The Secret of Yummy Garden

There's a new business in Portland's Real Chinatown—marijuana.

Sunny Chan has a lot of history at Yummy Garden, the Brooklyn neighborhood restaurant he used to own, and at another restaurant he owned, Chinese Garden in Gresham.

Today, there's change afoot at both joints. Yummy Garden, known for its kelly-green exterior and lemon-yellow floor tiles more than its cuisine (one regular says he took to ordering a burger or grilled cheese because the Chinese food was so bad) closed Jan. 29. Chan's Chinese Garden, which features a menu heavy on chop suey and chow mein, green vinyl booths and a flashy electronic Keno board over the cash register, remains open, although Chan abruptly assigned ownership to his wife in June.

And Chan is nowhere to be found.

"He's in China," says a Chinese Garden manager who declined to give her name. "We don't know when he'll be back."

Probably never. Chan is the alleged leader of a Chinese drug gang. Last week, Chan's top lieutenant, Shu Guang "Big Rock" Wu, was in federal court and is expected to plead guilty Feb. 20 to conspiracy to manufacture marijuana. He faces 26 years in prison.

Big Rock's would be the highest-ranking conviction in a three-year investigation into a large, sophisticated Chinese marijuana-growing operation that had its unofficial headquarters in Chinese restaurants, but extended into ordinary-looking houses scattered across Southeast Portland.

Nailing the leader of this operation will be difficult, unless Chan, 59, tires of China. He's got little reason to return to Portland. Federal prosecutors who indicted him last year are demanding he cough up nearly $4 million in cash and a couple of houses and spend the next few decades as the government's guest.

Prosecutors say Chan had ties to at least three restaurants—Mandarin Palace in Beaverton was the third—as well as elaborate money-laundering and property transactions.

The case offers a rare glimpse inside Asian organized crime in Portland.

Someone who's had more than a peek at this underworld is Jeff Zoria, a mortgage broker whose office at Wing Ming Square, at 2788 SE 82nd Ave., is in the heart of Portland's new Chinatown.

Zoria, 51, whose daughters and business partner are Chinese, complained for years about illegal gambling parlors in his building. But Zoria, who says he suffers from severe asthma, thought the Chinese gamblers, who included Sunny Chan, were guilty of nothing more than clicking mahjong tiles and violating indoor smoking laws.

"Why would all these Chinese guys, who speak little or no English, get into growing pot in Oregon?" Zoria asks. "They're serious and they work like oxen. There's just no mixture between the Chinese community and weed. I'm baffled by it."

The answer, of course, is money.

Like other industrial products, such as textiles, automobiles or computers, marijuana production moves from place to place and group to group. Even as legalization in Oregon looms, growers are enjoying outsized profits by shipping their product east.

"Legalization is following a very different path from the repeal of Prohibition," says Alison Holcomb, drug policy director of the American Civil Liberties Union of Washington state. She was a leader of that state's successful 2012 marijuana legalization campaign.

"Prohibition's end had an immediate impact because it happened at the same time nationwide," Holcomb says. "[Marijuana] legalization is piecemeal, so won't have the same impact on the black market."

Outdoor growing operations are still responsible for most of the 150,000 or so plants law enforcement seizes annually in Oregon—but Chinese indoor growing operations are the latest trend. Chan's operation, for example, was equivalent to 20 percent of all the indoor grows seized in Oregon last year, according to federal statistics.

"It's all about a business opportunity," says John Deits, a recently retired federal drug prosecutor who oversaw part of the Chan case.

While Mexican cartels have dominated Oregon pot production, there's clearly a new entrant to the market.

"The Chinese growers are a real recent phenomenon," Deits says, "and they are very well-organized."

If what the feds say about Sunny Chan is true, his underlings were correct to nickname him "Big Brother."

Federal warrants say he ran a large and complex "marijuana-manufacturing and money-laundering conspiracy."

Law enforcement agents believe Chan is the boss of a ring that involved at least five marijuana grow houses in outer Southeast Portland and at least one in Southwest Washington.

These were not houses with just a few plants in the basement. Agents busted the houses in 2011 and 2013, seizing more than 3,000 marijuana plants with a street value of as much as $3 million.

Those cases were in addition to at least four other busts of Chinese growers in Portland and in Washington and Yamhill counties since late 2010.

Deits, 66, who was Oregon's top federal drug prosecutor for 11 years before retiring in November, says the Chinese are the latest group to make a grab for Oregon's marijuana market.

Deits began his career as a drug prosecutor in 1974.

“The marijuana market has changed dramatically since then,” he says. 

In those days, Deits recalls, marijuana growers were Caucasian.

"Way back in the late '70s, I don't remember a lot of ethnic groups being involved," Deits says. "It was hippies."

Over time, however, the source of production moved north.

"In the '90s, you had 'B.C. bud' coming out of Canada," Deits says. "Nobody was growing much here, and because the Canadian border was insecure, you had huge quantities of super-high stuff available."

The terrorist attacks on Sept. 11, 2001, led to tighter security and a sharp reduction in the supply of Canadian marijuana. "The Canadian drug groups—a lot of them were Vietnamese—moved down to Seattle, Portland and Sacramento," Deits says.

Mexican cartels also moved in after 9/11, setting up expansive growing operations on remote federal lands. In the mid-2000s, Deits says, law enforcement agencies started targeting such Mexican operations. They remain Oregon's biggest growers, but the focus on them created opportunities for new growers.

Chinese entrepreneurs saw an opportunity in plentiful cheap houses, high unemployment and profit margins unimaginable in the restaurant business.

They jumped in. Unlike the Mexican cartels, which work outdoors in rural areas, Chinese pot growers work indoors in urban centers, where their plants produce a higher-quality product because of the climate-controlled conditions.

"Indoor grows produce higher THC," says Deits, referring to the main mind-altering ingredient found in marijuana.

Sunny Chan's indoor operations were almost invisible. And because most of the product got shipped out of state—experts say Oregon is a large exporter of marijuana—there was little risk of street dealers implicating Chan's crew.

Because Chan's case is still pending in federal court, some of the details of the investigation that led to his indictment are not public. (Lawyers for five others indicted with Chan declined to comment.)

But a 2011 bust of two of Chan's associates and search warrants served last year reveal how his gang allegedly operated.

Anybody who's watched The Wire or crime movies knows how cops often attack drug rings—they grab low-level dealers and roll up the chain of command.

Busting grow houses doesn't work that way. Instead of info from street dealers, the best intelligence usually comes from one of the most law-abiding organizations in town, Portland General Electric.

"A lot of times utilities provide a tip," Deits says. "PGE investigators will call the police and say, 'We see a diversion.'"

When cops raided one of Chan's grow houses on Southeast 118th Drive in August 2011, they said the house had been using thousands of dollars of electricity each month—for free.

Stealing electricity is a risky proposition. Trying to tap into the high-voltage lines on residential streets carries the risk of electrocution or fire.

Ryan Lufkin, a Multnomah County deputy district attorney who prosecuted those arrested at Chan's house on Southeast 118th Drive, says investigators believe there is a rogue electrician who serves grow houses, using his training to connect grow houses to the high-voltage wires.

Indoor grows require lots of electricity. Chinese growers tear out interior walls, clear all furniture and turn homes into giant greenhouses. They then hook up electricity for continuous lighting, irrigation and drying of marijuana. By tapping electricity before it goes through the household meter, the growers can hide their usage from PGE.

The utility's investigators monitor homes and businesses for unusual consumption, and indoor growers want to avoid that scrutiny.

Thieves steal nearly $1 million in electricity annually from PGE, says company spokesman Steve Corson. Corson does not know how much of that is stolen by marijuana farmers, but he says the amount is substantial.

"We've seen a definite trend in terms of growing operations moving indoors," Corson says. "A large grow operation can steal between $1,000 and $2,500 a month."

Stealing power was in some ways the riskiest part of Chan's operation.

WW interviewed neighbors near grow houses on Southeast 115th and 84th avenues. Fearing retaliation, they spoke on background but said neither house raised much suspicion.

A 2,640-square-foot grow house with a large garage on Southeast 115th Avenue in the Powellhurst-Gilbert neighborhood is tucked away on a flag-shaped lot and surrounded by a high fence.

Ironically, in front of the home is an Oxford House, for those in recovery from alcoholism and drug addiction. After a Chan underling bought the house in foreclosure in 2010, a Chinese man moved in.

Neighbors say a van stopped by periodically, and people walking in the park behind the house detected the smell of marijuana. But other than the fact that the lights never went off, it was difficult to tell if anyone lived there.

Chan's grow house on Southeast 84th Avenue in Lents has less privacy and is smaller—cops seized only 486 plants there, one-third of the total seized at the Southeast 115th Avenue house. A neighbor says an Asian woman appeared to live there by herself, only venturing outside for an occasional cigarette. The woman also received regular visits from a van driver.

Neighbors near two of Chan's grow houses say the first time they were aware something extraordinary was happening was when several PGE trucks showed up to work on the power lines.

"I came home one day and couldn't get through the street because there were so many PGE trucks," says an 84th Avenue neighbor.

Chan's gang operated as a tightly controlled cell. Records show Chan's wife, son and nephew were involved, along with other accomplices who were closely connected. (Chan's son, Evan, declined to comment. Chan's wife could not be reached.)

The Portland Police Bureau and local federal law enforcement agencies employ few Chinese-speaking investigators. And like other immigrant groups, prosecutors say, members of Portland's Chinese community are reluctant to speak to police.

Chan's group used prepaid cellphones that don't require identification for activation, court records show. That makes wiretapping difficult.

Despite the language and cultural barriers to investigating Chinese growers, prosecutors say there is one officer with extraordinary expertise in Chinese grow operations.

"The cop who did a ton of these investigations is Scott McCollister," Lufkin says. "He knows everything there is to know about them."

Today, prosecutors admire McCollister for his skillful investigations. A decade ago he was infamous for fatally shooting Kendra James, an unarmed black woman.

To take down Chan's operation, McCollister, who declined to be interviewed for this story, and his colleagues pulled together bank records, decoded convoluted property transactions and figured out where all the marijuana and money was going.

"These cases are very complex," Lufkin says. "Everybody has a specific role, and it's very organized."

All Sunny Chan needed to become a big-league marijuana grower was people and property.

It appears his enterprise began during the 2008 recession, when unemployment was high and home prices were low.

The crew he assembled often met after hours, records show, at Chan's restaurant, Chinese Garden. Chan even told one associate, his nephew Yau Yee "Fat Boy" Ma, to sponsor the immigration of a man named Chan Wen Chao to work at Yau's restaurant, Yummy Garden. (It is unclear when Chan came to the United States. Court records show he married his wife in Portland in 1983.)

Wen Chao's real function, according to a federal search warrant, was to serve as a straw buyer for one of Chan's grow houses.

Investigators found that Wen Chao presented falsified bank statements to a title company to prove he could afford a house, when in fact the real buyers were Chan and his wife.

The purpose of the deception: "To conceal Sunny's involvement in the illegal [marijuana] manufacturing activity taking place at the residence," the search warrant alleges.

The real-estate transactions provided Chan an opportunity to launder some of the cash his operation was allegedly generating. He bought at least three houses, paying more than $500,000 in cash.

Chan's marijuana business made a lot of money. A woman arrested for her role in tending plants told police she got paid 10 percent of the proceeds from the Lents house each month. Her monthly payments were $6,000 to $7,000 during 2012, which suggests that grow house—Chan's smallest—was netting $60,000 to $70,000 a month.

None of the legal titles to Chan's grow houses was in his name, at least initially. But when the cops started moving in, he flipped at least one back into his name to protect his business.

Chan bought the Lents house in 2009. Less than a month later, he sold it to an associate named Jian Pan Su.

In March 2011, police stopped Jian after he left a suspected marijuana grow house in Ridgefield, Wash.

That same day, Jian gave the Portland house back to Chan for free, which a search warrant describes as "an attempt by Jian to avoid discovery of the marijuana-growing operation inside the 84th Avenue residence."

Bank records showed that Chan controlled accounts in other states, such as Georgia, where money would be deposited and transferred back to Portland. In the 2011 bust, investigators found stacks of boxes for mailing marijuana elsewhere.

"The joke in law enforcement is that the U.S. Postal Service is the biggest drug dealer in the country," Deits says.

For all the sophistication of Chan's operation, his crew made some silly mistakes.

Although Chan went to great lengths to disguise his property transactions, Multnomah County property records show that his wife, Suzi, paid the 2012 property taxes for three homes held in other people's names.

Suzi Chan also figured in one of the unintentionally comedic events of the downfall of her husband's gang.

After the 2011 bust, she went downtown to bail out one of the growers, a man named De Bin Zhen, who had been arrested for growing marijuana.

"Suzi provided $10,000 cash in an attempt to bail out De Bin," according to court documents. "The money was seized following an alert from a narcotics-detection canine, which [was] alerted to the presence of a narcotic odor on the money."

De Bin did not fare any better in the judicial system. Lufkin, the state prosecutor, says Chinese growers usually plead guilty because such cases typically include overwhelming evidence of guilt and carry light sentences.

At the house where De Bin was arrested, officers seized 1,053 marijuana plants and 490 marijuana clones, which are fast-growing cuttings from mother plants.

"The guy's defense was, he did not know what marijuana was," says Lufkin, who prosecuted De Bin. "That did not go over very well in court."

The 2011 arrest and subsequent conviction of De Bin and another grower were just the first step in officials' pursuit of Chan.

To make a federal case against Chan, investigators pored over financial and property records to establish the interstate distribution and money-laundering aspects of the case.

After seizing evidence from Chan's grow houses, investigators had one final search warrant to serve.

They wanted the records kept by the real-estate agent who'd worked for Chan in at least three transactions.

That agent is a woman named Xiao Tang, and her realty firm shares space on Southeast 82nd Avenue with Bamboo Mortgage, Jeff Zoria's company. (There's no indication either of them was involved Chan's drug ring.) 

Ironically, Zoria was desperate for the   authorities to bust the Chinese gambling operation in his building.

"The gamblers are chain smokers and they were destroying my health," Zoria says.

Throughout the first half of 2013, Zoria sent emails and letters to the Portland Police Bureau's drugs and vice division, Portland Fire & Rescue, Multnomah County's smoking-prevention program and even the city agency that licenses social-gambling operations.

During the spring and summer, a drugs and vice cop stopped by, as did a fire inspector and the city's gambling-license regulator. A county code inspector even visited six times. But nothing changed.

Then, on Oct. 10, police and federal agents raided Zoria's office, seizing Xiao Tang's computer and records related to Sunny Chan.

Zoria says he sat in his office dumbfounded when officers served their search warrant.

"I've been complaining to the police about the gambling for a long time," he says. "Then they came in like storm troopers for something else."

Today, Zoria says his lungs are clear. Instead of tobacco smoke, the sugary smell of charred meat from New Wing Wa BBQ King, on the floor below, wafts through his office.

In January, the Chinese gambling club in his building closed. Some of the gamblers have been arrested. Chan is gone, holing up in China.

His associates are pleading guilty one by one. His wife filed for divorce in December—perhaps in an attempt to preserve assets, because she's said to be with Chan in China.

Although Oregon is hurtling toward marijuana legalization, prosecutors say there will be plenty of people eager to take Chan's place.

Even if Oregon legalizes marijuana later this year, many states are far from such a decision, which means demand for Oregon weed will remain strong.

In Colorado, where legalization went into effect last month, prices have gone up, not down.

Holcomb, the Washington ACLU drug policy director and a former criminal defense lawyer, says demand will keep the Sunny Chans of the world busy. And "whack-a-mole" justice will continue.

“We think the legal price will track the black-market price,” Holcomb says. “There’s still plenty of money to be made.” 

Willamette Week's journalism is funded, in part, by our readers. Your help supports local, independent journalism that informs, educates, and engages our community. Become a WW supporter.