Aug. 12 2015 12:16 AM

Fraud alleged at city's first permitted medical cannabis dispensary

Zachary Lazarus (left) and David Blair are business partners in A Green Alternative, which is being sued for mismanagement and fraud.
Photo by Joshua Emerson Smith

In the middle of April, a bank teller phoned Robert Walder to say that several corporate accounts he controlled had been cleaned out. Stunned, Walder said he immediately called his business partner Zachary Lazarus at A Green Alternative, San Diego's first permitted cannabis dispensary.

It caught me off guard, said Walder, who initially invested in the venture last fall and then, as its chief financial officer, helped launch the business in March. I ended up driving down to the dispensary because [Lazarus] wouldn't answer the phone.

When Walder arrived, he said, Lazarus, A Green Alternative's COO, refused to talk about the money, roughly $30,000. Instead, they argued over how to make payroll. About a week later, the other businesses partners, David Blair and Douglas Cristofo, called from a cruise ship traveling through the Panama Canal to tell Walder he was fired.

“My guess is they took that money and lived a pretty good lifestyle, and part of my argument is that they have the nice house, the cars, all that type of stuff,” he said.

Last month, Walder filed a lawsuit in state court against his former business partners alleging mismanagement, negligence and fraud. According to the lawsuit, Walder invested $75,000 in the business and took out a loan for the company— which now has an outstanding balance of more than $93,000—but was never repaid.

Walder said the business failed to bring in anticipated revenue and was behind on several payments. He said he insisted vendors, including a general contractor and the cannabis growers supplying the business, be paid for their services before he or his partners pocketed any money.

Robert Walder, former CFO at A Green Alternative

“The big fight we had was they wanted to take their cut before they gave anything to any of the vendors,” he said. “They wanted to take home $4,000 every two weeks.

That was going to sink us.”

The remaining partners have filed a cross-complaint, alleging Walder “misrepresented” A Green Alternative's corporate books and records. The cross-complaint states that Lazarus emptied the bank account because he was “concerned” that Walder failed to deposit funds.

“We had a parting of the ways,” Lazarus told CityBeat, declining to comment further. Blair and Cristofo could not be reached.

Attorney Lance Rogers, who's representing the three defendants, filed the cross-complaint on Tuesday and advised his clients not to talk to the media. He also declined to comment.

On the verge of retirement after seven years as the vice president of operations for a medical supply company called Tear-Lab, Walder, 63, met Lazarus after hiring Lazarus' mother to work in the company's billing department.

Walder said Lazarus and Blair took him to lunch and courted him to be an investor in the dispensary. In exchange for his investment, he said, he negotiated a 25-percent stake in the company and a lucrative repayment and interest plan.

Walder said Blair had shown him a list of other investors representing about $100,000 in start-up capital. However, when Walder came on board, he said, the money was nowhere to be found.

Starting from scratch, Walder said he took out a loan for $67,000 to get the business started, which eventually cost more than $200,000, including construction and security upgrades.

“I set up banking,” he said. “I set up loans. I set up contracts. I was the guy who got them through the building permit.

“David [Blair] didn't have a clue,” he added. “He didn't have any idea of what was necessary to be the CEO of a California corporation, although he claimed he knew everything there was.”

For the last six years, Blair, who holds a doctorate in leadership studies, has taught business ethics at San Diego State University.

Prior to opening A Green Alternative in Otay Mesa, Blair and his partner Cristofo operated a cannabis delivery service called Blossom San Diego. The 60-year-old previously told CityBeat that he's used medical cannabis for about two decades to treat symptoms resulting from AIDS.

In 2002, Blair and Cristofo opened a home furnishings business in Hillcrest called Blair House that eventually went under. In connection with the business, the couple faced roughly a dozen lawsuits claiming they failed to pay on debts.

Several judgments were issued against Blair and Cristofo in small claims court for amounts ranging from about $1,200 to roughly $5,300. At the same time, a construction company sued Blair for more than $150,000 over remodeling and repairs to his home, which was settled out of court.

Eventually, the couple filed for bankruptcy, dodging a property rental company seeking $60,000 stemming from back rent.

Today, Blair and Cristofo live in a large house in Chula Vista. Over the last few years, they bought multiple cars from Lazarus, a former general sales manager at the Perry Ford car dealership.

The three became friends, and Lazarus, now in his late 30s, suggested the idea of opening a medical cannabis dispensary to go along with the delivery service. Previously, Lazarus told CityBeat that he also successfully traded cannabis-related stocks, such as Terra Tech, a company that produces indoor-grow equipment.

Blair's lawyer, Rogers, is a high-profile medical-cannabis attorney who shifted away from criminal defense last year to join a practice focused solely on the business side of the industry. Rogers and his partner now have more than 40 clients in multiple states.

Walder's lawsuit seeks damages in the amount of $168,712, as well as indemnification against fees associated with the $67,000 loan. If Walder can't be paid out for his stake, the lawsuit seeks to take control of the business.

“We have to do something sooner rather than later before everything is lost,” said Thomas Gallagher, Walder's attorney. “Bankruptcy, those types of things, start becoming a concern, which is why we're going to move relatively quickly.”

Walder told CityBeat that he simply wants reimbursement for his principal investment and to be released from the loan obligation.

“I just want my $75,000 and I'll walk away,” he said.

Write to or follow him on twitter at @jemersmith.


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