The Most Successful Freon Salesman Ever 

The feds claim Mark Kesel's Hayward business kept the state's speed factories awash in their favorite solvent. Kesel says they're just out to get him 'cause he's Russian.

In a small office just off Solano Avenue in Albany, Mark Kesel smokes light cigarettes one after the other in the European manner, covering the bottom of his face with the palm of his hand while taking long, deep drags. Kesel has only recently returned to the nasty habit. He was born in Ukraine and came to the United States in 1978, where he's since become a successful East Bay entrepreneur. After he got married and had a child, he took on a healthier lifestyle. But in December 2000, the federal government indicted Kesel and several others, claiming the businessman and his Hayward company, All Discount Laboratory Supplies, knowingly sold freon to shady customers -- customers who later used the refrigerant as a solvent for making gargantuan amounts of methamphetamine. Out came the smokes.

In all, the government believes Mark Kesel pocketed nearly $13 million in illegal freon sales in just three and a half years. The astonishing payoff makes him either the greatest individual freon salesman in the history of the state or, by the government's estimation, an illegitimate schemer of Tony Soprano-like proportions. At the height of his success, one Drug Enforcement Administration agent claims Kesel was selling so much of the refrigerant that if you snorted a line of speed anywhere in California between 1997 and 2000 -- and if its manufacturer used freon in the process -- there's a "90 percent chance" Kesel's product was involved.

On a rainy morning that has suddenly turned into a hot afternoon, Kesel looks more like the yuppified East Bay father he is, dressed down in jeans, a buttoned stretch shirt, black loafers, and a stylish green raincoat. He continues to run his company and work on new business prospects while awaiting trial. His office is cluttered with stacks of manila files, large operating manuals, and unframed canvas paintings -- many of which he commissioned from local artists -- ranging from pedestrian still-lifes to wild abstracts.

Buried in the corner there's a "Socialist's Pledge," a souvenir poster removed from an office wall in his homeland. Sliding out from behind his desk, Kesel playfully shows it off. "Me and my Russian friends like to read this and get a good laugh," he says, running his fingers along the lines of Cyrillic figures. "It says, 'I pledge to make the culture,' how would you say ... 'cleaner'? 'And more,' more ... 'beautiful'? 'Cleaner and more beautiful.'" He offers a big smile. "'I pledge to make the culture cleaner and more beautiful.'"

Returning the poster to its corner, Kesel recalls with disdain how he was forced as a boy to recite allegiances aloud to the Soviet regime, and lived in fear of the consequences if he disobeyed. Once in America, he felt relieved, freed of such burdens. Since his arrest, though, his perspective has changed. He no longer has faith in the United States government. Despite the six volumes of files at the Oakland federal courthouse arguing for his guilt, Kesel adamantly denies the numerous and detailed allegations. If he's guilty of anything, he says, it's of becoming a damn good businessman who raked in big profits when the market was hot -- and since when has that kind of behavior been illegal in America?

The only reason he's speaking out now, he says, is to try and clear his name and take a stand against what he considers an ethnically motivated persecution. In Kesel's view, his nationality works against him, like some invisible piece of evidence, comparable to the silent way it worked against suspected Los Alamos spy Wen Ho Lee. Kesel's Russian roots have somehow made him, instantly, a suspect in a greater evil. "I believe that the fact that the owners of ADLS are of Russian origin has become convenient for federal and state authorities," he says. "With one shot, they believe they deal a blow to a drug ring and Russian mafia."

Kesel, who has hired counterculture celebrity attorney Tony Serra to defend him, quickly dismisses any notion that he's a member of a Russian mob. In fact, he questions whether one exists at all. Too many Russian families were broken up during the regime, and it frayed loyalties, he says; Russians couldn't support an organized hierarchy. "Any adult who looks at the facts of this case will be outraged," the businessman declares. "They will be ashamed of what this government is doing."

Kesel says he got into wholesale chemicals on a lark in 1995, when an old friend asked him to invest in her new business. Before then, he'd worked a variety of jobs, including stints as a painting contractor, an electronic engineer, and a stockbroker. By the time his friend called, he was already busy owning and managing a Berkeley apartment building and developing a new technology start-up in Santa Clara. He wasn't interested in chemicals, but just for politeness' sake, he asked his friend for a detailed business plan. And then, Kesel says, he saw the profit potential -- and he couldn't refuse.

It turned out to be a great time to sell Freon. In 1996, the federal government banned DuPont's trademarked chemical, citing its ozone-depleting effects. The crackdown created an immediate shortage, which manufacturers of generic refrigerants rushed to fill with modified versions of the original. But even these were in short supply, and the price of freon -- lowercase "f" -- skyrocketed from $5 to $130 per gallon. For crank producers who'd long enjoyed the solvent on the cheap, the outrageous expense was still worth it: The liquid efficiently separated methamphetamine oil from the chemicals used to make it, and it was barely flammable -- a key consideration, lab fires being the primary occupational hazard.

One of the first things Kesel learned about his new venture was that it was regulated closely by a slew of government agencies including the DEA, the US Environmental Protection Agency, and California's Bureau of Narcotic Enforcement. In the early '90s, as meth production flourished throughout the state, authorities grew frustrated raiding clandestine laboratories, arriving only in time to clean up the mess. Instead, they retrained their efforts on potential sources of the speedy drug's ingredients: wholesale chemical companies such as All Discount Laboratory Supplies.

The state Bureau of Narcotic Enforcement created the Precursor Compliance Program to keep a close eye on Kesel's industry. The program required vendors to meticulously invoice sales of particular chemicals and collect personal information on the buyers. Clients were asked to fill out forms citing their intended use for the product, and provide a photo ID and vehicle license plate numbers. Any sale of more than $100 was reviewed by DEA auditors, and any "suspicious sales" -- combination purchases that suggested illegal intentions -- had to be reported via a special DEA hotline and called off immediately at the register.

Red phosphorus and other chemicals popular with drug makers could only be sold in small quantities, and then only once per month per customer. Others, like freon, weren't limited in quantity, but buyers now had to produce a special EPA certificate vouching for the buyer's legitimacy. If all that wasn't enough, an auditor from the narcotics bureau and a DEA agent visited Kesel's company weekly to peruse the books and discuss new drug laws. By the letter of the law, Kesel and his employees were forbidden to sell listed chemicals "knowing, intending, or having reasonable cause to believe" that they'd be used to manufacture a controlled substance.

The state's new program immediately bore fruit. In 1997 two Oakland companies, Chemicals for Research & Industry and Custom Lab, were shut down after failing to comply with the reporting rules. Their customers promptly turned south, to Kesel's Hayward warehouse, for their supplies. The same year, state narcs notified Kesel that red phosphorus containers with ADLS markings had turned up at a raided megalab in San Bernadino County. In response, Kesel says he immediately set up new rules in his shop: He stopped selling red phosphorus altogether; began requiring two forms of identification from customers, not just one; created his own "Do Not Sell To" list of suspicious customers; and let DEA agents know when their clumsy surveillance efforts outside the building drew attention from his clientele. The businessman argues that his diligence went far beyond the government's requests.

Regardless of the strict measures, Kesel's business didn't suffer. In 1997, according to court documents, ADLS sold 63,856 pounds of freon -- nearly $1 million worth.


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