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A mere eight months ago, Rosa Cazares and Aaron Mitchell were the toast of the Democratic Party of Oregon.
They could be found playing pickleball alongside then-gubernatorial candidate Tina Kotek—photos show the governor-to-be giggling at Mitchell’s jokes. Two months later, in October, U.S. Sen. Jeff Merkley smiled at Cazares as she spoke into a mic at a black-tie gala she co-hosted for Kotek on the cusp of her victory.
The young couple formed a particularly close friendship with Shemia Fagan, the Oregon secretary of state and a rising Democratic Party star. They held two champagne-fueled fundraisers for her at a West Hills mansion.
Fast forward seven months later to the week of June 7, and the trio that joined forces three years ago had become the three names listed on subpoenas issued to five state agencies by the U.S. Attorney for Oregon. The feds are seeking correspondence between Fagan and the couple, the couple’s income tax returns, and details of Fagan’s spending while in office.
The subpoenas, released by the Oregon Department of Justice last week in response to inquiries by WW and other news organizations, are the latest signal of how far three people who were once among Oregon’s political elite have fallen—and how much further they might still fall.
Portland lawyer Vivek Kothari, a former federal prosecutor, says the subpoenas mark the beginning of a historic investigation that is likely to drag on for months, if not for more than a year.
“I wouldn’t expect this to get resolved anytime soon. There are probably thousands and thousands of pages of documents, and then they have to read them, analyze them, and figure out what the next step is,” says Kothari, a partner with the Markowitz Herbold firm. “This investigation could easily take a year and a half.”
The federal probe follows reporting by WW that revealed the couple’s failure to pay taxes and creditors while contributing to politicians, Fagan’s decision to moonlight as a consultant for their troubled cannabis company La Mota, and how Fagan shaped a state audit of cannabis regulation to please Cazares, her patron. Those revelations forced Fagan to resign from office May 2.
Since WW’s first cover story on Michell and Cazares in March, the couple has kept a low profile. They made one public appearance, on KOIN TV. They said they never intended to do wrong and were unfairly targeted by the media.
For her part, Fagan has all but disappeared from public view since her May 2 resignation. She’s spoken through her attorney since.
But public records, court transcripts, and people close to Democratic Party politics sketch an outline of what the weed entrepreneurs and their former contractor have been up to for the past month.
SHEMIA FAGAN
Fagan’s life was upended April 27, when WW first reported on her lucrative contract with Mitchell and Cazares. She is now the subject of three separate investigations.
The Oregon Government Ethics Commission is expected to present the findings of its investigation focused on Fagan’s contract with La Mota, requested by Gov. Kotek after the scandal broke, at its meeting July 14. The Oregon Department of Justice recently hired a California firm to investigate the secretary of state’s audit of cannabis regulation.
The third investigation is federal. In subpoenas, the U.S. Attorney for Oregon requested wide-ranging records related to Fagan and her ties to Cazares and Mitchell, as well as her conduct during office separate from the couple. In the past month, FBI agents have contacted officials at the Secretary of State’s Office to arrange interviews, several people familiar with the calls tell WW.
While it’s too early to say what charges the feds may be looking to bring against Fagan, Kothari says the Department of Justice “often prosecutes public corruption cases” under the Hobbs Act, a law enacted by Congrees in 1946.
“There’s almost no doubt when those stories came out that there was going to be an investigation,” Kothari says.
Fagan hired attorney David Elkanich to handle a tide of scrutiny. Much of his time has been spent defending her spending of public dollars and campaign funds. He won’t say if he intends to represent her in criminal matters, too.
Meanwhile, the $11,585 in campaign funds at Fagan’s political action committee that she pledged to donate to the Oregon Humane Society over a month ago remains there. Elkanich declined to comment why, nor would he say if Fagan intends to raise a legal defense fund through another PAC, whose paperwork Fagan would have to file with the office she once oversaw.
On April 12, the Democratic Lieutenant Governors Association contributed $25,000 to Fagan’s PAC. The DLGA has given to only two other candidates so far in 2023, amounting to $4,400. Fagan solicited the contribution in the spring, the DLGA says.
Six days later, Fagan reimbursed herself $20,000 from her campaign—an unusually large sum.
A spokesperson says the association is “unaware of any inappropriate use of the political donations by Fagan when the contribution was made.” Fagan’s attorney Elkanich says there was “nothing improper” about the DLGA contribution, which he asserts paid for a Fagan fundraiser, or her subsequent self-reimbursement. (The DLGA disputes Elkanich’s claim that the contribution was made for a fundraiser.)
Despite it all, Fagan has found gainful employment.
She’s once again an employee of Seattle-based HKM Employment Attorneys LLP, where she worked prior to becoming secretary of state in 2021.
“We could not be more thrilled to have Shemia return to HKM. She is one of the most selfless, ethical, and honorable individuals that I have ever met,” says HKM managing partner Daniel Kalish. “I really feel it is HKM’s gain (and Oregon’s loss) that she has returned to our firm.”
Kalish says Fagan will not practice law for the firm until she’s reinstated by a state bar. He would not say which office Fagan would work from—Seattle or Portland. (A spokeswoman for the Oregon State Bar says Fagan’s reinstatement application is in a “holding pattern” until the Ethics Commission’s investigation is completed.)
ROSA CAZARES AND AARON MITCHELL
In the one interview Cazares and Mitchell granted to a television station in April, the two presented a united front. Cazares told KOIN News she and Mitchell now owe less than half a million dollars in taxes to the Oregon Department of Revenue; b-roll footage showed the two paying taxes in cash at department headquarters.
But few of the couple’s problems have been meaningfully remedied, and other cracks have begun to show.
Cazares, Mitchell and companies they control still have outstanding liens from the Internal Revenue Service topping $4 million. Most of those liens were issued to a staffing company controlled by the couple called 503 Staffing. Those liens have not been paid off, according to public records. The liens stretch back to unpaid taxes from 2018 and primarily concern employment taxes.
Mitchell now faces a $15,000 lien in Daytona Beach, Fla., where the former skateboarder grew up and, in the mid-aughts, purchased a number of run-down homes and rented them to low-income families. The liens allege that the city of Daytona Beach has for years paid yard maintenance companies to clear the vacant property, situated in a poor neighborhood, of debris and overgrown weeds. Mitchell, according to the liens, never reimbursed the city.
Cazares and Mitchell appear to be living in separate apartments a mile apart on the westside. It’s unclear whether the two, who share a young daughter, remain a couple. People close to them say their relationship’s been on the rocks for years now.
Cazares, in a recent deposition for an ongoing court case filed by the company she hired to complete their 2021 tax returns, said she and Mitchell were in a romantic relationship.
Other testimony she gave, however, suggested some distance. She said in the deposition that Mitchell was the sole owner of 57 of the couple’s 60 operating companies—including all of their cannabis farms and processing facilities, and most of their dispensaries—and that she had an ownership stake in none. That’s despite claims in a March letter to WW by prominent cannabis lawyer Amy Margolis, who represented the couple for a short time during the newspaper’s coverage, that Cazares was a co-owner of the chain.
The couple faces five open civil cases in Oregon circuit courts.
And in the months since WW first reported on them, Cazares and Mitchell have rotated through a series of legal and political consultants.
Margolis signed on to represent La Mota in three ongoing court battles after WW first wrote about the chain. Weeks later, Margolis was no longer representing the couple in any ongoing litigation. Margolis declined to comment why.
For less than a month, the couple worked with a political consultant named Chris Edmonds. He’s no longer working for them but declined to comment why.
Then John Audley, a well-known lobbyist, applied to work for the couple in Salem. He says he never lobbied on their behalf, but would not answer repeated questions about whether he had placed calls to state lawmakers to talk about La Mota.
“I never met with a legislator to talk about [them], and lobbying is talking about specific policies,” Audley said in a terse phone call. “I call legislators all the time and talk to them about lots of things.” He declined to say what the couple sought from him or who had severed their relationship.
Two of the couple’s Portland dispensaries have shuttered since the March 29 story. But two La Mota dispensaries have opened in New Mexico. A third application there is pending.
Three lawyers from the Portland firm Hart Wagner now represent La Mota in three ongoing cases. But in the couple’s most troublesome case, which laid bare the chain’s sprawling network of operating companies, tax troubles and alleged financial mismanagement, they have been unable to find legal counsel. That case is set for trial in July, and the plaintiff, Michael Larson Consulting, alleges the couple failed to pay more than $150,000 in bills for work done on their 2021 tax returns.
In a recent filing, an attorney briefly appointed to the case through the state bar’s Professional Liability Fund asked the judge to push back the trial so the couple could find counsel.
“Defendants should not be put in a position where they cannot fully and fairly defend themselves,” the attorney wrote.
In response, the attorney for the plaintiff argued the couple was playing victim.
“Defendants are not the helpless victims they portray themselves to be. They are sophisticated manipulators who should not be allowed to manipulate the court,” Bear Wilner-Nugent wrote. “As Oregon and the world have learned due to a drumbeat of recent news reports, these defendants will misuse any extra affordance given to them in the service of their own goals.”
Correction: A previous version of this story said Cazares and Mitchell obtained temporary legal representation from the state’s Client Security Fund. That’s incorrect. They received temporary representation from the state bar’s Professional Liability Fund.