Gerald “Jerry” Shults and Amy Herrig, joint owners of a chain of head shops called the Gas Pipe, were each sentenced to three years in federal prison on Tuesday for defrauding the federal government.
Federal attorneys argued that the father and daughter owners of the stores, Shults and Herrig, were selling a mislabeled synthetic marijuana product known by some as spice or K2, which was legal at one time by federal standards, but then the laws were changed.
A jury found Shults and his daughter guilty in October 2018 of conspiring to defraud the United States, a federal felony, and not guilty on all other counts, according to the U. S. Attorney’s Office.
Shults and Herrig were indicted along with scores of their employees in 2014 for their alleged roles in a “massive synthetic-drug distribution conspiracy.”
George Milner III, the attorney for Shults, 73, and Herrig, 44, argues that the current laws need to be changed again to something more understandable.
“The law is vague,” Milner said. “Lawmakers should rewrite it so that people can determine what conduct is and what conduct is not prohibited. It’s time for lawmakers to write a clear law. I think what they want to say is that if it gets you high and it’s not alcohol, it’s a crime. But that’s not the law.”
Shults has been ordered to surrender to federal prison officials in early November, Milner said. Herrig will be able to remain free for the next two years, he said. The staggered surrender dates will allow the owners to keep the remaining stores open so that the store employees can keep their jobs, Milner said.
A forfeiture case involving assets valued at more than $16 million was settled, Milner said. Two stores in Austin were sold and some assets were forfeited in order to complete the settlement arrangement, according to Milner.
Prior to trials when fraud convictions were announced, Shults and Herrig faced multiple drug and drug-related charges.
“They are disappointed,” Milner said about Shults’ and Herrig’s moods. “They were hoping for a shorter sentence.”
It could have been worse
Before the not guilty verdict on 11 counts of drug possession and sales charges, Shults was facing a possible sentence of life in prison.
And it was federal time, where most people typically serve most of their sentence.
But the jury found Shults and his daughter guilty on only one minor felony count.
Shults, 73, a former Vietnam veteran who owns the Ridglea Theater in Fort Worth, a string of head shops in Texas and New Mexico called the Gas Pipe, five airplanes, an Alaskan resort and a pleasure craft, could have seen all that fade away.
Shults never did care that much about the money, Milner said.
But the government did, Milner said.
“In my opinion, from day one, this was only about the money,” Milner said. “This thing should have been settled with a cease and desist letter. If they had done it that way, Jerry would have quit. But then they would have never gotten at the money.”
Those prosecuting the case said the jury did good work, after the guilty verdict was announced.
“As always, we respect the jury’s decision,” said Erin Nealy Cox, U.S. Attorney for the Northern District of Texas, in a statement after the guilty verdict. “Following the announcement of the verdict, Mr. Shults and Ms. Herrig left the courtroom as convicted felons ... The jury found that for years, the defendants peddled dangerous synthetic cannabinoids — also known as ‘spice’— as innocuous ‘herbal incense’ products, causing harm to our citizens.”