Calif. town blasted after planning marijuana farm (AP)

ISLETON, Calif. – Officials in this cash-strapped Northern California city are defending their decision to approve a giant medical marijuana farm on the outskirts of town after a grand jury blasted them as having been lured by easy money.

The report says potential legal problems weren't adequately addressed before leaders moved to support a project that would total about 15,000 square feet on the edge of Isleton — a town of 800 about 40 miles south of Sacramento.

"The city allowed the community to be pushed into a project that is perched on the blurry edge of marijuana law without properly questioning the situation," a cover letter to the report from grand jury foreman Donald Prange Jr. reads. "It did so, not because of any desire to test the limits of the law, but because of the promise of money and jobs."

The medical marijuana collective Delta Allied Growers promised the city up to $600,000 in the first year of the farm's operation and officials blindly jumped at the opportunity, according to the grand jury report released Monday.

Isleton City Manager Bruce Pope, who was named in the report along with City Attorney David Larsen and Police Chief Rick Sullivan, said the city was unfairly targeted by District Attorney Jan Scully.

"We did our jobs the way we were supposed to," Pope told the Sacramento Bee. "The fact that a criminal prosecutor didn't like the way we did our jobs is beside the point."

No criminal charges have been filed in connection with the grand jury's probe. The city has until Sept. 21 to respond.

The report accused Larsen of an "improper financial interest" in the project for taking $100 an hour above his city-paid rate — money that came from the marijuana collective — to expedite the application for the farm.

Larsen told The Associated Press on Tuesday that the financial arrangement is common practice in other cities.

"These guys indicated they knew what they were doing. They were well-funded," he said of Delta. "It seemed to me this was a good use of a development agreement."

Sullivan's department was promised a security system for the town by the growers, according to the report. He did not immediately return a call seeking comment.

Delta Allied officials also did not respond to a request for comment.

The project was scrapped in May, a little less than a year after Delta approached Isleton officials about it, after federal prosecutors sent a letter warning that it was illegal.

Delta had already brought in more than 1,000 marijuana plants to the site by then, according to the grand jury report.

The city of Oakland last summer approved a similar plan to license four industrial-scale pot-growing operations. That effort was placed on hold after warnings from prosecutors that city officials could face criminal charges and federal officials could crack down on growers.

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Information from: The Sacramento Bee, http://www.sacbee.com

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Small Calif. town planned giant medical pot farm (AP)

SACRAMENTO, Calif. – A grand jury says the lure of easy money led a cash-strapped California town to approve a giant medical marijuana farm.

A Sacramento County grand jury report on Monday condemned leaders of Isleton for ignoring federal law and approving plans to build six pot-growing greenhouses on the outskirts of the town of 800.

The Delta Allied Growers medical marijuana collective approached Isleton a year ago with plans for the pot farm.

According to the grand jury report, the city was promised up to $600,000 the first year of the farm's operation.

The report questioned the actions of City Manager Bruce Pope and other officials. Pope told the Sacramento Bee officials did nothing wrong.

The project was scrapped after local and federal prosecutors sent a letter warning that it was illegal.

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Information from: The Sacramento Bee, http://us.rd.yahoo.com/dailynews/ap/ap_on_re_us/storytext/us_small_town_pot_plan/42032503/SIG=10nq7lhog/*http://www.sacbee.com

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Calif. finance researcher convicted in trade fraud (AP)

NEW YORK – A California finance researcher who prosecutors said used code words like "recipes," "cooks" and "sugar" to disguise an insider trading scheme was convicted of wire fraud Monday in federal court.

Winifred Jiau also was convicted of conspiracy to commit securities fraud and wire fraud in one of the first trials to result from a government crackdown of Wall Street middlemen suspected of peddling inside information as if it were legitimate research. The jury got the case Friday after a two-week trial and deliberated less than a day.

Jiau, 43, of Fremont, Calif., was among 13 people arrested last year on charges that she conspired to accept cash and gifts to feed inside information to hedge funds. Most of the other defendants have pleaded guilty.

Jiau, a U.S. citizen born in Taiwan, worked for two years as a consultant for Primary Global Research, a Mountain View, Calif.-based company.

Prosecutors said she earned more than $200,000 by selling "tomorrow's news today" about earnings and performance of publicly traded companies. The information, they say, was communicated in code with her co-defendants, sometimes using "cooks" to refer to tipsters, "recipe" for the inside information and "sugar" for what she was paid for it.

The expansive paper and electronic trail exposed how the hedge fund managers made massive trades moments after getting information from her, prosecutors argued.

Defense attorney Joanna Hendon countered that one of the government's key witnesses, former portfolio manager Noah Freeman, was disdainful toward Jiau and dismissive of her tips. In her closing argument Friday, she also highlighted defense evidence that she argued showed that another hedge manager-turned-cooperator made his trades based on research supplied by high-priced analysts rather than anything provided by Jiau.

Freeman testified that he rewarded Jiau with $5,000 a month, and sent her an iPhone, a dozen lobsters and a $300 gift certificate to a clothing boutique. She later insisted they cancel the gift certificate and make it for a restaurant near her home.

Prosecutors backed up the testimony by unveiling an email in which Freeman instructed his secretary to ship the lobsters to Jiau.

"I know you hate her, but we have to do this," Freeman wrote. The secretary wrote back: "Sure thing, I hope she gets sick from the lobsters."

Freeman has already pleaded guilty to conspiracy and securities fraud charges.

Jiau has remained jailed since her arrest, unable to make $500,000 bail. She faces steep fines and jail time of up to 20 years when she is sentenced Sept. 21. Her lawyer pledged to appeal the verdict.

The investigation into Primary Global Research grew out of what prosecutors have called the largest hedge fund insider trading case in history. The main defendant in that case, one-time billionaire Raj Rajaratnam, is awaiting sentencing after being convicted last month for fraud associated with his Galleon Group of hedge funds.

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Owners of Calif. test pilot school settle tax case (AP)

SACRAMENTO, Calif. – The owners of a Southern California civilian test pilot school pleaded guilty Monday to defrauding the federal government of nearly $710,000 by filing a false tax return related to a secret Swiss bank account, and are expected to pay more than $2 million in civil penalties.

Prosecutors said Sean and Nadia Roberts of Tehachapi face up to three years in prison at their sentencing Sept. 6 after entering the guilty plea in U.S. District Court in Fresno.

They own and operate the National Test Pilot School, a nonprofit founded in 1982 at Mojave Airport that trains test pilots. They also own Flight Research Inc., which owns most of the aircraft used by the school.

Prosecutors, in court documents, call it the world's only civilian test pilot school. A school official once claimed it is the world's largest private test pilot training facility.

Their attorney, Edward Robbins Jr. of Beverly Hills, said the couple was caught up in the U.S. government's investigation of secret accounts at Switzerland's UBS bank. Under a deferred prosecution agreement in 2009, UBS admitted helping U.S. taxpayers hide accounts from the IRS and agreed to provide names of some customers.

"They had the unfortunate luck to be among the first 260 UBS customers who were turned over to the U.S. government," Robbins said. "Sean and Nadia Roberts, but for the fact that they were in the first 260, would have dodged any criminal liability and gone in under the civil settlement."

That settlement was offered to 4,500 other bank clients whose identities were disclosed later, he said.

He expects the couple may qualify for probation and no prison time because they promptly admitted their guilt and are cooperating with the investigation. They remain free on bail.

The couple pleaded guilty to the single count of filing a false 2008 tax return under a plea agreement. The lost taxes amounted to nearly $710,000, according to the agreement filed in federal court.

Prosecutors say the couple transferred money from their corporation to several offshore accounts, then improperly deducted the transfers from their corporate and individual income tax returns. They also failed to report interest earned on the foreign accounts.

Aside from repaying the $710,000, the couple agreed to pay a penalty on the rest of the money held in offshore accounts to settle a civil claim filed by the federal government alleging that they failed to properly report their income for tax years 2004-08. The amount of the penalty is to be set before sentencing.

"They're going to end up eating, I think, a $2 million penalty," Robbins said. "It will be in the neighborhood of 50 percent of $4 million."

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2 men found guilty in murder of Calif journalist (AP)

OAKLAND, Calif. – A jury convicted the leader of a financially troubled community group of three murders, including the shotgun shooting death of the first American journalist killed on U.S. soil for reporting a story in nearly two decades.

Yusuf Bey IV, former head of Your Black Muslim Bakery, was found guilty Thursday in a month-long spree of violence that culminated with the August 2007 shooting of Chauncey Bailey while he walked to the newspaper where he was investigating the financial woes of Bey's group.

Jurors also found co-defendant Antoine Mackey guilty in the murders of Bailey and Michael Wills, but deadlocked on a murder charge against him in the death of Odell Roberson Jr.

"I hope that it sends the message that the First Amendment is not going to be murdered by murdering journalists," prosecutor Melissa Krum said of the verdicts. "You cannot kill the man and expect the message to be killed."

Founded some 40 years ago by Bey's father, the bakery, which promoted self-empowerment, became an institution in Oakland's black community while running a security service, school and other businesses. In recent years, the organization was tainted by connections to criminal activity.

Prosecutors argued that Bey felt he was above the law and was so desperate to protect the legacy of his family's once-influential bakery that he ordered Bailey murdered. The Oakland Post editor had been working on a story about the organization's finances as it descended toward bankruptcy.

Bey and Mackey, both 25, appeared stoic during the reading of the verdicts, which prompted tears from the families of the victims and defendants.

"Justice has finally been done," Bailey's cousin, Wendy Ashley-Johnson, said outside court. "Now Chauncey can rest. This chapter is over."

Bey's attorney, Gene Peretti, said he had thought the case would end in a mistrial because jury deliberations had entered a third week.

"It's a surprise and very disappointing frankly," Peretti said, adding that his client was "a little bit stunned."

Mackey's lawyer, Gary Sirbu, said his client was a victim of guilt by association because he was tried alongside Bey.

"In this particular case, I think Mr. Mackey should have had a separate trial," Sirbu said.

Both lawyers planned to appeal. Bey and Mackey could get life in prison without the possibility of parole when they are sentenced on July 8.

Bey's mother, Daulet Bey, who wept before and after the verdicts were read, said, "I believe in my son's innocence, I do."

Bey was charged with ordering the killing of Bailey, 57, as well as the slayings of Roberson, 31, and Wills, 36, in July 2007.

Mackey, a former bakery supervisor, was accused of acting as the getaway driver for Devaughndre Broussard, who confessed to killing Bailey on a busy city street with three shotgun blasts, including a final shot to the face to ensure his victim was dead.

Mackey was convicted of murder for shooting Wills. He was accused of aiding Broussard in Roberson's shooting, but jurors couldn't decide whether he was guilty.

Prosecutors said Bey ordered Broussard to kill Roberson in retaliation for the murder of Bey's brother by Roberson's nephew.

Mackey was accused of killing Wills at random after Mackey and Bey had a conversation about the Zebra murders, a string of racially motivated black-on-white killings in San Francisco in the 1970s. Bey and Mackey are black, and Wills was white.

Broussard, the prosecution's key witness, testified that Bey ordered him and Mackey to kill the three men in exchange for a line of credit.

The two-month-plus trial featured more than 70 witnesses for the prosecution and only a few for the defense, including Mackey.

Broussard struck a plea deal of 25 years in prison in exchange for serving as the prosecution's key witness. The former bakery handyman inexplicably laughed several times while testifying for more than a week, including while describing Bailey's shooting on Aug. 2, 2007.

Lawyers for Bey and Mackey questioned Broussard's credibility. Prosecutor Krum told jurors that while Broussard, 23, is a "sociopath," his testimony was credible.

Before the killing of Bailey, Cuban-American Manuel de Dios Unanue, an outspoken journalist, was shot in the head in a New York City restaurant in 1992.

Police believe drug traffickers and businessmen plotted to murder him in retaliation for hard-hitting stories he had written about their operations, according to the Committee to Protect Journalists.

Frank Smyth, CPJ's journalist security coordinator, said Thursday's verdicts were reassuring.

"This sends a signal to those who would violently attack the press in the United States that they will not get away with it," Smyth said.

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Defendant in 4 Calif killings pleads not guilty (AP)

SAN RAFAEL, Calif. – A man charged with killing four Northern California women with matching first and last initials pleaded not guilty Friday to four counts of murder with special circumstances that could bring the death penalty.

Joseph Naso, 77, who is acting as his own attorney, entered the plea in a Marin County courtroom then asked for the case against him to be thrown out.

In filing the dismissal motion, Naso addressed what prosecutors have put forward as key evidence linking him to the deaths — hundreds of photographs of women in various sexual poses.

"There were no photos in the defendant's home that show women in forced posing, forced bondage or being deceased," Naso said, reading glasses perched on his nose. "All the women were posed under free will."

The four victims in the case were killed in the 1970s and 1990s. All had matching initials: Carmen Colon, Roxene Roggasch, Pamela Parsons and Tracy Tafoya.

Naso is also being investigated for possible links to New York's "Double Initial Murders" of three girls, each with matching initials, in the early 1970s.

Naso was arrested in April after a yearlong investigation spurred by the discovery by a parole officer of hundreds of photographs, some of women in bondage and other poses, and journals.

Margaret Prisco and Thaddeus Iorizzo, two former neighbors of Naso, were interviewed by detectives then told The Associated Press the journals contained torture fantasies and lists of names of women.

Naso said Friday that nowhere in the evidence were the "names, descriptions or the intended fate" of the four women that he is charged with murdering.

Shackled and wearing red-and-white jail clothes, Naso then calmly asked for his release.

Prosecutors will file a reply to Naso's request and the judge will make a ruling.

A preliminary hearing was scheduled for July 11, when prosecutors will present the bulk of their evidence so the judge can rule if there is enough to send Naso to trial.

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Man pleads not guilty in blast by Calif. synagogue (AP)

LOS ANGELES – A homeless man has pleaded not guilty to charges he set off a homemade bomb near a Southern California synagogue.

Sixty-year-old Ron Hirsch entered pleas Monday in Los Angeles federal court to four felonies involving use of an explosive and a destructive device. He faces up to 70 years in federal prison if convicted.

Hirsch is accused of setting off an April explosion that caused a 250-pound steel pipe partially encased in concrete to crash through the roof of a home next to the Chabad (hah-BAHD) House synagogue in Santa Monica.

Some debris went through the ceiling of a bedroom where a 12-year-old girl was sleeping but nobody was hurt.

Hirsch was later tracked to Cleveland and arrested.

He also faces state charges that carry a potential life sentence.

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