In Ontario, it’s cash and controversy over donation

The Ontario real estate firm operated by Marty Justus was used to move money from a marijuana entrepreneur to city officials as a donation for a local park. (The Enterprise/Pat Caldwell)

UPDATE: This story was updated to reflect new information from the Oregon Liquor Control Commission regarding Hotbox Farms.

ONTARIO – The community group erecting Ontario’s splash pad park is considering returning one of its major donations to erase any connection to one of the region’s largest marijuana operations.

“It would be inappropriate to brand the project with any businesses that cannot legally serve youth,” said Friends of the Aquatic Center in a statement Friday.

The $25,000 donation earlier this year was given in the name of Hotbox Farms LLC, which runs a retail marijuana operation in nearby Huntington. The donation tied for the largest obtained by the aquatic center group as it rounded up city funds and pursued grants for the kids’ park next to the now-shuttered Ontario Aquatics Center.

“The Friends appreciate the gesture and the generosity, but recommends refunding the donation unless it can be recognized in a manner appropriate for the project’s audience,” the group said in its statement last week to the Enterprise.

The group on Friday wrote to the Ontario City Council, saying the donor name needed to change.

“If they do not agree to change the name, then we encourage the council return the donation,” the statement to the city said. “If the council does not act on this, we feel we will be losing other sponsors that will total more than $40,000.”

Interviews and emails and financial records obtained by the Enterprise show the controversial donation was engineered by Marty Justus, an Ontario city councilor and local real estate agent.

Justus is now running for mayor. On Friday, Justus announced on Facebook page that he is supporting the repeal of a ban on marijuana sales in Ontario. Voters in the city will consider the repeal in November – at the same time they select their new mayor.

Steven Meland, a partner in Hotbox Farms, earlier in the month endorsed Justus, writing, “I don’t pretend to know how Marty feels on each issue, including cannabis.” Last week, Meland said in an interview that he has known Justus for about four years and the two have a personal and business relationship. He said Justus’ company, Four Star Real Estate, manages his real estate holdings.

Justus declined an interview and by Monday hadn’t answered written questions he requested from the Enterprise. He also had not fully responded to a public records request from the Enterprise seeking documents related to his duty as a city councilor. He said both were under review by his attorney, Max Taggart. Taggart, an Ontario attorney, last week organized two new companies for Meland, according to state corporation records.

Hotbox Farms opened its retail operation in Huntington in 2016, after the city council there voted to allow the sale of recreational marijuana. Huntington has two such retail operations and the Oregon Liquor Control Commission reported sales totaled more than $14 million last year. One retailer said most of the sales were to Idaho residents. Idahoans can legally buy in Oregon but it remains against the law in Idaho to possess marijuana.

In January, state regulators reached an agreement with Hotbox, finding it had allowed marijuana to be consumed at its store. The Oregon Liquor Control Commission reported Monday that Hotbox paid a $1,485 fine on Feb. 13.

Hotbox’s role in the new splash park in Ontario traces back to last December, when Friends of the Aquatic Center was drumming up donations to show the Ontario City Council there was public support for the project.

About that time, Justus told Megan Cook, chairwoman of the aquatic committee, that he knew the Hotbox Farm operators and would “be happy to approach them,” according to an email he later wrote describing the transaction.

Cook said in an interview last week that she didn’t know much about Hotbox. She said Justus told her the business was growing “it” and “that it was used for medicinal use only.”

“I didn’t realize he was connected to them at all,” she said.

On Dec. 29, he emailed Cook that he met with Meland and his partner, Jay Breton. Justus reported they were “very interested” in donating $25,000 to the project.

“At that time, it was represented that the donation was from Steve Meland and was recognized as such,” the Friends committee said in its statement.

The committee listed Meland as the donor on promotional material as it prepared for a Feb. 19 groundbreaking for the splash park.

“Meland asked the Friends why his name was listed rather than that of his business and requested public recognition in the name Hotbox Farms LLC. As it unfolded quite quickly, the business name was included in limited promotional materials,” the Friends committee said.

One compromise was to eliminate logos for the donating businesses, which meant Hotbox’s circular design with a marijuana leaf wouldn’t be used. In a subsequent Facebook video, the logo was used but the marijuana leaf was blacked out.

Alfredo Rodriguez, helping the splash park project, wrote in an email last March 14 that he blacked out the leaf and no one mentioned it.

“Maybe taking the time to discuss options such as this with our taboo donor would reduce the amount of unneeded back and forth and let the donor believe it’s more about the product image and not so much the assumed political gesture?” Rodriguez wrote.

Three days after the ground breaking, a representative of Hotbox walked into Justus’s office with $25,000 in cash. The money was the intended donation for the splash park, Meland said.

Justus messaged Adam Brown, Ontario city manager, that he had the money and deposited it into his firm’s bank account. Brown advised him to write a check to the city of Ontario “with Aquatic Center in the ‘for’ line.” The next day, Four Star Real Estate issued a $25,000 check to the city, noting on the check memo line that it was for “Friends of Aquatic Center—Hot box Farms.” A city clerk issued a receipt for the check, not to Four Star but to Hotbox Farms.

Justus last week provided his firm’s check stub for the payment. That stub showed the $25,000 was charged to the rental trust account of “SNJ Property.” Meland has a holding company called SNJ Online Inc.

Justus didn’t respond to written questions about why he didn’t send the Hotbox representative straight to City Hall – about two blocks from his office. Brown told the Enterprise that the city could have accepted the cash donation directly.

Brown said the way the donation was handled didn’t raise any concerns for him.

“It never occurred to me that anything was wrong with it,” Brown said.

Mayor Ron Verini said he didn’t know about the matter until he received an email from the Enterprise.

“I don’t understand why he did it,” Verini said. “I don’t understand why we couldn’t accept money or cash.”

Verini said he hadn’t discussed the matter with Justus.

 “At this point, I have no concerns.”

At one point in an interview last week, Meland said the donation was simply another bill for his real estate holding company SNJ Property, and that Justus is charged with settling such bills. Later in the interview, however, he said that Hotbox Farms “made the donation.”

Asked about using cash to pay, Meland said the marijuana industry is limited in its banking operations. He later said that “of course we have a bank account. Of course we use banking services.”

He said he has delivered donations to Justus for other causes – sometimes in cash, sometimes by check.

“We use both,” he said.

Cook said Friends committee board members and donors grew uneasy with the marijuana business participating in the kids’ park project.

Cook wrote to Brown, Justus and others in an email last March 15 that said she wanted the donation – but not in the name of Hotbox.

“If they are doing it for advertisement reasons, then not so great, since it is youth specific,” she said.

Justus cautioned about doing anything different with the donation.

He said the Friends committee was obligated “to take it and thank them for it.”

Justus recommended against “coming to council and asking us to return this donation. I think the controversy it will bring to the Friends of the Aquatic Center and the city would be overwhelmingly negative.”

Cook said Justus seemed “very passionate” about leaving the donation in place.

Meland said last week he was told “nothing” about a possible refund.

“I don’t know of any controversy,” Meland said.

Cook said Hotbox was asked to change the donation from a business to personal. She said, as of Friday, she’s had no response.

This story was reported by Pat Caldwell, Kristine de Leon, Carolyn Agrimis and Max Egener and was written by Les Zaitz.

How a donation became news

Here is the sequence regarding the unfolding controversy over one donation to Ontario’s splash pad park.

Tuesday, Aug. 21 – Malheur Enterprise emails a public records request to Marty Justus in his role as a public official – Ontario city councilor. The request sought public documents relating to $25,000 in cash he processed for a local donation. Mr. Justus responded that he forwarded the request to his personal attorney.

Tuesday, Aug. 21 – Malheur Enterprise submits two public records requests to the city of Ontario, seeking public bank records and emails related to the $25,000 donation.

Wednesday, Aug. 22 – Tori Barnett, Ontario city recorder, responds to one Enterprise public records request with two documents and a copy of a check received from Justus’ firm related to the donation.

Thursday, Aug. 23 – Marty Justus, responding to the Enterprise’s public records request, emails a copy of his company check stub showing the transfer of $25,000 to the city. He wrote that he was “awaiting” his personal attorney’s review of other public records requested by the Enterprise.

Friday, Aug. 24 – Marty Justus declines a request for an interview from the Enterprise and asks that questions be submitted in writing. The newspaper emails him 48 questions.

Friday, Aug. 24 – Marty Justus provides an interview to the Ontario newspaper, the Argus Observer. The newspaper reported later that Justus commented on the donation and his role.

Saturday, Aug. 25 – Justus posts on his personal Facebook page what he described as “Press Release as submitted to Argus Observer.” He doesn’t say when he provided the release to the Ontario paper.In an effort to be forthright and transparent, I need to let you know that I received a Freedom of Information Act Request from the Malheur Enterprise this week,” he wrote in the statement.” He includes a link to documents, including records requested four days earlier by the Enterprise. He states: “If any of you have questions concerning this matter, please ask, I promise I will give truthful unfiltered responses.”

Saturday, Aug. 25 – Justus discloses a chain of emails showing controversy over the donation in March 2018. The public document showed that Justus notified the Argus of the controversy on March 15, 2018, by copying email traffic to its publisher. John Dillon, publisher at the time, also is Justus’ spouse.

Sunday, Aug. 26 – The Argus publishes a story about the donation, based in part of records and an interview with Justus. The story said that Justus “confirmed” there had been earlier controversy. The story does not disclose that the Argus was provided the email chain about the controversy four months earlier. Its editor didn’t respond to an email from the Enterprise asking about the timing.

Sunday, Aug. 26 – Notified that the deadline for responding to written questions from the Enterprise was later that day, Justus said he had “prior obligations” that prevented him from responding. He said his attorney “will be formulating a response via email sometime in the next week.”