Palomar Mountain Marijuana Co. goes bust

Marco Luis and Joshua Hester were longtime friends and business partners. "As a real estate agent, Luis had the know-how. As a career marijuana dealer, Hester had the cash," notes a decision from the Ninth Circuit Court of Appeals, ruling on an issue that had been decided by U.S. District Court in San Diego. The decision was released August 28.

In 2006, Luis and Hester bought a Rancho Santa Fe home, where Hester raised pot in a secret room. Hester's girlfriend was the straw buyer. Luis falsely stated she earned $420,000 a year as a self-employed businesswoman. The following year, Luis and Hester bought acreage on Palomar Mountain, where Hester intended to grow marijuana. This time, the straw buyer was a fellow who delivered marijuana to Hester's customers. Luis claimed on the paperwork that the deliveryman was in the auto business.

By 2009, both properties were in default. Luis, Hester, his girlfriend, and his pot deliveryman all were charged criminally. In 2012, Luis was sentenced to four years in prison for falsifying the loan documents. In 2013, Joshua got 100 months (more than eight years) for his marijuana, real estate, and money-laundering transgressions.

But the cases weren't over. Luis appealed the restitution that judge Irma Gonzalez ordered him to pay. In the decision of August 28, the appellate court upheld most of Gonzalez's order but said she had erred in calculating restitution to J.P. Morgan Chase, which had purchased one of the loans from Washington Mutual, the disgraced lender that was seized by the United States government in 2008. J.P. Morgan purchased Washington's banking operations after the seizure.