Last Place on Earth owner, employees indicted

Last Place on Earth owner Jim Carlson and three current or former employees have been indicted in federal court on 54 counts of violating the Federal Food, Drug, and Cosmetic Act, the Controlled Substances Act and the Controlled Substances Analogue Enforcement Act.

Among allegations are that the downtown Duluth head shop sold products falsely labeled for use as incense, bath salts and glass cleaner when they were intended to be consumed by humans to affect the functioning of the body.

The indictments were handed down this morning in federal court in Duluth.

Carlson, 55, and Lava Marie Haugen, 32, both of Superior, as well as Joseph James Gellerman, 34, and Jamie Paul Anderson, 24, both of Duluth, were charged with numerous crimes, including conspiracy to commit violations of the FDCA and conspiracy to distribute controlled substance analogues.

The indictment, which was filed under seal earlier this month, was unsealed today after the defendants made their initial appearances in federal court.

“I am confident this indictment is a major step in reducing the supply of dangerous, designer drugs to the region," Duluth Police Chief Gordon Ramsay said in a statement. “Our community, including families of those impacted by these drugs, as well as businesses in the eastern downtown area, can breathe a little easier today.”

The items marketed under names such as No Name, Smoking Dragon, Role-X Watch Cleaner and Binger, among others, were actually drugs as defined by federal law and subject to regulation by the Food and Drug Administration, the U.S. Attorney’s Office said.

The synthetic drugs seized are in a class of chemicals perceived as legally mimicking cocaine, LSD and methamphetamine. The U.S. Drug Enforcement Administration is attempting to ban or control the synthetic stimulants because some users have reported impaired perception, reduced motor control, disorientation, extreme paranoia and violent episodes.

The U.S. Attorney’s Office alleges that the defendants intended to mislead government authorities with false labels that, besides suggesting that the products weren’t drugs, failed to describe package content accurately and failed to include health warnings about their use.

Carlson is also charged with two counts of distribution of a controlled substance, one count of possession with the intent to distribute a controlled substance, and 25 counts of engaging in monetary transactions in property derived from a specified unlawful activity.

Duluth defense attorney Richard Holmstrom represents Haugen. He said his client suffers from multiple sclerosis and fibromyalgia and that limited her ability to work at the store. He believed she did mainly bookkeeping and payroll the last year or two.

“This is obviously a very serious and far-ranging indictment,’’ Holmstrom said. “This indictment looks to me like it intends not only to put Mr. Carlson out of business, but to seize all the property that any of these four defendants have and also an attempt to put all of them in prison for a long time. We’re in for a fight — and we intend to give the government a fight, and we intend to prevail.”

If convicted, the defendants face a potential maximum penalty of five years in federal prison for conspiracy to commit offenses against the United States, three years for violating the FDCA, and 20 years for each count of violating the Controlled Substances Act or the CSAEA. In addition, Carlson faces a potential maximum penalty of ten years in prison for each count of engaging in monetary transactions in property derived from a specified unlawful activity.

Carlson’s attorney, Randall Tigue, said the battle has “been joined, and we’ll fight this out.”

The four defendants voluntarily surrendered to authorities Tuesday morning.

Carlson, Haugen and Gellerman were released on conditions after signing $25,000 appearance bonds. Anderson faces three theft charges in St. Louis County and was transferred to St. Louis County authorities.

Carlson said he fired Anderson from his store last month for theft and failure to follow company policy.

Brisbois ordered Carlson, Haugen and Gellerman to surrender their passports and limit their travels to Minnesota and Douglas County, Wis. Anderson was ordered not to attempt to obtain a passport. All four defendants were ordered not to possess firearms or weapons, not to drink excessively and to abstain from using non-prescribed drugs. All are subject to random testing.

The head shop and its associated problems has long had the attention of Duluth Mayor Don Ness, who said he was encouraged by Tuesday’s development.

“It’s been a long time coming, and I think it’s the most important and significant development to date,’’ Ness said when reached by phone. “The federal involvement and their indictment on criminal charges is what is most likely to bring this to the final resolution. Obviously, there’s still a process to take place.

“The federal court proceedings themselves will take time,” Ness said. “If they prevail on these charges, downtown Duluth will be lifted from the burden of having the sale of these drugs in the middle of our downtown.”

The city is charging Carlson with operating a public nuisance, arguing that the Last Place on Earth has become a serious threat to public health and safety. The city says police have responded to more than 2,000 calls because of problems at the store, which has cost the city more than $100,000 in police time, not including community costs from medical problems users of the products suffer. Nearby merchants have complained that Last Place customers who hang out in front of the store interfere with their business.

In July, $2.8 million was seized from Carlson’s bank accounts and two of his vehicles — a 2012 Ford F-150 and a 2012 Jeep Grand Cherokee — were taken on warrants after federal and local authorities executed search warrants at his business.

Also taken from the shop were two loaded handguns, one of which was located on a shelf under the cash register, 16 boxes containing suspected synthetic marijuana with more than 20,000 individual packages being offered for sale, and $3,000 in cash.

That action came on the heels of seizures of $83,510 in cash and 28 guns taken from Carlson during the execution of search warrants at the shop in September 2011.

The government said in the indictment that if it gains convictions, it will attempt to seize $1,343,352, $1,201,522, $387,488 and $64,950 — almost $3 million in total — from four bank accounts, publicly identified only by partial account numbers.

The defendants will be arraigned Friday in federal court in Duluth.

Tags: crime, news, downtown, courts