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Palmer, who runs Healthy Family Farms, and Stewart also are being prosecuted in Los Angeles in the unlicensed production and sale of raw milk in three counties.
Both defendants have pleaded not guilty to all the criminal charges.
In addition to selling raw milk, Healthy Family Farms is a small poultry farm that raises and slaughters chickens and turkeys for sale at Southern California farmers markets, said Matt Bromund, Palmer's lawyer.
He said Palmer, 51, has two teenage children and thousands of animals for which to care.
Attorneys for the two tried to get their clients out of jail with no bail at the hearing.
Coleman said Palmer hasn't been straightforward with investors by withholding from them her criminal history. She has felony convictions in state and federal court for mortgage fraud.
"She is the primary conspirator in removing money from people under false pretense," Coleman said.
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