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Maine businesses have financial ties to alleged marijuana trafficker

Clockwise from top left: the former Cascades Auburn Fiber mill, the offices of Provider Financial, a warehouse at 230 Merrow Road that is co-owned by Brian Bilodeau and Auburn businessman Kevin Dean and the home of alleged marijuana trafficker Brian Bilodeau, at 72 Danville Corner Road. Federal authorities raided the warehouse and Bilodeau’s home on Feb. 27, 2018. Darren Fishell | BDN
By Darren Fishell, BDN Staff
May 21, 2018 6:00 am

Last summer, Kevin Dean was riding in style.

The serial entrepreneur of Auburn and his wife had purchased a burly 825-horsepower Ford Mustang from the North Carolina garage of NASCAR star Richard Petty. Dean would return for a truck to match, he said.

He had sold off old investments to line up promising new bets on medical and retail marijuana in Maine and Oregon. But one thing was different from past ventures: his partner.

As the Deans rolled back toward Maine, Kevin Dean’s business life was unwinding. His longtime partner Emile Clavet wanted a “business divorce.” In July, Clavet hired consultants to help split up a business empire of more than 15 companies that had touched at least a quarter of Maine households.

The duo is known for co-founding and, in 2016, selling the power supplier Electricity Maine, which entered the market promising lower electricity prices but charged its residential customers in Maine $58 million more than the going rate from 2012 to 2016. As of January, Dean and Clavet owned businesses in mental health counseling, real estate and urine testing for opioid treatment programs.

In November 2017, Clavet sued Dean, alleging he was “cheated” out of a $7.9 million real estate deal. Dean has countersued.

The battle reveals more than a messy business breakup.

Court and property records show Dean and companies he’s managed with Clavet have multiple financial connections to a man the federal government charged in February with operating illegal marijuana grows as part of a marijuana trafficking and money laundering ring.

The federal investigation and the legal battle between two prominent businessmen who cracked open the residential competitive electricity market come at a crucial time for Dean, who has made major moves toward another emerging multi-million dollar industry: retail marijuana.

Attorneys for Dean denied his involvement in any marijuana trafficking or illegal activities, but the attorney for his longtime business partner, Clavet, alleged otherwise, writing in a brief to the court that Dean had “decided to become a marijuana trafficker” with the man facing federal charges.

Clavet’s attorney, Clifford Ruprecht, declined to comment further on the allegation. In court records, he based the statement on sworn testimony from Clavet about Dean’s medical marijuana investments. Clavet did not respond to a request for comment.

Federal officials have not charged Dean or Clavet with any crime and declined to say whether either is a part of the marijuana investigation.

Meanwhile, Dean has invested at least $4.8 million in retail and medical marijuana operations in Maine and Oregon.

In January, Dean struck a buyout deal with the Canadian firm C21 Investments, which is seeking a foothold in the U.S. retail cannabis industry. The pending sale would be worth at least $12.5 million to Dean and give him a stake in the expansion of marijuana growing facilities at the former Auburn pulp mill, Cascades Auburn Fiber, and an Oregon marijuana grow. The investors plan to open their own retail dispensaries in Maine.

Retail sales became legal in Oregon in 2016, and the industry is on the verge of becoming big business in Maine.

On May 2, Maine lawmakers overrode a veto from Gov. Paul LePage to clear the way for retail marijuana sales, which could happen as soon as the spring of 2019. A 2016 forecast estimated Maine’s retail market for marijuana would total $200 million by 2020.

The raid

Federal drug enforcement officers raided the Auburn home of 33-year-old amateur golfer Brian Bilodeau on Feb. 27, 2018.

The government charged Bilodeau with possession of drugs with the intent to distribute and possession of a firearm used in drug trafficking. They seized two of his sports cars, a blue 2016 Lamborghini Huracan and a black 2014 Nissan GT-R.

Brian Bilodeau’s home at 72 Danville Corner Road in Auburn, on property he purchased from Dean and Clavet’s company Diamond Properties Inc. Darren Fishell | BDN

Police executed more than 20 search warrants that day in the Lewiston-Auburn area, following a six-year federal investigation assisted by the Internal Revenue Service. Officials seized $300,000 from unspecified bank accounts.

They said Bilodeau “generated substantial sums of money from his involvement in drug trafficking,” from 2014 to 2018.

They allege Bilodeau was part of a larger trafficking ring that illegally grew marijuana “under the cover of, but in violation of, Maine’s Medical Marijuana program,” selling that marijuana on the black market, across state lines, and laundering the proceeds.

Investigators also raided a warehouse at 230 Merrow Road in Auburn, where they allege Bilodeau operated an illegal marijuana grow.

The property is owned by MR LLC, a company Dean founded in 2016, according to the certificate of formation filed with the Maine secretary of state’s office. Investigators seized 321 marijuana plants from the building and have filed suit to seize Dean’s property itself, alleging it was used to commit a felony drug trafficking crime.

The warehouse investigators raided at 230 Merrow Road. MR LLC, a company founded by Kevin Dean, owns the building. Darren Fishell | BDN

An attorney Dean hired to defend him and the property, Thimi Mina, said he “categorically den[ies] any involvement by [Dean] in any unlawful conduct.”

Barry Kelly, a task force officer with the U.S. Drug Enforcement Administration, verified in a complaint that bank records showed Bilodeau had a role in Dean’s company MR LLC, either as a member, manager or person who could act on its behalf.

Deeper financial ties

Property records show other connections between Bilodeau, Dean and companies Dean and Clavet operated together.

Dean and Clavet’s real estate firm, Diamond Properties Inc., in January 2015 sold Bilodeau a 3.8-acre plot of land in Auburn for $10,000, according to property records. On that land, at 72 Danville Corner Road, Bilodeau built the house police raided in February, seizing what they said was 183 pounds of marijuana from an eight-by-10-foot secure vault in the basement of that home.

Diamond Properties also had given Bilodeau a $125,000 mortgage loan on that property five months after the sale, in May 2015. Bilodeau built a home on the property that summer, according to Auburn building permits.

[Read the documents that show businessmen’s ties to alleged drug trafficker]

Six months later, in January 2016, Dean, as Diamond’s treasurer, approved the discharge of that mortgage, giving Bilodeau the property free and clear. Dean and Clavet’s company still owns the adjacent land, according to Auburn property records.

At the end of 2015, the duo also sold Bilodeau a car wash in South Paris, transferring to him the company that owned the property, Dandelion Investments. Dean and Clavet financed the $750,000 deal privately, each giving Dandelion Investments LLC a $375,000 mortgage loan. South Paris valued the building, land and equipment at the car wash at $319,400 in 2015.

Dean and Bilodeau also are associated with a property management company named Lewiston Junction Road LLC, which Clavet said leases space at the site of the former Auburn pulp mill Cascades Auburn Fiber, at 586 Lewiston Junction Road. A company held by Dean’s wife, Cecile Dean, owns the former mill property.

A June 2017 check filed with testimony in Clavet’s civil case against Dean shows Dean and Bilodeau shared an account at Androscoggin Bank for Lewiston Junction Road LLC.

Dean formed that company at the end of 2016, as he was branching out into the medical marijuana industry, apart from Clavet.

To set up Lewiston Junction Road’s bank account, Clavet said Dean turned to a trusted adviser, the chief financial officer for their shared company, Provider Financial. Clavet said that gave him pause.

“When I learned of that, I ordered it to stop,” Clavet wrote in his testimony, “because I did not want any of my staff or company resources used in [Dean’s] business with Mr. Bilodeau.”

The offices of Provider Financial, at 306 Rodman Road in Auburn, where Dean and Clavet have for years shared adjacent offices. Darren Fishell | BDN

Companies controlled by Bilodeau, Dean and Clavet had also shared an attorney, up until two weeks after the federal raids. Attorney Shawn Bell resigned on March 12 as the registered agent for Bilodeau’s Dandelion Investments and at least 11 other companies held by Clavet, Dean or both. Bell did not respond to requests for comment.

The breakup

Dean and Clavet own more than 15 companies together, mostly in real estate or health care. But they decided to begin unwinding that relationship in early 2015, according to an affidavit from Dean. By 2016 their relationship became more strained.

“I understood [Dean] was moving in a different direction, wanting to pursue the medical-marijuana trade aggressively and on his own,” Clavet wrote in court testimony. “I was not interested in joining him in that venture, nor did he indicate interest in having me join him in that venture.”

Clavet had tested those waters, too. In late 2016, he took a meeting with attorney Hannah King about business opportunities in retail marijuana in Maine. Clavet and King serve on the board of Maine Professionals for Regulating Marijuana, a group that has advised Maine policymakers on implementation of medical and retail marijuana regulations.

By July 2017, the decoupling became acrimonious. Clavet said in an affidavit that he hired consultants “to work out the details of a business divorce from [Dean],” a process that included settling a dispute over a $7.9 million sale of a marina in Port Aransas, Texas.

In November, Clavet sued Dean, alleging Dean “cheated” him out of about $3 million in the marina deal. The dispute stemmed from the duo’s ongoing efforts to split up their joint business holdings.

In the fall of 2016, Dean had bought out Clavet’s stake in those marina companies for about $1.1 million. The two agreed the marinas were worth about what they had paid$2.5 million — minus some business debts.

Meanwhile, Dean was in discussions with a buyer considering a purchase price of $7.9 million. Dean didn’t think the sale would go through, according to his affidavit. Dean alleges he kept Clavet informed of that potential offer and said both agreed it was unlikely to happen. They disagree on those points.

Dean has denied Clavet’s charge of fraud and six other charges related to the marina sale, including unjust enrichment and fraudulent transfer. He also countersued, alleging Clavet cut him out of a real estate project in Harpswell and went behind his back to make a bid on the bankrupt Bangor-based social services company, the Getchell Agency.

After buying out Clavet, Dean transferred his interest in the marina companies to his wife, Cecile. Dean said the move was a routine “estate planning” measure that both he and Clavet have used to lower their estate tax exposure should they die.

On Feb. 5, 2017, the marina deal went through, bringing $7.9 million to two companies now held by Dean’s wife, according to his affidavit.

Clavet argues he’s due half of that price from the two companies, but he’s concerned his partner’s financial ties to Bilodeau could affect the claim he asserted to assets of two companies involved in the marina deal. Blue Water LLC now owns the former Auburn paper mill and Covered Marina LLC owns an Oregon grow facility.

“I am concerned that Kevin Dean, reasonably believing himself to be a target of this ongoing federal investigation may try to hide assets of his from law enforcement … thereby frustrating my ability to collect any judgment I obtain against him in this lawsuit,” Clavet wrote, in a second sworn affidavit.

Berney Kubetz, who is representing Dean in the dispute with Clavet, called the claim “unfounded.”

“[Dean] is not a marijuana trafficker,” said Kubetz, who also regularly represents the Bangor Daily News.

Kubetz has objected to Clavet’s second affidavit serving as evidence in the business dispute, arguing it is irrelevant to the civil case. The case, before Maine’s Business and Consumer Court, is still in mediation, Kubetz said.

Donald Clark, spokesman for the U.S. attorney in Maine, said “we can’t confirm or deny the existence of an investigation” against Dean, Clavet or any of the companies they manage.

A web of investments

After the Texas sale closed, in early 2017, the companies now held by Dean’s wife were quick to put the cash back to work. The two marina companies bought properties used to grow retail and medical marijuana, an industry that thrives on private financing as banks generally won’t make loans to businesses selling what is still a federally scheduled drug.

The marina companies are one part of a web of corporations linked to Dean’s medical and retail marijuana investments.

Five days after closing the Texas sale, Blue Water Marina bought the former Cascades Auburn Fiber mill, at 586 Lewiston Junction Road, for $2 million. In March, the second company, Covered Marina, bought a Windham building leased to Goodwill, for $4.4 million.

The companies took out mortgages on each property from Franklin Savings Bank, worth about $5.2 million in total. In April, Covered Marina bought the real estate of a grow facility in Canby, Oregon, for $2.5 million, according to property records. The facility in Oregon, which has active retail sales, does business under the name Eco Firma Farms.

By January of this year, the investments already bore fruit.

The Vancouver-based C21 Investments announced plans to acquire the Maine and Oregon marijuana companies “to spearhead into the USA cannabis industry,” as part of its pivot away from oil and gas investments.

“C21’s acquisition strategy focuses on jurisdictions where cannabis cultivation, processing and distribution are legal under local state and municipal law,” the company wrote in a January news release.

The deal is valued at roughly $12.5 million, giving Dean’s companies up to $6 million in cash for the properties and 8.3 million shares in C21, worth about $6.5 million. Dean’s companies could get up to 8 million additional shares in C21 if the companies hit certain revenue goals in the seven years after the deal closes.

That deal involves two other companies belonging to Dean, both founded in the fall of 2017. Dean is president of North American Health Group LLC and New England Manufacturing and Supply LLC, according to a statement by C21. The investment firm would acquire both companies as part of its deal in Maine.

C21 said it plans to build a 4,500-square-foot processing lab in Maine, greenhouses and outdoor cultivation on roughly 13 acres of gated property.

For its Maine investment, C21 did not identify the specific location of the property, but noted that it would acquire the land from Blue Water Marina LLC. The only property Blue Water owns in Maine is at the Auburn mill, according to property records.

The former Cascades Auburn Fiber mill, which a company held by Kevin Dean’s wife, Cecile, purchased for $2 million in February 2017. Darren Fishell | BDN

In C21’s January press release, Dean said that “joining forces will allow us to pursue our aggressive growth plans with a well-capitalized company and great management team.”

C21 CEO Robert Cheney did not respond to telephone requests for comment on the status of the deal.

Maine Focus is a journalism and community engagement initiative at the Bangor Daily News. Questions? Write to mainefocus@bangordailynews.com.

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