38-year-old Ruben Weigand from the Westerwald has shared a cell with 14 inmates in Santa Ana Prison in Orange County, California, since mid-March. When the pandemic also reached prisons in the US and the first infected people were in Santa Ana, his lawyer asked for bail. He had a report from Weigand’s Heidelberg doctor translated into English, which attested his immunodeficiency.
But the prosecutor had concerns: Weigand is a German citizen and if he escaped, Germany would not simply extradite him to the USA. Weigand also has “substantial assets,” says the prosecutor. Even if the court had withdrawn his German passport, his assets would enable him to leave the country, similar to the fugitive Nissan boss Carlos Ghosn. “We are talking about a group of people who have access and (…) substantial resources, much of which is likely to be offshore,” argues the prosecutor.
The story of Ruben Weigand tells how an unscrupulous payment processor and offshore company can inject drug money into the banking system. The joint research by NewsABC.net and t-online shows: Weigand and his accomplice are said to have concealed transactions worth at least 100 million US dollars (85 million euros) from US banks through European bogus companies. “This is a complex white-collar crime case with multiple files,” states the New York South Court.
Instead of hashish biscuits, cream or sparkling water was billed
Because most US banks don’t want to make payments for marijuana, Weigand and his accomplices are said to have found a solution for an online marijuana shop. Customers can pay for hashish biscuits, cannabis flowers or pre-rolled joints with their credit card, and a face cream or sparkling water is billed to the bank at the end. The case could also lead to another, much larger case of fraud: As the Wall Street Journal reported, the US Department of Justice is examining whether the payment processor, previously unnamed in the files, is about Wirecard.
It took seven lawyers, a doctor from Heidelberg and several friends willing to pay to convince the court of Weigand’s release on bail. As a guarantee, Weigand’s $ 3 million Luxembourg property is being used and an additional $ 470,000 in cash that friends and family have deposited with the court. Three friends of Weigand are particularly committed to his release. Her emails to the judge are also filed in the files. One of the people who is committed to Weigand is Markus Fuchs, then VP Sales Digital Services for Wirecard. “I’ve known Ruben for almost ten years,” he wrote to the judge. The two first met on business, which then turned into a friendship. Fuchs wants to convince the judge that Weigand is a man of principles. Later, when he was released, the Wirecard executive offered to make $ 150,000 available for bail. Fuchs is not the subject of the investigation.
From the Westerwald to the startup in California
Ruben Weigand’s career starts with the best possible prerequisites: After studying business administration in Karlsruhe, he works for the Schäfer group of companies and was elected to the board of the business junior in Westerwald-Lahn in 2009. In the following year he was already leading a management consultancy from Montabaur and subsequently founded other companies for electronic payments. He was temporarily on the board of iPAY International S.A. in Luxembourg, where he has lived since 2014. In the Grand Duchy he set up a company Payment Consultants sarl, which offers support for all aspects of electronic payments.
How he came into contact with the California marijuana startup is still under investigation. The indictment alleges that he and his accomplices were involved in bank fraud along with the marijuana shop and a payment processor from 2016 until at least mid-2019. The online shop, which, according to media reports, is supposed to be about Eaze Technologies from San Francisco, was not allowed to offer credit or debit card payments. While many states allow personal use of cannabis, federal agencies have made the possession and distribution of marijuana illegal. For most banks and credit institutions this is a risky business and for this reason they refuse marijuana transactions.
The successful Californian startup that delivers the green gold to customers’ homes wants to come up with something. The company allegedly relied on external payment processors who worked with Ruben Weigand and his accomplices, according to the indictment. They are said to have founded bogus companies and linked them to offshore bank accounts. The income worth 85 million euros then flowed back through the European front companies to the marijuana seller.
A civil law suit filed by a competitor of Eaze Technologies in 2019 reveals exactly how the obfuscation of payments worked.
A customer in San Francisco ordered cannabis-containing cartridges for his vaporizer from the Eaze Technologies online shop on February 8, 2019. Eaze emailed him the bill for $ 243.4. Below the invoice there is a note in italics: “You will see a debit of $ 243.4 from absolutsoda.com on your bank statement.” Why should a weed order be billed as a CO2 cylinder? If you believe the indictment, absolutsoda.com is one of various fake shops run by bogus companies that are said to have been founded for alleged bank fraud.
In the US files there is a chat log that deals with bogus companies
The FBI also produced its investigation report. A chat protocol between Weigand and two other accomplices should prove his involvement in the establishment of bogus companies:
Accomplice1: (…), Ruben (Weigand) asks about labels
Weigand: We have already discussed that, you just have to confirm. (M) edical-stf.com / 877-975-5510. (M) edical-dsr.com / 877-974-7750
Mittäter2: We bought the domains for both of them (…). Just let me know which ones you want in the end
Weigand: (M) edical-stf.com / 877-975-5510. (M) edical-dsr.com / 877-974-7750. These are already set up at the bank
Like absolutsoda.com, medical-stf.com was also a front company that allegedly disguised the payments for weed. Although the customer’s money went to the marijuana shop, one of these front companies settled the sales with banks – sometimes for sparkling water, dog food or face cream. Weigand and his accomplices allegedly provided the transactions with false codes so that the credit card companies would not notice the marijuana sales and authorize the payments.
The court speaks about a fraud system in which the company is said to have “laundered” transactions. Weigand and his accomplices are said to have lied to the banks on a regular basis and thereby forced them into transactions that would otherwise not be allowed to go through.
When we asked whether Ruben Weigand or Wirecard worked for the company, Eaze did not want to comment. The company has separated from the old payment processor and would cooperate with the authorities, the press officer wrote to us.
FBI agents arrest Weigand on his way to Costa Rica
At the beginning of the year, Weigand and his accomplices were targeted by the US judiciary. Weigand wants to fly from Zurich to Costa Rica via Los Angeles on March 9, 2020. But when he is about to change trains at Los Angeles Airport, FBI agents arrest him and confiscate his cell phones and computer. It took seven months for the court and its lawyers to agree on bail release terms in early October.
His lawyer emphasizes that Ruben Weigand is a successful businessman in Europe who has not caused any financial damage. He pleaded not guilty to the court. After all, the money has not disappeared. So even if there are technical arguments for bank fraud, no losses have occurred in this case. But the prosecutor sees Weigand’s role differently: “Mr. Weigand in particular had the responsibility to help found the bogus companies,” for which he also had the bank accounts set up. The prosecutor believes that the US $ 100 million charge underestimates the actual dimensions of the fraud.
How much Weigand himself should have earned on the alleged scam is a mystery so far. In any case, his expenses are said to have risen sharply after his release. In addition to the generous amount of bail, which his circle of friends co-financed, Weigand had to cover the conditions for his release at his own expense: not only the rent for his apartment in Manhattan, but also private surveillance around the clock. He is only allowed to leave the apartment if he wants to meet his lawyer, he is only allowed to receive visitors with special permission. Here he is to prepare himself for the start of the process at the beginning of next year under constant GPS monitoring. Shortly after his arrest, the prosecution offered a prison sentence of between five and seven years – defense lawyers hope this will be reduced to less than a year.
He has already waived his right to extradition to Germany or Luxembourg.
There is no specific information in the files as to which payment processor Eaze was able to carry out the alleged fraud. One of Weigand’s accomplices, who is also accused, admits that the payments for the marijuana shop also went through a company in Germany. When we asked whether Wirecard had a business relationship with Ruben Weigand or with its consulting firms, the company did not want to comment. Markus Fuchs, then VP Sales Digital Services at Wirecard, who had offered Weigand help with the deposit payment, did not respond to our request until this article was published.