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Convicted Dirt Cheap, Island Smokes owners hold on to most property in jury's decision
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Convicted Dirt Cheap, Island Smokes owners hold on to most property in jury's decision

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The former owners of Lincoln head shops Dirt Cheap and Island Smokes evaded substantial financial losses Wednesday after a jury said they must forfeit only one business bank account to the government.

The same jury convicted Sharon Elder and Allen Peithman of conspiracy to sell misbranded drugs, commit mail fraud, receive illicit profits and structure bank deposits to avoid financial reporting Tuesday.

Individually, Elder was convicted of conspiracy to sell drug paraphernalia and Peithman was convicted of violating his supervised release.

The mother and son were acquitted on eight of the 14 counts they faced, including drug dealing conspiracy and money laundering charges.

Over the three-week trial, prosecutors alleged Peithman and Elder's stores sold packets of potpourri labeled not for human consumption but they knew full well customers were buying the product to smoke it.

But their attorneys alleged the government was playing a game of gotcha and that they were not responsible for what their customers did with the potpourri.

During closing arguments on forfeiture Tuesday, government prosecutors asked jurors to force the forfeiture of all the property listed, including homes Peithman owned, his bank accounts and his mother's cars.

The illicit proceeds from their businesses were tethered to these assets, prosecutors said.

Assistant U.S. Attorney Steven Russell said bank records showed Peithman couldn't have purchased a house near Havelock that he claimed he bought with the proceeds of rare coin sales.

"Mr. Peithman lies when he doesn’t want people to take his stuff,” Assistant U.S. Attorney Steven Russell said.

Russell referred to cross-examination earlier that day when Assistant U.S. Attorney Sara Fullerton wanted Peithman to admit he was hiding assets from the government when probation and pretrial service staff asked him to list all his assets.

He didn't list his $220,000 worth of gold and silver or the more than $250,000 in cash he had in personal safes, she said.

"I don't really trust the government," Peithman replied. "I've been raised not to."

Though he received rent from his mother's businesses, the drug paraphernalia generated little revenue overall, said his attorney, Korey Reiman.

The government's theories relied too much on assumption and not on evidence, he told the jury.

Elder's attorney, Rick Boucher, asked the jury to be generous to the defendants.

The jury deliberated on forfeiture Tuesday afternoon, returned Wednesday and deliberated another two hours before delivering its decision.

The jury ordered the forfeiture of a business account belonging to Elder's company, Cornerstone Plaza, which operated Dirt Cheap. Court documents didn't list how much was in the account.

The jury also said the government can keep the potpourri packets, 45 containers of rolling papers and more than 3,600 water pipes, dugouts and bongs seized during the raid.

The jury declined to forfeit Peithman's house, several of his rental properties, his personal accounts and his mother's cars.

But jurors deadlocked on titles to the land where Dirt Cheap and Island Smokes operated and Peithman's business account. The deadlock leaves the properties in their ownership.

After the verdicts Tuesday, Elder's other son, Don Peithman, called the forfeiture proceedings a scam to leave the two penniless.

On Wednesday, he said he was "glad to finally see some justice dispensed in the Federal District Court of Nebraska."

Elder, 70, faces up to 46 years in prison and Peithman, 38, up to 53 years in prison at their sentencings in June.

Jacie Sanne, a store manager who pleaded guilty to an aiding and abetting distribution charge last year, will be sentenced next month.

Reach the writer at 402-473-2657 or rjohnson@journalstar.com.

On Twitter @LJSRileyJohnson.

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