A 51-year-old Oklahoma City real estate broker pleaded guilty on Sunday to a federal drug conspiracy charge, telling a federal judge that he helped run an alleged scheme that let out-of-state investors control Oklahoma medical marijuana grows through fake local ownership. Chong Iu Phu’s admission in Oklahoma City federal court also implicated his co-defendant, a politically connected attorney who once advised Gov. Kevin Stitt during the pandemic.
According to The Oklahoman, Phu’s guilty plea directly points to Matthew Alan Stacy, the attorney named as his co-defendant in the case. Stacy is the same lawyer who spent part of the pandemic advising the governor’s office, a background that has made the criminal case unusually sensitive in Oklahoma political circles.
A Pandemic Adviser With No Medical Background
Stacy, a lieutenant colonel in the Oklahoma Army National Guard and a decorated veteran, served as an adviser to Stitt on a hospital surge plan, sat on the governor’s COVID-19 response team, and held a seat on the Governor’s Council on Science and Innovation, according to Business Insider. He was appointed to help coordinate the state’s pandemic surge response despite having no medical background, the outlet reported.
Federal prosecutors unsealed an eight-count indictment against Stacy, Phu and a third defendant, Chanh Iu Phu, in April 2024, charging all three with drug conspiracy and maintaining drug-involved premises tied to an alleged ghost licensing scheme running from August 2019 to March 2023, according to the U.S. Attorney’s Office for the Western District of Oklahoma. Oklahoma law requires commercial marijuana grow businesses to be at least 75% owned by state residents to hold a license through the Oklahoma Medical Marijuana Authority, a rule enacted after voters legalized medical marijuana in 2018 that prosecutors say the scheme was designed to dodge.
How the Alleged Scheme Worked
State court affidavits described a lucrative arrangement on both ends of the alleged network, per Cannabis Law Report. Out-of-state marijuana operators allegedly paid Stacy up to $60,000 per business setup, while Oklahoma residents recruited to lend their names to license applications as ghost owners received around $5,000 a year per license, the outlet reported.
State Prosecutors Moved First
Stacy’s legal troubles began well before the federal case landed. A multi-county Oklahoma grand jury indicted him on state felony counts in late 2022 in Garvin County District Court, and Attorney General Gentner Drummond announced in February 2023 that his office would take over the prosecution from local county prosecutors, according to the Oklahoma Attorney General’s Office. State affidavits alleged Stacy served as registered agent for more than 300 limited liability companies…