Banking Dive reports on what seems a very light sentence (we think) compared to some of the sentences we’ve recently seen handed out to illegal grow house minders or street dealers around the country.
Equity has a ways to go yet !
- A federal judge sentenced a California businessman Friday to 2½ years in prison for his role as the “mastermind” behind a scheme that duped banks into processing around $150 million in cannabis-related purchases, according to The Wall Street Journal.
- Hamid “Ray” Akhavan and his co-defendant, German e-commerce consultant Ruben Weigand, were convicted in March on one count apiece for conspiracy to commit bank fraud for orchestrating a scheme that involved fake companies, false websites and fake customer service centers, to deceive U.S. banks and credit unions into processing cannabis sales. For his part in the scheme, Weigand received a 15-month prison sentence.
- The case highlights the challenges cannabis industry-serving companies face as banks remain reluctant to associate with a drug that’s still illegal on a federal level.
Akhavan and Weigand, who were working as consultants to marijuana marketplace Eaze Technologies, used the company to disguise cannabis purchases as being for other kinds of goods, such as dog products, diving gear, carbonated drinks, green tea and face creams, prosecutors said.
“Akhavan’s scheme was difficult to detect, elaborate and complex — it involved the use of offshore bank accounts, phony webpages, online tracking pixels, and forwarded customer service phone numbers, which were all designed to conceal the scheme from banks, credit card companies, and law enforcement,” prosecutors wrote to U.S. District Judge Jed S. Rakoff ahead of Friday’s sentencing.
Eaze Technologies cooperated with the government in the case, and its former CEO pleaded guilty to one count of bank fraud conspiracy and testified at trial, according to The Journal.
Meanwhile, two senators are pressuring Senate Banking Committee Chairman Sherrod Brown, D-OH, to hold a hearing for a bill that would create safeguards for banks that choose to service the industry — legislation many cannabis industry proponents and bank trade groups say would encourage more banks to do business with the sector.
“This is not simply a matter of banking. The inability of these state-legal entities to bank their significant cash reserves is an issue of public safety,” Sens. Jeff Merkley, D-OR, and Steve Daines, R-MT, wrote in a letter addressed to both Brown and ranking member Sen. Pat Toomey, R-PA, urging the lawmakers to schedule a markup for the Secure and Fair Enforcement (SAFE) Banking Act.
Because of the majority of banks’ reluctance to open accounts for marijuana-related businesses, the cash-based nature of the industry has made some dispensaries targets of burglary.
“[T]here have been 135 robberies and armed burglaries against cannabis dispensaries in the state since May 2020,” the senators wrote, citing data from the Oregon Liquor Control Commission. “Montana is no exception to this. In Yellowstone County, two medical marijuana dispensaries were burglarized on the same day in March.”
The SAFE Act has been introduced every Congress since 2013 by Rep. Ed Perlmutter, D-CO.
Republicans lawmakers have historically been reluctant to move on cannabis-related legislation, which has generally received broader support from their Democratic counterparts.
Sen. Mike Crapo, R-ID, the former chairman of the Senate Banking Committee, refused to hold a hearing on the SAFE Act after its historic passage in the House in 2019.
With Brown as the committee’s new head, many supporters of the bill have been hopeful the Democratic lawmaker would hold a vote on the legislation.
Brown, however, has said he’s not ready to move on the bill.
“This committee’s been too much about Wall Street and not enough about housing, not enough about rural and urban affairs and people’s everyday economic lives, and that’s my focus,” Brown said in April, according to Cleveland.com. “I will look at this seriously. We’re not ready to move on it.”