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Law360, New York (March 8, 2021, 6:15 PM EST ) A Manhattan jury hearing charges against two men accused of fooling banks into processing $150 million of credit transactions for federally illegal marijuana got back to work Monday after a now-excused juror reported a positive COVID-19 test.
Twelve remaining jurors and an alternate tested negative for the virus in the morning at the Daniel Patrick Moynihan Courthouse before a second week of trial for businessmen Hamid Akhavan and Ruben Weigand began before U.S. District Judge Jed S. Rakoff.
"I'm delighted to hear that you all tested negative. It's rare in life that negative is a good thing," Judge Rakoff said, adding that it would have "broken my heart" had a Thursday coronavirus scare derailed the trial.
A juror was excused that day after reporting a positive test. The juror reported no symptoms and said she had remained physically distanced and masked during her time at the Lower Manhattan courthouse. That left Judge Rakoff to continue the trial in hopes that no transmission had occurred in court.
Akhavan, who goes by Ray, and Weigand allegedly schemed to deprive banks of property rights, tricking them into processing transactions on behalf of Eaze, a San Francisco-based marijuana delivery service, from 2016 until 2019. They deny the allegations, arguing they had no criminal intent.
With last week's virus scare out of the way, the jury heard at length Monday from British businessman Oliver Hargreaves, who began cooperating with prosecutors from the Manhattan U.S. attorney's office soon after he was arrested in 2018 and pled guilty to attempted extortion and other charges.
Testifying in a soft voice, the 42-year-old Hargreaves said Akhavan worked directly with Eaze, while Weigand had extensive contacts with merchant banks including Wirecard AG. They and others worked a complex scheme to create "fraudulent application packs" that allowed Eaze to transact marijuana purchases via credit card without triggering red flags, he said.
Banks generally refuse to handle marijuana transactions because of its federal prohibition even though marijuana is legal in California, where Eaze's business is focused.
"There was a lot of moving parts — an awful lot of moving parts," Hargreaves told the jury.
The group went to so far as to create functioning websites with names like SonicLogistics.com — complete with support staff — to give the appearance of legitimate e-commerce, he said. Eaze allegedly needed those sites, as well as fake product descriptions and dormant "shelf companies" with names like Hot Robots Ltd., to "launder" pot credit transactions via bogus merchant accounts, he said.
Hargreaves, who is on track to face cross-examination beginning Tuesday, is the second cooperating witness to testify against the defendants.
Testifying via an immunity agreement, Eaze executive Michael Tassone earlier told the jury that he acted as a conduit between the defendants, Eaze's weed-growing merchants and bankers to facilitate the allegedly illegal scheme.
In another trial development Monday, prosecutors said their mid-trial production of data from a device belonging to Hargreaves did not occur in "bad faith," after counsel for the defendants asked to have newly disclosed evidence excluded from the trial.
"It appears that the government has permitted Mr. Hargreaves to cherry pick communications, allowing him to decide what evidence to send to the government," a weekend defense motion read.
It was unclear what relief, if any, the defense might win from the incident. Judge Rakoff took limited argument on the matter early in the day but allowed Hargreaves to testify fully during a whole day on the witness stand.
The defense letter also says that, since his arrest, Hargreaves has been allowed "to return to Europe, from where he has continued to assist the government in various investigations, including this one." Hargreaves told the jury he currently lives in the United Kingdom.
Akhavan is represented by William Burck, Christopher Tayback and Sara Clark of Quinn Emanuel Urquhart & Sullivan LLP and Ira Rothken and Jared Smith of the Rothken Law Firm LLP.
Weigand is represented by Michael Gilbert, Shriram Harid, Steven Pellechi and Amy Lesperance of Dechert LLP and by Michael Artan of Michael H. Artan PC.
The government is represented by Nicholas Folly, Tara La Morte and Emily Deininger of the U.S. Attorney's Office for the Southern District of New York.
The case is U.S. v. Weigand, case number 1:20-cr-00188, in the U.S. District Court for the Southern District of New York.
--Editing by Marygrace Murphy.
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