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Ridglea Theater seized in federal ‘K2’ crackdown

Posted 9:01am on Friday, Jun. 06, 2014

The Ridglea Theater, the Camp Bowie Boulevard landmark listed on the National Register of Historic Places, is one of a slew of North Texas properties seized in a federal crackdown on a Dallas-based synthetic marijuana operation taken over by the Gas Pipe head shop chain.

Also seized were $2.8 million in cash and investment funds.

The Gas Pipe chain is owned by Jerry Shults, who also owns the Ridglea Theater. Neither he nor Amy Herrig, his daughter and business associate, has been charged with a crime or arrested.

In a complaint filed in federal court Wednesday, prosecutors say employees of Shults’ Gas Pipe on Maple Avenue in Dallas began manufacturing substances known as K2 and Spice in a room there by early 2014 after people working for the original maker, Lawrence Shahwan of Lewisville, were arrested on unrelated charges.

The case was first reported by WFAA/Channel 8.

Shahwan was detained May 4 on charges of conspiring to distribute a banned substance, according to a complaint filed in federal court in Dallas on Thursday. His attorney, Don Mulder, did not return a call seeking comment. An indictment is expected within 30 days, a court document said.

The complaint said a number of residential and commercial properties were seized because prosecutors allege that they were either bought with drug money or used to sell synthetic marijuana under such brand names as Venom, Alien Loose Leaf, WTF, Wolf Pack Rage and Assassin Revenge.

Employees of the Gas Pipe shop next to the Ridglea declined to comment Thursday. A property manager for the complex of buildings, which is also owned by Shults, said he was out of town but didn’t know where. Shults did not respond to a message left on his phone.

Ridglea Theater house manager Richard Van Zandt expressed surprise about the Drug Enforcement Administration raid on the Gas Pipe shop next door on Wednesday, saying Shults was known to be careful not to violate the law. The chain’s Arlington shop was raided the same day, with local police assisting, but both locations were open for business Thursday.

“Jerry was always ahead of the curve,” said Van Zandt, a thickly bearded 65-year-old, no relation to the Fort Worth pioneer family or the late songwriter Townes Van Zandt. “It was my understanding that he sold K2 that was within legal limits.”

Van Zandt said he was unaware that the theater building was listed as seized property.

How it began

According to a May 6 affidavit filed by DEA task force officer Jason Daniels, a key break in the case came Dec. 4 in a routine traffic stop of a Ford pickup in Denton County. A sheriff’s deputy asked the driver whether he could search the pickup. The deputy found 2.7 grams of hashish oil, marijuana residue and items used in cannabis cultivation. The truck was registered to Shahwan.

A further interview provided information about a hydroponic marijuana operation in a metal barn in Whitesboro. Two arrests were made, and both suspects said they worked for Shahwan, who split profits 50/50.

When Shahwan’s brother Rakan was arrested on an outstanding felony warrant on Jan. 4, a receipt for $9,000 worth of butane was found in his BMW’s trunk. Twenty days later, investigators found hydroponic grow lights in a warehouse recently given up by Lawrence Shahwan.

According to the property seizure complaint, Shahwan had agreed in September to supply the Gas Pipe chain with 500,000 3-gram packages of synthetic marijuana at $8 apiece, totaling $4 million.

The packets would fetch up to $32 each at head shops in Texas and New Mexico, it said. The contract required Shahwan to deliver 40,000 packets to Gas Pipe every Tuesday, it said.

At first, Shahwan made the substances with a synthetic cannabinoid commonly called JWH-018 “to produce the hallucinogenic effect in its produce,” according to the complaint.

However, the DEA has banned JWH-018 since March 2011. Shahwan shifted to other synthetic cannabinoids, but many of them were also designated as controlled substances.

To stay ahead of law enforcement agencies, the complaint said, Shahwan would alter the formula by changing the synthetic cannabinoid. With each switch, a member of the ring would be assigned to test the new chemical to determine potency, it said.

But when the key members of his ring were arrested, Shahwan agreed to give “hands-on tutorials” to Shults’ daughter, Herrig, and to two others affiliated with Gas Pipe, the complaint said.

A room at the Maple Avenue shop was remodeled as a Spice lab in late December or early January, it said.

Shults’ past

Shults had minor drug paraphernalia delivery charges dating to the 1980s, but either they were dismissed or he paid small fines, according to a 2012 Star-Telegram profile.

In recent years, his public profile ballooned in a very positive fashion. The colorful owner of head shops in Texas and fly-fishing lodges in Alaska and Chile won support for his campaign, ultimately successful, to save the Ridglea Theater from the wrecking ball.

Bank of America had announced that it was in negotiations to buy the 1950s-era building with the intention of preserving the facade but demolishing the auditorium — where Shults had watched Midnight Cowboy as a returning Vietnam veteran.

Shults outmaneuvered the bank, buying the theater in 2010 and reportedly spending more than $1 million to acquire and remodel it. The next year, the Ridglea was placed on the national registry.

In 2013, Shults was honored for his preservation work by Historic Fort Worth Inc. The same year, he bought the adjoining two-story building, which has a number of shops and offices, including one used by a therapist specializing in substance abuse.

The Ridglea has shied away from bringing back rock music performances, Van Zandt said. The theater earns its keep as the venue of Sunday and Wednesday services for the nondenominational Watermark Church and does special events, he said.

Despite the raids, Shults’ Gas Pipe shops continue to operate because authorities were permitted to seize only items authorized by the court, said Kathy Colvin, spokeswoman for the U.S. attorney’s office in Dallas.

“Due to the fact these search warrants are sealed and this is an ongoing investigation, we are unable to comment about the basis of the investigation and about any evidence discovered during the searches,” she said.

Notable on the long list of assets seized from Shahwan, Shults, and their families and associates are an American Airlines Air Pass, which grants unlimited travel and is valued by the government at $38,000; a 2013 BMW 535i and a Mercedes CLS 863; and a $1.8 million home in Highland Park, which is owned by Shults’ daughter and son-in-law.

The federal court filing explained why the Ridglea Theater was seized, saying that Shults bought it with funds “directly traceable” to “mail fraud and money laundering.” And its remodeling has been underwritten by profits from the manufacturing and distribution of controlled substances, it said.

Staff writer Bill Miller contributed to this report.

Barry Shlachter, 817-390-7718 Twitter: @bshlachter

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