By Max Jaeger

Law360 (May 13, 2021, 8:45 PM EDT) -- Federal prosecutors urged a New York judge on Wednesday not to acquit or retry two men convicted of defrauding U.S. banks on behalf of a California marijuana-delivery service, arguing that the government provided more than enough evidence to show the scheme intentionally wronged lending institutions.

The feds vehemently disagreed with Ruben Weigand and Hamid Akhavan's claims that prosecutors provided insufficient evidence that the pair tricked banks when they created shell companies to process marijuana transactions without drawing attention to the federally illegal payments.

"The defendants' arguments strain credibility, are unsupported by the record, and were properly rejected by the jury," the government said in court papers. "Indeed, the basic fact that these transactions were illegal, and that their illegality was concealed, is itself sufficient for a reasonable juror to conclude that the scheme involved material misrepresentations."

"[I]t borders on the absurd to argue that lies going to the nature and legality of transactions the U.S. issuing banks were being asked to approve do not satisfy the essential element requirement," the filing said later.

Weigand and Akhavan were convicted in March on one count each of attempt and conspiracy to commit bank fraud. The pair allegedly created phony businesses to launder $150 million in customer payments to Golden State weed-delivery service Eaze, obscuring from banks that the transactions were for a controlled substance.

While marijuana is legal in California for adults over 21, it remains illegal on the federal level, so financial institutions are unwilling to process related transactions.

Under Weigand and Akhavan's alleged scheme, customer payments to the so-called "Uber of Pot" instead appeared to go to online retailers dealing in diving equipment, pet supplies and other legal goods.

Short of acquittal, the defendants asked U.S. District Judge Jed S. Rakoff for a retrial, arguing that the court admitted prejudicial evidence against them, rejected evidence bolstering their defense, and undercut Akhavan's attorney's credibility with an instruction about materiality.

But the government says the court acted within its discretion when it put time constraints on Akhavan's cross-examination of a Visa risk-management expert who appeared remotely because of COVID-19 concerns.

Prosecutors got 90 minutes on direct examination, while Akhavan's side only got 45 to cross-examine, Akhavan says in a memo supporting the retrial motion. Prosecutors say Akhavan's side asked for 45 minutes and got a little extra, then failed to recall the witness.

Likewise, the government's opposition argues that Judge Rakoff was right to amend jury instructions after Akhavan attorney Christopher Tayback mischaracterized them during his summation.

Prosecutors also backed the judge's decision to exclude as irrelevant portions of Weigand's lengthy post-arrest statement and to disallow a Weigand witness who would have argued that the banks suffered no monetary harm from the scheme. The government noted the court had already found on a motion to dismiss that it did not need to prove financial loss.

Prosecutors had to deal with evidence problems earlier in the case when they revealed on the third day of the trial that they had uncovered new data seized from a cooperator who was expected to testify.

Former Eaze CEO and co-conspirator James Patterson entered a guilty plea in the run-up to the trial and cooperated with the government. Other current and former Eaze workers also were given immunity for their testimony.

Representatives for Akhavan, Weigand and the government did not immediately respond to requests for comment.

Akhavan and Weigand are scheduled to be sentenced June 18.

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.

Akhavan is represented by William Burck, Derek L. Shaffer, Brian McGrail, 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.

Patterson is represented by Emily Schulman of Wilmer Cutler Pickering Hale and Dorr LLP.

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.

--Additional reporting by Pete Brush and Jack Queen. Editing by Peter Rozovsky.

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