Marijuana Company Consultants Get Prison for Defrauding Banks
(Bloomberg) -- Two men convicted of defrauding banks including Citigroup Inc. and Bank of America Corp. into processing more than $150 million in marijuana purchases were ordered to spend more than a year behind bars.
Hamid Akhavan and Ruben Weigand worked as consultants for Eaze Technologies Inc., a San Francisco company that runs a site where customers can order cannabis products from dispensaries. The two were found guilty of bank fraud in March for using shell companies and fake websites to cloak weed sales as shipments of dog food, face creams, green tea, carbonated drinks and diving gear from 2016 to 2019.
Akhavan, 43, of California, the leader of the scheme, was sentenced to spend 2 1/2 years in federal prison and pay a $100,000 fine by U.S. District Judge Jed Rakoff on Friday, while Weigand, 38, of Germany, received 15 months and a $50,000 fine. Both were ordered to pay more than $17.5 million in restitution.
“This massive fraud undermined the fundamental integrity of the U.S. financial system, which relies on banks’ ability to identify the nature of the transactions they process,” Manhattan U.S. Attorney Audrey Strauss said in a statement.
While marijuana has been legalized by states from California to New York, it is still illegal under federal law, which forces many cannabis businesses to operate outside the U.S. financial system. Akhavan and Weigand had argued that the banks were willing to look the other way and knew that customers were using their cards to buy weed.
The case is U.S. v. Weigand, 20-cr-00188, U.S. District Court, Southern District of New York (Manhattan).
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