A settlement is expected to be reached this month more than a year after Goyoko “Batzi” Kuburovich – a Gilroy resident and former co-director of medical marijuana dispensaries with locations in Gilroy, Morgan Hill and San Jose that were shut down after law enforcement officers raided MediLeaf offices and founders’ homes in December 2010 – was taken into custody March 23, 2012 on charges of embezzling $1.6 million through real estate grand fraud.
Kuburovich was 51 at the time.
A hearing is scheduled for 3 p.m. June 17 in dept. 23 of the Hall of Justice in San Jose, where Deputy District Attorney Victor Chen anticipates Kuburovich will plead guilty to five of six felony grand theft charges.
The grand theft allegations Kuburovich faces are completely separate from suspicions of alleged money laundering and illegal pot sales associated with his now defunct MediLeaf business.
“We’re most certainly going to prosecute that case. We’re still in the investigative stage,” Supervising District Attorney Patrick Vanier of the Narcotics Prosecution Team said. “As of right now, the real estate fraud case, because of its size and scope and number of victims involved, has certainly been the focal point from our office’s perspective.”
In the grand theft case, two of Kuburovich’s victims – a Morgan Hill firefighter named Bill Ferguson and self employed truck driver named Alan Hamblin, also of Morgan Hill, will be paid somewhere in the ballpark of $215,000 each according to Chen.
Those numbers are rough, he added, as the DA’s office is still hammering out the final dollar amount.
The settlement entails a restitution of $435,000, but it won’t paid by the defendant’s “own volition,” Chen added. Rather, the majority of that money comes from assets frozen by the DA’s Office through a process called “lis pendens,” which Chen filed at the time of the original complaint.
“That money was taken from (Kuburovich) by the lis pendens statute that allows us to freeze – for benefit of the victims – assets that are associated with a particular defendant in cases where they are charged with theft, and that’s exactly what happened here,” he explained.
The lis pendens statute enabled authorities to freeze approximately $267,000 from the sale of Kuburovich’s home in Gilroy’s upscale Eagle Ridge neighborhood; $60,000 seized by narcotics officers when they raided the now defunct Medileaf facility previously located on First Street; and another $101,000 squirreled away by Kuburovich in a foreign account in Liechtenstein, Chen said.
“He was basically digging a hole in the ground and burying it and hiding it,” Chen continued. “He didn’t think we’d find it, and we traced it and found it.”
While the DA’s office was able to “claw back” roughly $428,000, Kuburovich still owes the victims around $8,000 if the settlement is reached.
Chen anticipates a certain term of probation or parole but does not foresee Kuburovich receiving a significant jail term. It’s likely the California Department of Real Estate will also revoke Kuburovich’s license after he pleads guilty to the charges, Chen said.
Victims Ferguson and Hamblin will deliver victim impact statements during the June 17 hearing.
The gist of the alleged crime is that between 2005 up until 2012, Kuburovich “actively solicited persons to invest hundreds of thousands of dollars” through a company called AZ Custom Smart Homes, LLC, of which he was a managing officer, records show.
However, “rather than these funds being invested through AZ Homes as was represented to the investors, the suspect deposited these funds into his personal bank account with Silicon Valley National Bank and Heritage Bank,” according to court documents.
Chen is careful to differentiate the difference of investing money and losing it, versus what happened with Kuburovich, who allegedly “took a detour on the way to the bank.”
Kuburovich, who is a Realtor, was also employed as a part-time hired consultant for a San Jose medical cannabis co-op called NorCal Care. A person who answered NorCal’s phone Thursday said Kuburovich no longer works there.
More background: Court file breaks down the case
• The loss of money and value of property resulting from Kuburovich’s alleged acts is approximately $1.6 million. The total amount of restitution and fines that could be awarded is $4.8 million.
• In 2005, victim and Morgan Hill resident Alan Hamblin was “talked into” investing $250,000 with AZ Custom Smart Homes, LLC. Kuburovich then allegedly deposited the funds into his personal bank account, instead of the AZ Homes’ corporate account. Within a few days, Kuburovich allegedly used the entire $250,000 to pay off a pre-existing line of credit with Heritage Bank. Court documents state “the suspect’s use of Hamblin’s money was not related to … any legitimate business purpose with AZ Homes … the suspect knew that Hamblin, a self-employed truck driver, was unsophisticated in real estate matters. The suspect also knew that Hamblin had inherited hundreds of thousands of dollars from the sale of his parents’ home.”
When Hamblin later noticed Kuburovich was listed in the local newspaper as the owner of a newly opened MediLeaf marijuana dispensary in Gilroy, “he called Kuburovich and expressed displeasure in the fact that his money was being used to open a marijuana club,” according to a narrative investigation from the Morgan Hill Police Department.
Kuburovich responded, “Don’t worry, once this club takes off, it’s going to make you and me both rich,” the report states.
Despite repeated requests and pleas from Hamblin for the return of his investment, Kuburovich failed to return Hamblin’s money, investigators with the Santa Clara County District Attorney’s office allege.
• In January 2009, Kuburovich allegedly, and without authorization from AZ Homes, transferred a land title in Arizona to Hamblin, even though Hamblin had not contracted for any such transaction, according to court documents. The title belonged to Roger McKinley, the majority manager of AZ homes whose daughter, Tammy Rix, lives in San Martin. This is one of three illegal property title transfers that Kuburovich allegedly committed while working at AZ Homes, according to court documents.
• In 2007, Kuburovich allegedly used the exact same “blueprint” method of embezzlement with another Santa Clara County victim, Morgan Hill firefighter Bill Ferguson, who “suffered a similar fate as Hamblin,” according to court documents. Ferguson lost $187,500 in what he thought would be invested in Arizona property; however court documents show Kuburovich deposited the money into his personal account.
• Investigators state it is “entirely reasonable to believe that the total loss suffered by the victims in this case will be in excess of $1.6 million. As the publicity of Kuburovich’s arrest becomes continues to spread, investigators believe more victims will come forward.”
