Eureka insurance broker John Ford is being investigated by the Humboldt County District Attorney’s Office for alleged embezzlement of a Benbow medical marijuana company’s insurance policy payments.
“Your affiant fears that the industry of marijuana production is particularly vulnerable to this type of embezzlement because business owners are less likely to report their own victimization, as doing so may generate further scrutiny to their own businesses,” District Attorney’s Office investigator Martin Morris wrote in a Dec. 1, 2016, statement of probable cause to obtain a search warrant for Ford’s business.
District Attorney Maggie Fleming said Thursday that charges have not been filed against Ford and therefore she cannot comment on a case that is pending investigation. A management hearing at the Humboldt County Superior Court for this case is scheduled to take place Feb. 21.
The nonprofit Humboldt Redwood Healing corporation filed the claim against Ford in October alleging that Ford had accepted more than $52,100 in payments from the company between February and September 2016 to set up a workers compensation insurance policy for three trimmers, according to court documents.
However, the company later found out in October that it was never covered under an insurance policy. Humboldt Redwood Healing’s accountant Jamie Walling confronted Ford with this information in an Oct. 18 email, according to court documents.
According to court documents, Ford replied, “No it isn’t. I’m not going to answer that question. The fact that I screwed up and willing (sic) to fix it is good enough.”
Attempts to contact Ford were not returned.
‘I will make it whole’
In investigating the embezzlement and breach of contract claims against Ford made by Humboldt Redwood Healing’s CEO Thomas Mulder, Morris found that one of the two policies Ford claimed to have set up for the company since February 2016 was cancelled in May 2016 due to a failure to make payments, according to court documents.
Morris discovered in his investigations that the other insurance policy with the State Compensation Insurance Fund that Ford stated he had set up for the company never existed.
In subsequent investigations, Morris found Ford’s business status with the Secretary of State had been cancelled in January 2016. Ford was also not an approved insurance broker for the two insurance agencies that Ford had stated the company was receiving policies from, according to Morris.
Humboldt County Sheriff’s Office Deputy David Diemer spoke to Ford on Oct. 18 after the claims were filed against him, in which Ford stated he did not know the “ins and outs” of running his own business, according to court documents. Ford also stated the money he received from Mulder went into his checking account “but he could not account for what happened to the monies,” according to Diemer’s investigation report. Ford is quoted by Diemer as stating, “I don’t know how to explain or what happened to Mulder’s money.”
“Ford stated, ‘I freely admit I screwed up, I’ll make it better and take care of any fines,’” the report states. “Further, Ford said, ‘All of Mulder’s funds will be paid back.’ Ford then stated, ‘All funds paid will be paid back in full, it was not my intention to defraud Mulder.’ Ford continued, ‘I will make it whole.’”
Morris obtained a search warrant for Ford’s business, home and vehicle from Judge Marilyn Miles on Dec. 1 and served it that same day.
Items that were seized from Ford’s office included a computer tower, receipt book, client file folders, bank records and a plastic tote bag containing marijuana found in the closet of the reception area. Two laptops, two cell phones, insurance paper work and other loose paper were also seized from Ford’s Eureka home. No items were seized from his car.
Several client files were returned to Ford on Dec. 5 after they were “deemed not to contain data of evidentiary value,” according to a Dec. 5 court filing from Morris.
‘A serious liability’
Ford became one of the first local insurance brokers to begin offering insurance to medical cannabis businesses, which he named Ford20 Insurance. He began offering several insurance policies for indoor and outdoor medical marijuana grows, dispensaries, physicians who prescribe medical marijuana and testing operations, as well as landlords whose tenants cultivate, test, process or sell medical marijuana.
Mulder’s attorney Paul Gallegos — a former Humboldt County district attorney — said that no evidence has been demanded from either side and that there is a pending court date.
“This isn’t cannabis that was stolen, this is a company that was trying to buy workers comp insurance for its employees and the employees were deprived of that coverage,” Gallegos said. “… There are so many people still operating illegally that, to me, when I see that people are trying to operate lawfully and then they’re taken advantage of, it’s unfortunate.”
Mulder recently wrote an open letter to the community calling on any other individuals or businesses who have purchased insurance from Ford to verify whether they are covered and to contact the District Attorney’s Office if they find they are not.
“The other challenging thing is we’re trying to run a completely legitimate business and then for this to happen to us, it really caught us off guard,” Mulder said to the Times-Standard. “It’s a serious liability.”