Recent York lawmakers fret that fast-growing chains of marijuana shops across the town might be a source of money for Middle East terror groups — and so they’re pressing for laws to assist root out rogue financiers, The Post has learned.
Owners of the illegal smoke shops — which in line with some city officials now number within the 1000’s, versus just 11 state-licensed shops across the Big Apple — have stayed under the radar with the assistance of local laws that govern so-called LLCs, or limited-liability corporations.
LLCs are legitimately utilized by businesses to reap tax advantages and secure liability protections. But also they are subject to abuse by tax cheats, money launderers and other criminals — and backers of terrorism might be amongst them, state Sen. Brad Hoylman-Sigal told The Post.
“We all know LLCs are used to cover and funnel money to unsavory causes and might be used to fund terrorist activities,” said Hoylman-Sigal, who’s the lead sponsor of the LLC Transparency Act. “It wouldn’t surprise me if there have been individuals or groups of people who’re financing these shops in a comprehensive manner, but we won’t know until we get to the guts of their ownership.”
Recent York State Senator Brad Hoylman-Sigal says limited liability corporations will be used to fund terrorist activities.AP
Passed by the Recent York legislature in June, the bill would require LLCs to report their owners’ true identities, including names, addresses and birth 12 months, to a public database.
The bill needs Gov. Kathy Hochul’s signature by 12 months’s end to turn into law.
Shady shop owners
A spokesperson for Hochul said she is reviewing the bill, nevertheless it faces stiff opposition from her deep-pocketed supporters, including business and real estate lobbyists.
Insiders say that’s partly because secretive shell corporations have been a large force propping up the Recent York real estate market.
A study last month found that 37% of Manhattan properties are owned by LLCs.
There are millions of illegal smoke shops in the town, with most of the owners hidden behind LLCs.Getty Images/iStockphoto
“Russian oligarchs, narco traffickers, terrorists and money laundering dirtbags the world over use Recent York’s LLC secrecy laws to cover their money,” said John Kaehny, executive director of watchdog group Reinvent Albany, which published the study.
Meanwhile, the explosion of illegal smoke shops across the town has turn into a political hot potato, with Recent York mayor Eric Adams claiming there are actually 1,500 of them — and the town council saying in an August press release the number is closer to eight,000.
State Sen. Liz Krueger — who sponsored the bill that regulates and taxes marijuana after it was legalized for recreational use in 2021 — said the expansion of illegal pot shops citywide has far outstripped anything she expected. Accordingly, Krueger said she’s backing greater disclosure laws around their ownership.
State Sen. Liz Krueger said she is “absolutely concerned that LLCs could be used to fund terrorist groups.”HANS PENNINK
“I feel there are individuals with big money which can be fronting these illegal shops,” Kreuger told The Post. “I’m absolutely concerned that LLCs could be used to fund terrorist groups.”
An illegal Recent York City pot shop can rake in tens of 1000’s of dollars a day – despite the town’s spotty efforts to fantastic business owners and landlords because the botched rollout.
While intel around ownership stays murky and speculative, weed that finally ends up at a few of the illegal smoke shops has been linked to Chinese criminal networks that are amongst the most important cannabis growers within the US, in line with Chris Urben, a retired DEA agent who’s the managing director for the worldwide investigative firm Nardello & Co.
People in Yemen are showing support for Palestinian factions like at this Oct. 13 rally.REUTERS
The Chinese rogue financiers, in turn, have also historically done business with Lebanese money-laundering networks, in line with Urben. When the latter are involved, there’s likely a reference to Iran-backed terror group Hezbollah, he adds.
Lebanon-based Hezbollah has been lobbing missiles into neighboring Israel because the Jewish state began bombing Gaza following the Hamas terror attack, which killed greater than 1,400 Israelis.
“We now have seen links with the Chinese money launderers coping with the Lebanese money launderers, so we imagine there’s some type of money-laundering connection” to marijuana sold at some illegal shops, said Urben, who worked for the federal Drug Enforcement Administration for 25 years.
There are only 11 licensed Cannabis shops in the town — and just 26 in your complete state.Paul Martinka
In 2015, US Attorney General Preet Bharara busted 10 dealers of synthetic “K2” marijuana across Recent York City that used a network of bodegas to peddle the Chinese-made drugs. The synthetic weed was divided into 260,000 packets and sold for $5 a pop “where they sell milk and candy,” Bharara said on the time.
Defendants within the case — several of whom entered plea deals on conspiracy charges and served jail sentences between 4 and 12 months — were mostly of Yemeni origin. No specific accusations of funding terrorism were ever brought against those defendants.
Yemen in the combination
Nevertheless, federal agents lately have gathered evidence that money from K2 drug sales across Recent York City has helped fund Yemen-based Houthi fighters, in line with Urban. There are 6,000 Yemeni-run bodegas within the Big Apple out of 13,000 citywide, in line with the Yemeni Merchants Association.
“A big a part of the synthetic narcotics that were being sold lately through Recent York gas stations and bodegas, and there’s a big likelihood that significant dollars from those sales were sent to Houthi militias,” Urben said.
Last week, Houthis made headlines after they fired multiple missiles at Israel following the Hamas attacks on Oct. 7. The missiles were shot down by a US Navy warship, the Pentagon said.
A Yemeni lifts a portrait of Houthi leader Abdul Malik al-Houthi during a ceremony last month.AFP via Getty Images
Hezbollah has trained and armed the Houthis during their yearslong war against Saudi Arabia in Yemen. The Houthi leader recently said the group was able to coordinate with Hezbollah if the US intervenes in Gaza.
The Yemeni Merchants Association, which represents a lot of Recent York City’s smoke shops along with the 6,000 bodega owners, didn’t return calls looking for comment.
The group has said at City Council hearings that its smoke shop owners wish to be licensed, in line with public testimony.
Missiles fired from Yemen which will have been directed at Israel were downed by this Navy warship last week.
“They wish to avoid police raids,” said Paula Collins, a lawyer who represents may of the town’s pot shop owners. “Persons are uninterested in the life.”
Collins denied that any of her Yemeni clients were behind any network involved in nefarious schemes.
“There are little groups owning three to 4 shops,” Collins told The Post. “Many of the Yemenis I do know are hardworking and scrimped and saved to get here. I just don’t see the connection.”
Nevertheless, Collins admitted the owners have problems finding a spot to stash their mounds of money because most banks won’t accept money from cannabis corporations because it remains to be illegal on a federal level.
Those banks that do take care of cannabis-related funds charge 1000’s of dollars for basic services including checking accounts, she said.
“Welcome to the world of cannabis,” Collins said.
With Carl Campanile
