Oregon Secretary of State Shemia Fagan poses for a photo.
Courtesy of Oregon Secretary of State's office
Federal criminal investigators are looking into former Secretary of State Shemia Fagan and the two cannabis entrepreneurs she briefly worked for, records show.
According to subpoenas released by the Oregon Department of Justice on Wednesday, the U.S. Attorney’s Office in late May sent demands to five state agencies for records concerning Fagan and the owners of the La Mota cannabis chain, Aaron Mitchell and Rosa Cazares.
Fagan stepped down on May 8 after revelations she’d taken on private consulting work for Mitchell and Cazares as her office prepared an audit of state cannabis regulations that was seen as extremely favorable to cannabis companies.
The state is pursuing two inquiries into that arrangement — one on whether Fagan broke state ethics laws and another on the audit her agency carried out — but now federal authorities want to know if any crimes occurred.
It’s not clear what exactly prosecutors are investigating. The Oregonian/OregonLive first reported on Monday that federal officials were convening a grand jury to look more closely at the scandal.
A spokesman for Oregon U.S. Attorney Natalie Wight, the state’s top federal prosecutor, said Wednesday he could not confirm or deny the existence of an investigation.
But in subpoenas dated May 24, it’s clear federal agents are looking closely at Fagan, Mitchell and Cazares. The documents — formal orders for state officials to produce records — were submitted by Assistant U.S. Attorney Ethan Knight, chief of the office’s economic crimes unit.
Knight sent those orders to the Secretary of State’s Office, the Oregon Department of Revenue, the Oregon Government Ethics Commission, the Oregon Liquor and Cannabis Commission and the Department of Administrative Services. He’s demanding a wide array of records dating back to 2018.
From the OLCC, federal officials requested documents regarding a recent audit of cannabis regulations, along with any records having to do with Cazares or Mitchell, and “any communications to or from Shemia Fagan regarding the marijuana/cannabis industry,” among other things.
From the Secretary of State’s Office, investigators are requesting records related to Fagan’s employment, schedules, travel itineraries, use of official credit cards, call and text records and campaign finance records, among other things. They’re also asking for communications with Cazares and Mitchell and records of the couple’s campaign finance contributions.
Investigators are demanding an even broader swath of records from the Department of Administrative Services.
Among documents subpoenaed from the Ethics Commission: “Ethical discussions, questions and or conflicts of interest related to Shemia Fagan and/or her election campaigns.” From the Department of Revenue: “Any communications to or from Shemia Fagan regarding Aaron Mitchell and or Rosa Cazares.”
Mitchell and Cazares began making head-turning donations to Democratic politicians and committees in 2019, and have counted Gov. Tina Kotek, Senate President Rob Wagner, and former Oregon Labor Commissioner and now-U.S. Rep. Val Hoyle, among their favored candidates.
Because federal law makes it difficult for cannabis companies to use traditional banks, those campaign donations sometimes came in the form of stacks of cash, Willamette Week reported. Many of the politicians who received contributions from the couple either returned them or gave comparable amounts to charitable causes once the La Mota owners’ pattern of avoiding taxes and being sued by suppliers was revealed by the newspaper.
Fagan has said she met Mitchell and Cazares in 2020 while running for secretary of state. She told reporters she soon became friends with the couple.
When Fagan began looking for side work to supplement her $77,000 salary as secretary, Cazares offered a consulting contract worth at least $10,000 a month. For that sum, Fagan said she did basic research into various states’ cannabis laws — excluding Oregon — in order to help Cazares and Mitchell expand their business.
Fagan has insisted that the arrangement was legal, noting she recused herself from her agency’s audit of OLCC cannabis regulations before signing on as a consultant. But records show the audit was largely complete by that point, and the report gave credence to complaints Cazares had voiced to Fagan and others about the agency.
Fagan never got a formal opinion from state ethics officials about whether the consulting arrangement was in line with state ethics rules, though she did request information on past ethics opinions about accepting side work.
Before her resignation, Fagan said she had “faithfully followed Oregon’s ethics rules and laws.”