Jason Glenn Catoe of Jonesborough and his half-brother Kory Neal Wiesner have agreed to plead guilty to a charge of structuring currency transactions to evade reporting requirements. Catoe has also agreed to plead guilty to possession of Schedule I drugs with intent to distribute.
The charges were filed in U.S. District Court in Greeneville. The drug charge carries a maximum sentence of 20 years in prison and a $1 million fine; the money charge is up to five years in prison and a $500,000 fine.
Wiesner’s change of plea hearing is scheduled for March 11; Catoe’s has not yet been scheduled.
According to court records, the two men opened the Ultimate Smoke shop in March 2011 (initially on Fuller Street, then eventually moving to East Center Street in Highland), selling synthetic marijuana, bath salts, incense and other drug paraphernalia. For a brief time, Catoe opened a second Ultimate Smoke shop in Gray.
At the time, the half-brothers argued their products were merely incense and potpourri and were not meant for human consumption. Prosecutors say the two men and all of the employees of the Ultimate Smoke shop knew the products were for human consumption and for people “to get high” using.
In August and November of 2011, undercover officers with the Sullivan County Sheriff’s Department purchased bath salts and incense from the Ultimate Smoke shop, dubbed “Crystal Clean” and “Mad Hatter,” respectively. The DEA determined chemicals within the products were analogous with federally banned controlled substances.
Kingsport Police made similar undercover purchases in February 2012 and raided the Ultimate Smoke shop a month later, seizing bath salts, K2 and cash.
Federal agents conducted a search of Catoe’s Jonesborough residence in March 2012 and found more than $290,000 in cash from a safe, along with five firearms and two bullet-proof vests. Various synthetic drugs were also found at the residence, with names such as “Mary Joy,” “K2 Summit,” “Hammer Head,” “Happy Hour Passion Fruit” and Da Bomb.”
Prosecutors say the half-brothers also structured more than $200,000 in cash deposits to ECU in order to avoid federal reporting requirements. Federal law states that any cash deposit of more than $10,000 has to be filed with a Currency Transaction Report. In addition, if the financial institution believes a person is depositing cash in a manner to avoid this requirement, then the multiple transactions are to be treated as a single transaction.
Court records show that over a one-month period in August and September of 2011, Catoe and Wiesner deposited just over $200,000 in cash to the Eastman Credit Union, making 23 deposits over about a 38-day period with all of them being less than $10,000, but most over $9,000. The two men also made $60,000 in account transfers during 2011, again in the attempt to avoid reporting requirements.
In all, prosecutors say the two men made deposits and transfers in the amount of $288,411 from May 2011 to January 2012 in order to avoid reporting requirements.
Catoe and Wiesner have agreed to plead guilty to the charges and cooperate with federal prosecutors and law enforcement. U.S. Attorney Neil Smith said additional individuals are expected to be charged in the matter.
Despite city and federal bans on various types of synthetic drugs, Ultimate Smoke held out as the last remaining business in Kingsport selling the product, and even went so far as to file a federal lawsuit challenging the bans in Kingsport, Bristol and Sullivan County.