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Prosecutors Press Fraud Charges, Alleging Businessmen Tricked Banks Into Processing Cannabis Transactions

By:
Chris Gaetano
Published Date:
Jul 1, 2020
Federal prosecutors have charged two businessmen, plus several unnamed co-conspirators, with laundering cannabis business transactions in order to trick banks into processing cannabis transactions, according to the Wall Street Journal.

While cannabis is legal on a state level in many jurisdictions, such as California where the questionable transactions took place, banks have typically been reluctant to deal with the industry, as the product remains illegal under federal law. As a result, many cannabis industry participants lack access to banking services that other industries take for granted: At the Foundation for Accounting Education's 2018 Cannabis Conference, speaker Matthew A. Karnes, founder and managing partner of GreenWave Advisors LLC, noted that only 14 percent of marijuana businesses have bank accounts.

Prosecutors said that this is what prompted the German businessman, Ruben Weigand, plus another man, Hamid “Ray” Akhavan, to use fake online merchants and businesses to disguise transactions from the cannabis delivery company Eaze, a scheme that allegedly involved working with third-party payment processors to create phony offshore corporations and bank accounts. Beyond that, they are accused of further obscuring the nature of these transactions by "miscoding" them to appear as other products. Prosecutors described the scheme as being linked to a vast criminal network that ultimately tricked banks into processing $100 million worth of transactions. Weigland, apparently, coordinated all the different pieces of this network.

Weigand has pleaded not guilty to the charges; however, given his personal wealth and foreign ties, he has been deemed a flight risk and so remains in custody in California.