5 Indicted on Charges of Franchising Drug Labs

A group of alleged drug manufacturers were indicted by a federal grand jury in Los Angeles on Friday for their roles in allegedly selling methamphetamine franchises around the country, much like restaurant entrepreneurs sell fast-food outlets, authorities say.

The 31-count indictment accused the three men and two women of drug dealing and manufacturing, racketeering and conspiracy and participating in a continuing criminal enterprise. The men were also indicted on tax evasion charges.

1 Still Sought

Four of the alleged dealers were arrested Friday afternoon and another was still being sought late Friday by the FBI, authorities said.

“This was no ice cream and hamburgers. . . . They were franchising speed labs and selling the death and destruction,” U.S. Atty. Robert Bonner said at a press conference in which he outlined how the operation worked.

‘This is the first instance that we’ve seen this type of operation. It’s very unusual and disturbing because they are teaching many others how to make it,” Bonner said.

Since 1982, the group has allegedly operated numerous laboratories in the Apple Valley area of San Bernardino County. In the past three years they have distributed 200 pounds of methamphetamine (commonly known as “speed”) worth $3.5 million, federal officials said.

But the unique part of the operation, drug officials say, is that the defendants allegedly sold drug franchises to other dealers for $250,000. The price included a special “recipe” for the methamphetamine and help in setting up the labs.

Technical Consultants

The franchisers later acted as technical consultants in case any manufacturing problems were encountered. And they also oversaw operations to make sure that quality control was maintained, Bonner said.

The drug franchisees, most of whom had previously worked for the group’s drug operations, agreed not to operate their franchises in the group’s own territory. They also gave 50% of the drugs they made to the franchisers until their $250,000 debt was paid. Bonner said they do not know exactly how many of the franchises were sold, but they do know that labs were located in Fresno, Minneapolis and Oklahoma.

Charged in the indictment, which capped a two-year investigation by the regional federal Organized Crime Drug Enforcement Task Force, were Paul Terry Nichols, 43, his wife Karen Nichols, 41, Michael Francis Breor, 39, and his wife Christel Breor, 36, all of Apple Valley, and Patric Henry Stewart, 47, of Las Vegas. The indictment charges that Stewart was the principal distributor of the drugs for Paul Terry Nichols and that Karen Nichols and the Breors helped to manufacture and distribute the drugs.

Four were arrested at their homes Friday, but Paul Nichols was still at large late Friday afternoon. Federal authorities are asking that Stewart and Michael Breor be held without bail and that bail for the others be set at $200,000.

Besides the criminal charges, criminal forfeiture is being sought for more than $1.25 million worth of property, which authorities represents proceeds of the illegal drug trafficking. Included are interests in two video stores in Helendale and Lucerne Valley, three residences in Apple Valley, 13 automobiles and two pleasure boats.