Former chair of Berkeley Medical Cannabis Commission sentenced to 3+ years in federal prison

Daniel Rush, a former union organizer and former chair of the Berkeley Medical Cannabis Commission, was sentenced to 37 months in prison Monday for his involvement with fraud and money laundering.

U.S. District Court Judge Haywood S. Gilliam Jr. sentenced Rush to that term even though his defense attorneys had argued that Rush actively helped drug addicts turn their lives around and that assistance would be nullified if he was behind bars.

Judge Gilliam commented that “the case reflects large-scale, long-lasting corruption on the defendant’s part,” according to a press release put out Tuesday afternoon by the office of U.S. Attorney Brian J Stretch.

Rush, 57, who now lives in Crescent City, must report to the U.S. Marshals office in Oakland on Jan. 15, according to court documents. Rush must also pay a $7,500 fine and will be subject to a three-year term of supervised release when he gets out of jail.

Rush pleaded guilty in June to one count of violating the Taft-Hartley Act, one count of honest services fraud and one count to commit structuring and money laundering. He had originally been charged in 2015 with 15 felony counts that could have brought him 70 years in prison and a $1.27 million fine.

In one of the original counts, Rush allegedly offered special treatment to an applicant for Berkeley’s fourth dispensary spot, but “demanded a well-paid job” from the applicant in exchange, according to the indictment. In a press release issued Tuesday afternoon, Stretch said Rush threatened the owner that if he “did not offer him a salaried job, with benefits, he would take adverse action against its application.”

Rush also admitted that he had used his position as the organizing coordinator for the medical cannabis and hemp division of the United Food and Commercial Workers International (UFCW International) Local 5 to enrich himself.

Rush borrowed $600,000 from marijuana businessman Martin Kaufman, who was connected to the Blum Dispensary in Oakland and was seeking to open another dispensary in Nevada. (It was Kaufman’s wife, Salwa Ibrahim, who was applying for a dispensary permit in Berkeley.) Rush wanted to use the money to remodel his family home at 472 W. MacArthur Blvd in Oakland into an assisted-living complex.

When Rush had difficulty paying back Kaufman’s loan, he asked Kaufman in 2010 to forgive $250,000 of it and said he would undermine his own union’s efforts to unionize dispensaries belonging to Kaufman and his business partner, Derek Peterson, according to court documents.

In late 2010, Rush started paying Kaufman $3,000 in monthly interest payments. Rush enlisted the help of Berkeley attorney Marc Terbeek to disguise those payments as “consulting fees” rather than loan fees, according to authorities. Rush also knew that the loan money “had been earned in connection with illegal marijuana cultivation activities and that therefore the money was the proceeds of unlawful activity,” according to prosecution documents.

TerBeek, who was charged with two felonies in February for his work with Rush, turned against him and assisted the prosecution in its case, according to court documents. He pleaded guilty and will be sentenced by Judge Gilliam on Nov. 27 at 2 p.m. He faces a possible six years in prison.

Update 12/4/17: Marc TerBeek was sentenced on Nov. 27 to three years probation and was ordered to pay a $7,265 fine.

In a letter to the judge, TerBeek took responsibility for his illegal activities and tried to explain why they happened:

“It is with a deep contrition that I write to you, not as an advocate in a pending matter, but as a criminal defendant.

The factual circumstances relating to my offense are largely set forth in the record of my plea and the testimony I gave at the hearing on Mr. Rush’s Motion to Dismiss. I have little to add other than to acknowledge that I knew my conduct was unlawful at the time I committed the offense, and that I am rightfully being held accountable.

I struggle on a daily basis with the question of how I permitted such a lapse in my judgment and character. I see myself as a person of integrity, and I believe that, on the whole, that is how I have lived my life. Yet in my association with Mr. Rush I abandoned my principles and my ethics. And although I knew what I was doing was wrong, I failed to put an end to it until SA Wynar’s intervention on January 7, 2015. I have spent nearly three years working on that issue, in my sobriety support groups, the Other Bar, with my spouse, with friends and family, and through therapy. What I have learned from my situation comes down to an issue of boundaries. The conduct I engaged in with Mr. Rush was an aberration in my life. It is true that Mr. Rush was a central figure in my early sobriety, in addition to having been a longtime friend and benefactor of my career. It is true that I trusted him, and shared intimate details about myself, with him, as part of my program of recovery from alcoholism, and that I sought his approval and support. But those facts do not excuse my willingness to participate in criminal conduct with him. The truth is that I simply was not strong enough in my own sense of myself to do the right thing.

This has been an incredibly painful realization that has shaken me to my core. My failure could hardly be more profound. My ability to do what I have labored for decades to accomplish is compromised and forever altered. I have ruined my reputation as a lawyer. My ability to be present for, and provide for, my spouse and children, is in doubt, and may be irreparably damaged. I am left with feelings of shame, guilt and disgrace.

However, I am gradually coming to terms with my behavior and seeking to turn this disaster into something positive. I am seeking to perform ethics educational work for attorneys and attorneys-to-be with the assistance of the very FBI agent whose investigation led to this sentencing hearing. I believe this experience has made me a better sponsor and allowed me to help newcomers to sobriety recognize and avoid some of the stressors that I believe contributed to my failings in this case. With 9 plus years of sobriety, I am far better equipped to deal with situations that used to baffle me than I was in early sobriety when this conduct began.

In closing, I want to expressly apologize to this Court, to the State Bar of California, and to the community at large for my misconduct. I want to thank the government and especially SA Wynar for his professionalism and his sensitivity to my situation. I have learned from this experience, and can continue to grow from it.”