Legalization advocates claim that a legal pot market would be a magical thing. Criminal drug dealers would fade away in vampiric agony at the sight of this Libertarian sunrise which would usher in a new dawn of responsible drug use. But in California where there is a legal pot market (the “medical” marijuana industry) organized crime has been taking advantage the legal market and committing other crimes to do so. This is the latest example:

 Federal prosecutors announced 18 indictments Thursday in a pot cultivation and mortgage fraud scheme that purchased homes in Elk Grove and Sacramento and converted them into bustling “grow houses” for tens of thousands of marijuana plants.

Nine people are in custody. Authorities are searching for other indicted suspects who may have fled from the Bay Area to China.

The individuals were charged with orchestrating bogus real estate transactions to buy 51 houses in the Central Valley, then establish indoor pot-growing operations using sophisticated lighting and irrigation and stealing thousands of dollars’ worth of electricity.

“They came into our cookie-cutter residential neighborhoods and created cookie-cutter marijuana factories,” said Gordon Taylor, assistant special agent for the U.S. Drug Enforcement Administration in Sacramento.

The indictments stemmed from the discovery of massive indoor growing operations in 2006 and 2007 in Elk Grove, Sacramento, Stockton, Lathrop, Tracy, Modesto and the Alameda County town of Mountain House.

Three people were indicted on charges of conspiracy to manufacture marijuana, in connection with pot operations at 15 houses in Elk Grove and six in Sacramento.

One suspect in the local grows, Guo Ying “Ivan” Lu, 29, of Milpitas is in custody. Two others, Siming Zhu, 32, and Dennis Hou Huan Yang, 28, both of San Francisco, remain at large.

This crop of indictments follows 17 previous actions in the pot-growing case. Fifteen people pleaded guilty in those earlier indictments and two fled after authorities seized 24,200 marijuana plants from the indoor growing operations. The high-grade pot was worth $96 million and its potency “was the highest we’ve ever seen in this area,” Taylor said.

With the new sealed indictments, authorities said they climbed the ladder of an intricate organized crime operation based in San Francisco.

One of the newly indicted suspects being sought in the case, Dickson Wing Kei Hung, 35, is a real estate agent from San Francisco. He was indicted on charges of marijuana conspiracy and mail fraud for allegedly setting up phony mortgage loans to buy houses for the operations.

Sacramento U.S. Attorney Larry Brown said the scheme began to unravel in late 2006 when neighbors started noticing unkempt lawns and strange activity at houses where no one was living.

[…]

He said Hung and associates recruited “individuals with good credit ratings” to sign mortgage loan applications for homes they never intended to occupy. But he said the loan applications were augmented with bogus employment and exaggerated salary information.

He said some buyers “knew they were being used to grow marijuana. But others had no idea.” None of the people who posed as buyers have been charged to date, O’Briant said.

Many of the grow houses were rigged to steal electricity and at least 52 of the houses are already in foreclosure.What do you medical marijuana users say to that?

Via the Hot Air headlines, where the air is full of pot smoke