Businessman Sentenced to 2½ Years in $150 Million Bank Fraud

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Ray Akhavan was convicted in a scheme to trick financial institutions into processing online marijuana sales

A federal judge sentenced a California businessman to 2½ years in federal prison Friday for orchestrating an international scheme that tricked U.S. banks into processing more than $150 million in marijuana-related purchases.

Hamid “Ray” Akhavan and his co-defendant, German e-commerce consultant Ruben Weigand, were convicted in March on one count apiece of bank-fraud conspiracy, following a trial that underscored the challenges facing the cannabis industry as it seeks a foothold in the mainstream banking system.

Federal prosecutors had described Mr. Akhavan, 43 years old, as the mastermind behind the scheme, which involved disguising the purchase of cannabis products through shell companies, false merchant codes and payment-processing companies around the world. Evidence presented at trial, including by a cooperating witness, showed that the conspirators sought help from defunct German payment giant Wirecard AG and met with a former top executive there.

A bankruptcy administrator for Wirecard didn’t respond to a request for comment.

A lawyer for Mr. Akhavan declined to comment on the sentence.

His lawyers have argued that Mr. Akhavan wasn’t a leader in the scheme and previously said they would seek to have the verdict overturned. They had sought to have him sentenced to time served; Mr. Akhavan has been in custody since he was found to have violated the terms of his release last year.

Mr. Weigand was sentenced Friday to 15 months in prison.

A lawyer for Mr. Weigand didn’t immediately respond to a request for comment. His lawyers had asked U.S. District Judge Jed S. Rakoff to sentence their client to time served. Mr. Weigand had been held in a California city jail for seven months after his March 2020 arrest in the case; Judge Rakoff gave him credit for that time.

The case grew out of efforts by Eaze Technologies Inc., a California-based marijuana marketplace, to expand its business by accepting credit-card payments. While the marijuana purchases in question were legal under state law in Oregon and California, most banks avoid doing business with the industry, citing policy against activities that are illegal under federal law.

Lawyers for the two men had argued at trial that those policies were vague and loosely enforced, and that the banks had routinely turned a blind eye to the transactions because they were lucrative.

Both men faced hefty prison terms under federal sentencing guidelines, which put emphasis on the total amount of the fraud. Their lawyers had argued that the banks didn’t lose money.

Eaze cooperated with the government; a former CEO pleaded guilty to a count of bank-fraud conspiracy and testified at trial.

Courtesy : WSJ

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