| Grupo Flor’s legal team packs it up after a day of testimony
Story and photos by Royal Calkins
It was election night in November of 2016. Inside Nader Agha’s antique store in downtown Monterey, a group of Democratic Party regulars was watching TV and fretting mightily about the ascendancy of Donald Trump. But in the adobe conference building behind the store, it was an entirely different scene.
In the adobe, also owned by Agha, fancy people in fancy clothes were eating fancy food and smiling the way people might when they think they’re about to become rich. They weren’t all that interested in the national results. They were there to celebrate passage of a ballot measure legalizing marijuana in California.
The smiley people were already in the marijuana business, the medical marijuana business mostly, and they figured the new law would enable them to expand production and sales dramatically. Agha, who hosted the celebration that night, already owned what would become the largest indoor pot grow in California. Outright legalization promised to make him an even bigger player. Popping champagne bottles with him were his partners and tenants, the founders of one of the state’s most prominent and, at one time, most promising pot endeavors, Salinas-based Grupo Flor.
It turned out to be a false start. Three long and frustrating years later, Agha and the Grupo Flor team are locked in a courtroom battle, each accusing the other of dastardly and deceptive behavior. Fraud. Even forgery. Double-dealing and double-dipping.
Agha and Grupo Flor founder Mike Bitar were once the closest of friends, so close that Bitar was able to convince many that he was Agha’s nephew, so close that Agha made him the executor of his estate. Now they grit their teeth when they talk about each other.
They had met at a foreclosure auction in Salinas, both of them bidding on the same house while Bitar tried to dissuade others from bidding. Agha says they talked and eventually bonded, partly because they are both Middle Easterners and because he appreciated the younger man’s energy and real estate acumen. He says Bitar held himself out to be a licensed real estate agent and it wasn’t until later that he learned that Bitar’s license had been suspended because he had violated unemployment insurance regulations while operating a Wienerschnitzel restaurant in Salinas.
With that partnership long gone, the outcome of the trial underway in the Monterey courthouse shouldn’t have a big impact on Monterey County’s cannabis industry. Grupo Flor remains in the business, claiming to control as much as 1.5 million square feet of “cannabis operations” locally. And Agha’s Moss Landing Commercial Park continues to lease thousands of square feet of space to other marijuana growers who had once operated under subleases with Grupo Flor or Bitar.
The most visible portion of the Grupo Flor operation is its East of Eden cannabis dispensary on Work Street in Salinas. Company literature stresses the company’s efforts to be a “farm to table” operation, growing, processing and distributing cannabis in its various forms.
Significant or not, the trial nearing a close in Judge Susan Matcham’s courtroom is providing a glimpse into what may still be the Central Coast’s largest pot operation. Grupo Flor’s founders see it as a bridge between the marijuana industry’s outlaw past and its future of public stock offerings, annual reports and government regulation.
The jurors, many of whom seem to be struggling to stay awake, will be asked to rule on Agha’s suit against Bitar and associates and those people’s countersuit against Agha. Agha alleges that Bitar forged his signature on numerous lease documents and deceived Agha about how much many of the marijuana growers in Moss Landing were paying for rent each month. Bitar and Grupo Flor allege that after that celebratory evening in 2016, Agha got greedy and ended his relationship with Grupo Flor without explanation so he could rake in more money from the pot-growing tenants.
It’s more complicated than that, of course. Agha’s lawsuit also alleges elder abuse, contending that Bitar and the others took advantage of his age, 75, and his various health issues. In opening statements, Bitar lawyer Jim Cook argued, “If anyone was taken advantage of, it was Mike Bitar.”
In court, eight lawyers take turns questioning witnesses and sometimes more lawyers are in the gallery.
Among the most revealing courtroom moments so far was Grupo Flor CEO Gavin Kogan’s admission on the stand that he and his partners had knowingly included inaccurate and misleading information on forms they submitted to Monterey County in 2016 while seeking an exemption from new county rules governing pot production. Under questioning by one of Agha’s three attorneys, Marc Eistenhart, Kogan explained that the inaccurate information about Grupo Flor’s founding and the timing of its leases in Moss Landing was merely an attempt to memorialize what had been informal agreements, handshake deals. Eisenhart established, however, that the backdating and other fudging was significant because the actual date of leases and the start of operations were keys to obtaining the county exemption.
“It wasn’t my finest hour,” said Kogan, a lawyer who specialized in representing Silicon Valley tech companies before concentrating on cannabis. He grew up near Big Sur and trimmed his share of marijuana buds before going to law school at Whittier College. He and several of his well-dressed associates were among Agha’s fancy friends on election night of 2016.
Nearly two weeks of trial haven’t featured many other Perry Mason moments. Most of the testimony has been drier than last year’s marijuana crop, focusing on leases, handwriting analysis and commercial real estate rules and regulations. Still, a few of the more entertaining moments have been worth the wait.
For instance, Agha’s legal team used ledgers to show that the Grupo Flor folks had paid just shy of $100,000 to their local government lobbyists during the time that Agha and Grupo Flor were partners. The lobbying firm is a partnership between Carmel Mayor Dave Potter, who previously served on the Monterey County Board of Supervisors for 20 years, and veteran Monterey County campaign manager Plasha Fielding Will. The invoices weren’t as clear as an accountant might prefer but it appeared that Potter received about a fifth of the total, Will the rest.
The payments were cash, of course. The nation’s lawmakers have managed to create a situation in which a still somewhat shadowy enterprise is carried out in cash because the law prevents banks from handling the profits. During the trial, the lawyers have shown pictures of boxes filled with cash, $192,000 in all, that Bitar delivered to Agha as a deposit when Grupo Flor begin renting space in Moss Landing.
Kogan, the Grupo Flor CEO and general counsel, testified that even before Potter left his county position at the start of 2017, he was the cannabis industry’s go-to guy within the county bureaucracy because he was highly instrumental in writing and interpreting the county’s rules governing cultivation and processing permits.
Over the decades, Will has worked primarily as a campaign manager and lobbyist. She ran several of Potter’s campaigns and also ran both of Monterey County Supervisor John Phillips’ campaigns. She ran campaigns for former Central Coast Congressman Sam Farr and his successor, Jimmy Panetta, whose Salinas office is in a building rented from Grupo Flor. She was also active in former Salinas Mayor Dennis Donohue’s unsuccessful run for a supervisorial seat.
Kogan has been CEO of Grupo Flor for several weeks now. Previous CEO Paul Henderson left, Kogan testified, because he felt the cannabis industry was about to undergo a dramatic downturn.
Here’s how Henderson described Grupo Flor in his LinkedIn profile: It “elevates and seeks to legitimize the cannabis industry by pioneering a vast ecosystem of companies that support the entire supply chain. Our five distinct businesses in real estate, cultivation, manufacturing, distribution, and retail have allowed us to maintain a leadership position in California as one of the fastest growing companies in the cannabis industry. Grupo Flor recently launched operations in Colombia which allows us to start working on international relationships.”
Unlike Grupo Flor, Agha is well known throughout Monterey County, known for big deals, big ideas, hard bargaining and controversy.
Agha immigrated from Syria as a young man, got involved in TV repair, chinchilla raising and other assorted jobs before embarking on a career as a land developer and a trader in antiques and coins. He built hundreds of houses in Soledad and elsewhere in the Salinas Valley, acquired the old Holman Department store building in downtown Pacific Grove and the old National Refractories property next to the landmark power plant in Moss Landing.
National Refractories had used the buildings and storage space there to process magnesium hydroxide that had been mined from the ocean. The compound was used in the manufacture of bombs during World War II and later for various industrial uses. Eventually the space fell empty and Agha bought it out of bankruptcy in 2003 with several ideas in mind, including aquaculture, the building of electric cars and desalination.
Agha has never shied away from controversy. In fact, he wades right into it. He is perhaps best known locally for his now-buried plans to build a desalination plant in Moss Landing as an alternative to Cal Am Water’s more expensive plan. Today, the property is mostly used for pot production, but don’t try to break in —it’s heavily secured. The only significant theft there is believed to have been carried out by former cultivation workers, upset that some of Agha’s tenants weren’t paying them on time.
Over the past several years, it seems as though Agha has attached himself one way or another to many or most of the big ideas floated on the Peninsula. He also has sued and been sued more times than he can remember. He once sued Potter, the Grupo Flor lobbyist, after learning that a $10,000 campaign contribution Potter solicited from him had been used instead for a vacation trip.
Agha’s lead attorney in the current case, Jim Dawson, described him to the jury as a “force of nature.” He also described him as a man of great integrity, a description Grupo Flor’s attorneys will work to attack when Agha eventually takes the stand.
Some of the most tedious but most important testimony came from a handwriting expert hired by Agha’s lawyers.
Agha’s lawsuit alleges that Bitar, in order to meet county and state regulations regarding the formation of marijuana enterprises, routinely forged his signature on leasing documents for space at the Moss Landing commercial property.
In opening statements to the jury, Grupo Flor attorney Jonathan Shapiro showed a video clip of testimony from handwriting expert Patricia Fisher. In the misleading clip, she testified that four documents she had examined had, in fact, been signed by Agha. In the courtroom, however, Fisher testified that about 20 other “Nader Agha” signatures on lease documents were forgeries. The other side sees the signature dispute in an entirely different light, of course.
The trial was originally estimated to last two weeks and is in its ninth day with the end not quite in sight. As testimony has dragged on, Judge Matcham seems to have instructed the lawyers to speed things up. For the most part, it hasn’t worked, with most of the principals in the partnership testifying while surrounded by binders filled with lease documents and ledgers detailing where the money came from and where it did and didn’t go.
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