on behalf of the real owners.

A message left with the Chinese consulate general's office in San Francisco was not immediately returned.

The federal crackdown on the illegal pot operations comes as California is months into creating the world's largest legal marijuana market amid uncertainty about whether the U.S. government will try to shut it down.

More than 500 officers, including SWAT teams, fanned out over two days to search and seize about 75 houses and two real estate businesses. The remaining 25 houses were raided previously.

They seized more than 36,000 marijuana plants, 115 kilograms (253 pounds) of processed marijuana, at least $68,500 in cash and 15 firearms, including one that had been stolen. They also seized generators, one of which was strong enough to power three normal homes.

Most of the suburban houses were valued at $300,000 to $500,000, though some were in rural areas and some in more upscale neighborhoods.

Black-market pot operations have been a widespread problem in Northern California for at least a dozen years. Sacramento officials have estimated that there might be as many as 1,000 illegal grow houses in California's capital city.

Suburban tract homes are transformed with high intensity lights and irrigation pipes, gutted to add ventilation pipes and air filtration systems to vent the tell-tale smell through the attic, and stacked with tables full of marijuana plants that could produce multiple crops each year.

"It's like industrial agriculture," Scott said.

Authorities often are alerted when the houses catch fire because of illegal electrical hookups or when they are found to be using extraordinary amounts of electricity to power the equipment.

Local neighborhoods hit by Chinese pot ring react

"Well with three kids under 10 it's kind of scary to think that was going on so close to home," said Maria Guerrero.

Guerrero lives close to 5935 64th Street in Sacramento, now marked as unsafe because of what federal investigators say was going on inside.

The chemicals and jerry-rigged power connections needed to produce pot for distribution can render a home inhabitable, a threat to those a wall away actually living in their homes and not using them as giant greenhouses.

Thirteen miles to the south in Elk Grove, Norma Gradezi said, "I had no idea, no idea. Sometimes we smelled a little pot, thought maybe just for medicinal use."

But when Gradezi heard banging at 6 a.m. Wednesday she spotted a SWAT team outside of her home on Blossom Ranch Drive. She recorded a video through her living room blinds.

"The kids were scared. My daughter was crying. She was like really scared," Gradezi said.

Those officers breached a house that appeared to have been gutted to make way for the venting systems necessary to nurture pot plants.

After a battle to get inside, it appeared Homeland Security and local officers had to protect themselves against what was needed to mature 61,050 marijuana plants and produce the 200 kilos of processed pot their raids uncovered.

Neighbors said they saw people they considered suspicious, not really "living" in the homes in question, but coming and going at odd hours and loading them up with surveillance cameras. U.S. Attorney McGregor Scott likened those manning the grow houses to indentured servants. He says organizers of the pot ring fronted the money for Chinese nationals to come to the U.S. legally and required them to work in the grow houses to pay off that debt.

According to Scott, the houses were purchased by straw buyers, used common real estate agents and were financed through high-interest, hard money loans. Such loans are typically issued by private investors or companies.