EVERETT — First, the Seattle broker allegedly tricked the property owners he was representing into letting his friends buy their building in Everett.
Then he reportedly told a bank that he was opening a western-themed bar, qualifying him for a $1.5 million Small Business Administration loan, when he had plans to lend the money to open a retail marijuana shop.
The SBA, a federal agency, prohibits its loans from being used for anything involving marijuana. Compared with other financing options, SBA loans offer lower down payments and longer repayment terms.
It was a convoluted web of lies, according to papers filed Dec. 3 in Snohomish County Superior Court. Conrado Topacio, 57, was charged with first-degree theft and first-degree identity theft for allegedly misrepresenting himself to the bank. Two people he worked with are listed as co-suspects. The trio also have been the subject of a civil suit over the property.
It’s not the only time someone may have lied to the same banking firm about using SBA loans for a marijuana business. A similar case, with different defendants, is pending trial over a marijuana processing site in Lyman, a small town in Skagit County.
The eager broker
Topacio got involved with the Everett property, at 9506 19th Ave. SE, as a broker in the summer of 2013. He bragged about his credentials and promised to sell the place within 90 days, according to a lawsuit filed by the then-property owners. He claimed that he’s never let a property sit longer than five months.
Over the ensuing months, the suit alleges, he persuaded the owners to break their agreement with another listing service and let him take over.
The property owners agreed, with the assumption that Topacio would help sell the building for $1.5 million and look for businesses to lease space until the sale.
It was an agreement they would later regret.
Topacio apparently never offered any leases on the building. He often dodged the subject, according to the suit, replying in an email that “I know again we need to sell and not lease. Because of your situation.”
Topacio also reportedly listed the property for $1.95 million on the Commercial Brokers Association listing website — hundreds of thousands of dollars above the agreed price point.
In September 2013, Topacio told the owners that a marijuana business was interested in buying the building. He didn’t say that he personally knew the buyers, or that he would eventually form a company with them. He allegedly never told the property owners the names of the buyers, either, describing one as a “rocket scientist.”
According to state real estate law, a broker is not supposed to represent both the buyer and seller unless both parties give written consent. The plaintiffs allege they never knew that Topacio was working with the buyers.
Seeing that no one else made any acceptable offers, the property owners agreed to sell in March 2014 for $1.9 million, the lawsuit states. The offer included an addendum that would credit $450,000 back to the buyers, effectively making the price closer to the original $1.5 million.
After the sale was completed, the plaintiffs began to suspect Topacio purposefully upped the price and didn’t pursue potential buyers or tenants.
They filed the suit against him in 2017. The case ended in a settlement, but a disagreement over its interpretation is now awaiting hearings with the state Court of Appeals. The plaintiffs say they are owed $350,000.
Forgeries and loans
Shortly after the purchase, the two other suspects formed a company called CHJ Properties. Topacio originally hid his involvement, according to the criminal charges. He further denied having any stake in the land during an interview with investigators in December 2016, beyond being the broker.
Topacio, who also goes by “Conrad,” has no felony history. His arraignment is set for Tuesday. It does not appear that his friends have been charged.
He is currently listed as a partner of CHJ Properties on a business license filed with the state. The business was formed in April 2014, around the same time as the sale. It seems that Topacio’s name was added later that year.
The three owners of CHJ properties had previously entered applications to a state-sponsored lottery to get a retail marijuana license, according to the suit. The plaintiffs allege that the men listed the Everett property’s address on the applications before the purchase was complete, without their knowledge.
The men didn’t get a license, so they apparently partnered up with a woman who had one to open Mari J’s Highway Pot Shop.
To get the money, the men applied for an SBA Loan through Coastal Community Bank in May 2014, reportedly saying it would go toward a country-theme bar called the Stomping Grounds Restaurant.
To give legitimacy to the fictitious business, Topacio tried to persuade a Seattle restaurateur to put her name on the loan application, documents show. He needed someone with experience, he reportedly told her in an email.
“All I did was provide (the loan agent) your resume. He was totally cool with that,” he said.
The restaurateur didn’t agree to the idea, so Topacio allegedly forged her signature on papers, saying she was a 19 percent owner of CHJ Properties and CHJ Food Services, another affiliated company.
When she was interviewed by investigators, the restaurant owner said she didn’t know she was listed as a co-borrower. She denied putting her name on any documents for the loan.
She said she knew Topacio. He had hired her at a restaurant several years ago and helped her open up her current cafe in Seattle.
The defendant and the other two men continued lying to Coastal Community Bank, providing projected income statements, according to court documents.
The bank approved the loan in November 2014, but held onto some of the money to disperse later. To obtain the final installment, the defendants sent Coastal fake invoices, court papers say.
Two of those invoices supposedly were from a Seattle contractor, separately calling for $80,000 and $60,000 for repairs and improvements.
The contractor did make the second invoice, but the real version only asked for $20,000, prosecutors allege.
Another invoice, from a Seattle coffee company, was for $23,000 in kitchen appliances. The coffee company’s owners, however, told investigators that they never sold any items and they never sent an invoice.
Instead, charging papers conclude, the SBA loan was for reimbursing CHJ Properties for lending money to the marijuana store owner. In state records, the business is described as being owned by the woman with the pot retail license. She was named in the lawsuit but it’s not clear if she was part of the criminal investigation.
Mari J’s Highway Pot Shop opened in August 2015 but is facing its own legal challenges.
The Washington State Liquor and Cannabis Board moved to suspend the store’s license for misrepresentation of facts and hiding true parties of interest. The store owner has tried to settle with the board twice since then, but both attempts were rejected, according to a board spokesman. Another state agency will handle what happens next, he said.
“Ultimately,” the charging papers state, “the defendant devised and executed a complex scheme to defraud a federally insured financial institution in support of a marijuana retail store.”