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Duluth could reap financial benefit from Last Place demise

The city of Duluth soon could receive a financial windfall as a result of the downfall of Jim Carlson, the former owner of a local head shop called the Last Place on Earth.

Jim Carlson
Customers line up as Last Place on Earth owner Jim Carlson talks about his experience of being arrested at his store on Superior Street in downtown Duluth in April 2013. (file photo / Duluth News Tribune)
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The city of Duluth soon could receive a financial windfall as a result of the downfall of Jim Carlson, the former owner of a local head shop called the Last Place on Earth.

Wayne Parson, Duluth's chief financial officer, said he was unofficially informed by an Internal Revenue Service representative Monday that the city can expect to receive an estimated $1.15 million as part of an "equitable sharing" settlement with the U.S. Marshal's Office.

That payment represents a portion of the money recovered after Senior U.S. District Judge David Doty issued a $6.5 million forfeiture order for the property and assets of Carlson and his former girlfriend Lava Haugen in 2013. The order resulted in the seizure of cash, bank accounts and property, including vehicles, firearms, the shop and a vacation home in Mexico.

Now that Carlson has exhausted all his legal options to appeal a federal conviction for selling synthetic drugs from his former store at 120 E. Superior St., the funds could flow any day now. But David Montgomery, the city's chief administrative officer, said he's not taking the funding for granted until a check is in his hands.

All indications are that the payment should be in the works now, said City Attorney Gunnar Johnson.

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"It's been kind of stuck in limbo for a long time. Not only were they waiting for the criminal appeals to finally play themselves out, which they have now, but also the U.S. Department of Justice for a while had suspended the equitable sharing program," he said.

That forfeiture distribution program was revived again in March of this year, Johnson noted.

"So it is now ripe for the city of Duluth to get these funds," he said.

In October, the U.S. Supreme Court declined to review Carlson's case, as well as the convictions of his son, Joseph Gellerman, and Haugen. That decision means Carlson must serve out the 17½ year sentence handed down to him in 2013 as a result of his conviction on 51 charges related to the sale of synthetic drugs, unlawful labeling and money laundering.

For their parts, Haugen received a five-year sentence, and Gellerman was placed on probation.

Any funds the city receives from the case will be earmarked to support the Duluth Police Department.

Montgomery said the city has been looking at how to improve its police records system for several years, and that's one possible use for the funds.

"We're looking at a number of different options and alternatives, but we haven't really settled on anything yet," he said.

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Police Chief Mike Tusken referred to the Last Place on Earth as "a tremendous drain on our resources."

He said the business required a security detail to deal with problem customers.

"Within those lines, there were behaviors that were way beyond the social norms. The language was bad. We had people urinating and defecating in public. There were fights. There were disturbances. So essentially anytime he was doing business, plus an hour before and after, we had to have a presence there," Tusken said.

The police received more than 5,000 calls in a single year to the two-block area around the Last Place on Earth, Tusken said, noting that was about equal to the call volume for all the rest of downtown Duluth.

"It brought out tremendously aberrant behaviors that we had never seen before with many other chemicals. Whether that was self-harm or harm to others, there were people getting so sick that they required hospitalization," Tusken said.

Mayor Emily Larson said she considers the pending reimbursement to be well-deserved.

"To me this financial settlement is a recognition of the kind of effort it took for our community to shut this place down. That was not easy, but the community was in step with us every step of the way," she said.

Larson noted that the former head shop has since been renovated and the storefront recently reopened as a new business, Blacklist Artisan Ales.

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She described the scene at an open house for the brewery, saying: "There was so much community pride at Blacklist, because the community feels that we did this together."

"And it was 'we,'" Montgomery interjected. "It was the Greater Downtown Council and the downtown businesses. It was the Chamber. It was the hospitals. It was the ER (emergency room) doctors. It was the city and all of our law partners and public safety partners who were involved. It was very much a collective community effort."

Related Topics: CRIME
Peter Passi covers city government for the Duluth News Tribune. He joined the paper in April 2000, initially as a business reporter but has worked a number of beats through the years.
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