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Forum News Service, Published October 07 2013

Jury finds Duluth head shop owner guilty on 51 of 55 counts

MINNEAPOLIS — A Duluth, Minn., head shop owner has been convicted of almost all counts against him in a closely watched federal case involving the sale of synthetic drugs.

Last Place on Earth owner Jim Carlson was found guilty of 51 of the 55 counts he faced; his girlfriend, Lava Haugen is guilty off all four counts she faced; and son Joseph Gellerman was found guilty on two of the four counts he faced.

The jury returned the verdicts Monday afternoon in the closely watched case. The trial was seen as one of the first major tests in federal court of how effectively authorities can combat synthetic drugs

Jim Carlson, 56, faced 55 federal charges for allegedly selling misbranded drugs and controlled substance analogues, as well as money laundering. All three defendants were tried together, which is standard in federal cases, but jurors had to consider evidence against each separately and return separate verdict forms for each defendant.

Prosecutors said the defendants knew they were selling recreation drugs that people would use to get high. Carlson didn't deny selling the products, but his attorneys argued he did nothing illegal.

The defendants face a potential maximum penalty of five years in federal prison for conspiracy to commit offenses against the United States; three years for violating the Federal Food, Drug and Cosmetic Act; and 20 years for each count of violating the Controlled Substances Act. In addition, Carlson faces a potential maximum penalty of 10 years in prison for each count of engaging in monetary transactions in property derived from a specified unlawful activity.

The trial began Sept. 16 in U.S. District Court in Minneapolis. The case went to the seven-woman, five-man jury on Wednesday. Jurors deliberated for an hour Wednesday and about eight hours on Thursday before breaking for the weekend. They resumed deliberations this morning.

Haugen had waived her right to be present in the courtroom for the verdict, citing her multiple sclerosis and fibromyalgia. Carlson had also asked for a waiver, but Judge David S. Doty denied it after an objection from prosecutors, who indicated that they may ask to have Carlson immediately taken into custody if found guilty.

The federal indictment charging the three was unsealed in federal court in Duluth on Dec. 18, 2012. The indictment stated that between March 2010 and September 2012, Carlson, Haugen and Gellerman conspired to obtain and sell through the Last Place on Earth items misbranded as incense, potpourri, bath salts, exotic skin treatments, glass cleaner and watch cleaner. The products were not identified as drugs, though they were intended to be consumed by humans to affect the functioning of the body, according to a release from the U.S. Attorney's Office in Minnesota.

In July 2012, $2.8 million was seized from Carlson's bank accounts and two of his vehicles — a 2012 Ford F-150 and a 2012 Jeep Grand Cherokee — were taken on warrants after federal and local authorities executed search warrants at his business.

Also taken from the shop were two loaded handguns, one of which was on a shelf under the cash register, 16 boxes containing suspected synthetic marijuana with more than 20,000 individual packages being offered for sale, and $3,000 in cash.

That action came on the heels of seizures of $83,510 in cash and 28 guns taken from Carlson during the execution of search warrants at the shop in September 2011.

The government said in the indictment that if it gains convictions, it will attempt to seize $1,343,352, $1,201,522, $387,488 and $64,950 — almost $3 million total — from four bank accounts, publicly identified only by partial account numbers.

The Associated Press contributed to this report