Feds investigate ex-House Speaker Johnson for bribery in pot licensing

Lansing — FBI agents and a federal grand jury have spent more than two years investigating whether former Michigan House Speaker Rick Johnson and others received bribes in return for awarding state licenses to operate medical marijuana facilities, The Detroit News has learned.

The probe has the potential to raise new questions about financial influences over Lansing, the state’s ethics policies while the GOP controlled the Legislature and how Michigan’s burgeoning marijuana industry was shaped.

Three sources familiar with the probe described a prolonged, ongoing investigation involving Johnson’s nearly two years of tenure as chairman of the Medical Marihuana Licensing Board. The sources declined to be identified because they weren’t authorized to speak about the secret federal investigation.

Johnson, 70, who oversaw the board from May 2017 through April 2019, has not been charged with wrongdoing. The existence of the federal investigation was confirmed in court records obtained by The News that are marked “United States of America vs Johnson, Rick V” and provide a partial roadmap of the probe since September 2020, describing search warrants, grand jury subpoenas targeting Johnson’s bank records, and the seizure of Johnson’s cell phone along with a computer from his wife, Janice.

The records are exhibits in a lawsuit filed against Johnson and his wife for failure to pay for legal work in connection with the federal criminal investigation. The case, filed in 2021, includes legal bills from Grand Rapids criminal defense attorney Christopher Cooke, who billed Johnson for talking to a federal prosecutor about Johnson’s bank records from 2016 through 2020 that were subpoenaed by a grand jury. That period covers his time leading the medical marijuana licensing panel.

Brian Breslin, who managed appointments for former Gov. Rick Snyder when Johnson was appointed to head the marijuana board in May 2017, also confirmed to The News that he was questioned by an FBI agent about Johnson.

“I am not going any further than that,” Breslin said in a phone interview.

An FBI spokeswoman declined to comment. But a source familiar with the FBI investigation confirmed to The News the questioning of Breslin was related to bribery allegations made against Johnson during his time overseeing the state marijuana board. Johnson didn’t respond to four calls seeking comment over six days.

Snyder appointed Johnson, a Republican from LeRoy, as chairman of the five-member licensing board in May 2017 despite concerns about Johnson’s prior work as a lobbyist.

The licensing board had the power to decide which businesses got into the developing marijuana industry first. As chairman, Johnson had the power to influence the board’s agenda and dictate which marijuana grower and retail license applications were considered and when. In 2018, Michigan voters approved a ballot proposal to allow for the use and sale of recreational marijuana, and many of the licensed medical marijuana firms were best positioned for the market’s expansion.

The Johnson probe

The five-member Medical Marihuana Licensing Board approved about 150 licenses for businesses in growing, processing, selling, transporting and testing from June 2018 through April 2019, when its last meeting was held.

Under state law, the board had the power to help the Department of Licensing and Regulatory Affairs set rules for the marijuana industry and to decide whether to grant or deny applications for licenses.

Applicants were supposed to be disqualified if they had a recent felony, if they weren’t residents of Michigan and if they failed to demonstrate the ability to maintain adequate insurance. The board was also able to consider the person’s finances, experience and “integrity, moral character and reputation,” according to the law.

In March 2019, less than three months into her first term, Gov. Gretchen Whitmer issued an executive order abolishing the Medical Marihuana Licensing Board and creating a state agency to oversee the regulation of both medical and recreational marijuana.

“This executive order will eliminate inefficiencies that have made it difficult to meet the needs of Michigan’s medical marijuana patients,” Whitmer said at the time.

By the following year, federal investigators were examining Johnson and his wife, Janice, according to court documents. Rick and Janice Johnson signed an agreement to hire the law firm Secrest, Wardle, Lynch, Hampton, Truex and Morley in August 2020, according to the lawsuit that referenced “United States vs. Johnson.”

The 2021 suit by the law firm against the couple included a summary of the firm’s work. The records offer an intimate view of a secret federal grand jury investigation, describe evidence seized by federal investigators, and mention Bank of America records from 2016-20, a period that covers the months preceding Johnson’s appointment to the medical marijuana board and his tenure as chairman.

The billing records attached to the lawsuit also confirm that a grand jury has issued subpoenas and shows how the lawyer responded to the criminal investigation as far back as September 2020.

That month, the lawyer indicated investigators had seized Rick Johnson’s cellphone and a computer tower belonging to Janice Johnson.

There are multiple references to government subpoenas. There also are references to O’Connor, an apparent reference to Assistant U.S. Attorney Christopher O’Connor, a federal prosecutor in Grand Rapids who handles corruption.

He is the lead U.S. attorney in the federal bribery and extortion case against former Rep. Larry Inman, a Republican from Williamsburg in Grand Traverse County.       

Investigations abound

The grand jury investigation involving Johnson is the fourth state or federal criminal case underway involving Republicans at the top levels of state government in Lansing. That includes a state Attorney General investigation of the political fundraising accounts of two Republican former legislative leaders: ex-House Speaker Lee Chatfield of Levering and ex-Senate Majority Leader Mike Shirkey of Clarklake.

Kimberly Bush, a spokeswoman for Attorney General Dana Nessel, declined to say this week whether Nessel’s office was involved in the investigation of Johnson.

Federal prosecutors also have been preparing for a second attempted extortion and bribery trial against Inman, a Republican from Williamsburg. Cooke, the lawyer who spent time working with the Johnsons, represented Inman during his first trial in 2019.

Inman has maintained his innocence. In 2019, a jury cleared him of one of three criminal charges but was unable to reach verdicts on the other two.

With Johnson and Chatfield, two of Michigan’s nine most recent House speakers are under investigation. The probes are examining key GOP figures’ actions as their party held control of both the House and Senate from 2011 through the end of 2022.

Some current legislators have called for ethics reforms as Nessel’s office scrutinizes the financial activities of Chatfield and nonprofits tied to Shirkey. Both former lawmakers have denied wrongdoing.

Concerns from start

Johnson’s leadership of the Medical Marihuana Licensing Board was controversial from the start in 2017 as critics argued Snyder shouldn’t have picked up someone from the lobbying world for the prominent position.

At the time, Brandon Dillon, then-chairman of the Michigan Democratic Party, suggested that Johnson’s appointment was ethically questionable given his past work.

“It just smacks of corruption,” Dillon said in 2017.

Johnson was the speaker of the House from 2001 through 2004. He went on to work at the lobbying firm Dodak Johnson in Lansing with former House Speaker Lewis Dodak before joining the licensing board. Dodak didn’t respond to a request for comment.

As a lobbyist, Johnson shared the same office suite in downtown Lansing as lobbyists who were focused on marijuana policy, including an entity called Michigan Growers Consultants. A business tied to longtime political consultant Steve Linder called “Leaf St” was organized in 2017 and listed the suite as its address on its filing with the state.

In 2017, Johnson told reporters he had no former clients who were looking to get licenses from the board he led.

Rick Thompson, executive director of the National Organization for the Reform of Marijuana Laws Michigan, said he believes the licensing board selected winners and losers instead of allowing market forces to dictate. The board passed over some people with backgrounds as medical marijuana caregivers under the state’s past policies, which were rewritten by lawmakers in 2016, Thompson said.

“That shaped the first wave of millionaires in the industry,” Thompson said of the board’s decisions.

In 2017, then-Senate Majority Leader Arlan Meekhof, R-West Olive, nominated Johnson for his position on the board and advocated to have him appointed by Snyder.

Snyder initially resisted the idea because of Johnson’s background as a lobbyist, according to three sources with knowledge of the conversations but who were not authorized to speak on the private deliberations. Snyder eventually relented, announcing Johnson’s appointment as chair of the board in May 2017.

Meekhof, who consulted for marijuana clients after leaving the Legislature at the end of 2018, didn’t respond to a request for comment.

‘Absolutely shocking’

In early 2019, weeks after leaving office, Meekhof sought Johnson’s assistance in getting three of his clients seeking medical marijuana licenses on the marijuana board’s agenda, the Michigan Campaign Finance Network reported in June 2019.

In addition to Johnson, among the board members was David LaMontaine of Monroe, who was an executive board member of the Police Officers’ Association of Michigan. He was nominated by then-House Speaker Tom Leonard, R-DeWitt. The other three members were Don Bailey, a retired state police sergeant; Nichole Cover, a licensed pharmacist; and Vivian Pickard, a consultant and former General Motors Co. public policy executive.

In an interview, Bailey said he saw nothing untoward happening with Johnson and the licensing board.

“It’s absolutely shocking based on what I knew and saw,” Bailey said of the idea of Johnson being investigated.

Lansing and the state Capitol fall under the jurisdiction of federal prosecutors based in the Western District of Michigan in Grand Rapids.

“It is refreshing to me as a former long-time corruption prosecutor to see that attention is being paid in the western district. There is corruption in government in all states and cities,” Detroit criminal defense lawyer Michael Bullotta told The News. “There just is.”

Bullotta was part of the team that secured the conviction of former Detroit Mayor Kwame Kilpatrick and prosecuted widespread corruption in Macomb County.

“You need the right agents and you have to have ways to infiltrate sources and people that would know,” Bullotta added.

The Medical Marihuana Licensing Board held its last meeting in 2019.

During the meeting, Rick Johnson became emotional, thanking state employees and medical marijuana entrepreneurs for their work in the market.

“The biggest reason I’m here is it really has helped two members of my family,” Johnson said. “Keep doing what you’re doing because those are the people that need to be helped.”

Johnson registered to lobby again in Michigan in March 2020 after the licensing board ended, according to state disclosures.

Source: The Detroit News click HERE to view article.