Former Eaze CEO Facing Bank Fraud Charges

Federal prosecutors will charge the former CEO of cannabis technology and delivery platform Eaze in connection with a case against two businessmen who allegedly duped banks into processing $100 million worth of illegal credit and debit payments, Law360 reports.

Eaze’s former CEO Jim Patterson — who stepped down as CEO in 2019 and later left the company — is expected to plead guilty tomorrow to the undisclosed charges. Notably, Eaze was not charged and a representative said the company has been cooperating with investigators.

The case centers around businessmen Ruben Weigand and Hamid Akhavan, who are accused of conspiracy to commit bank fraud in a “transaction laundering scheme,” Law360 reports, citing court records. The men argued the case against them is invalid because officials have not alleged an intent to harm or steal from banks, and because the money involved was only transferred through banks, not actually acquired from the banks. But in August, U.S. District Judge Jed Rakoff said that argument “borders on the frivolous.”

Their trial is currently set for March 1 in the U.S District Court of the Southern District of New York in what would be the district’s first white-collar criminal trial of the year, according to the report.

Patterson’s charges call to mind a California lawsuit filed in 2019 by Eaze competitor DionyMed, who accused the company of committing bank fraud in order to process customers’ credit and debit card payments. Eaze decried the case — which was later dismissed — and called it an attempt by DionyMed to publicize its subsidiary cannabis delivery platform Chill.

Originally founded as a cannabis delivery app, Eaze announced last year that it would pivot from just a technology platform to a touch-the-plant, retail business model.