44 2GM Tuesday July 21 2020 | the times
Business
British shell companies were at the
heart of an alleged $100 million bank
fraud orchestrated by a porn baron with
links to Wirecard, the disgraced Ger-
man payments group.
Hamid “Ray” Akhavan, an American
citizen, is accused by prosecutors in the
United States of devising a “transaction
laundering” network to fool banks into
accepting credit card payments for
marijuana.
An analysis of corporate filings and
other documents by The Times has
uncovered the extent of Mr Akhavan’s
connections to Wirecard via hundreds
of shell companies in London, Essex and
Co Durham. The connections include
pornographic websites owned by com-
panies in Consett, Co Durham, set up by
an entity in which Wirecard executives
were shareholders.
Mr Akhavan, 42, also has links to hun-
dreds more adult sites registered to shell
companies based in Essex, a network
that allegedly amounted to one of Wire-
card’s biggest customers.
Mr Akhavan and his alleged co-con-
spirator Ruben Weigand, 38, a German
citizen, strenuously deny wrongdoing.
The two men have been charged by
the US Department of Justice with
conspiring with unnamed payment
processors and others to avoid restric-
tions in the financial system so that
Eaze, an American company dubbed
the “Uber of pot”, could accept card
transactions for cannabis. Its sale and
use are legal in some form in many
states, but it is illegal at a federal level
and so most banks are unwilling to
process associated payments.
The alleged scam is said to have in-
volved using British and Cypriot shell
companies, along with payment proc-
essors that received unusually high fees,
to disguise the true nature of transac-
tions through “fraudulent merchant
category codes”, codes used by the pay-
ments industry to identify the type of
business being engaged in.
The Wall Street Journal has reported
that prosecutors are examining whether
Wirecard executives were involved in
money laundering in the case. The
former favourite of the financial techno-
logy sector, which entered insolvency
after a huge accounting scandal
emerged, has not been charged and was
not named in court filings.
However, after Mr Weigand was
arrested, Markus Fuchs, a former
vice-president at Wirecard, offered to
put up $150,000 for his bail and
described him as a close friend, court fil-
ings show. Mr Fuchs, 41, is a former di-
rector of an Irish Wirecard subsidiary
and was listed as its sales director for the
UK and Ireland.
Several British shell companies des-
cribed by prosecutors as “phony mer-chants”, allegedly set up to mislead
banks, have a common director, Peter
Adam, an Austrian. These merchants
maintained web pages suggesting that
they were involved in selling legitimate
goods, such as carbonated drinks, face
cream, dog products and diving gear,when they were fronts for processing
money for Eaze, prosecutors claimed.
Mr Adam is listed at Companies House
as having an extraordinary 1,283 direct-
or appointments, only two of which are
still active. Many of the companies were
based at a London address owned byWirecard trail leads to chain of
Virtual London Offices, which provides
a virtual corporate address and services
such as mail forwarding.
The company said that Mr Adam had
never registered with them or paid for
any services and that the police had
attended to look into his activities. He is
alleged to have done the same with
other virtual office providers, an activity
the industry calls “squatting”.
A document seen by The Times
suggests Mr Adam marketed hundreds
of UK shell companies in Germany for
£147 each, advertising them as coming
with a “mailbox, account and card” and
as “liability-free masked companies”.
Many have an “AG” or “Inc” suffix, giv-
ing the misleading impression that they
are German or American entities.
Corporate filings show indirect links
between Mr Adam and an entity called
Deutsche Payment, a company founded
by Alexander Herbst, a former Wire-
card chief financial officer.
Mr Akhavan, a Californian resident,
was arrested by the FBI in March. Cor-
porate filings gave his address as a 9,000
sq ft mansion that sits in 40 acres and is
valued at almost $9 million. He has links
to a network of porn sites that reported-
ly were significant clients of Wirecard,
The Times can reveal.
Until last week, he was listed as a
person of significant control of a UK
company called Optima Merchant Ser-
vices. Its director is Mark Quirk, of Ani-
mo Associates, based at an address in
Wickford, Essex, that is the registered
address for 28 companies linked to 1,200
pornographic websites that the Finan-Shell companies in Britain are linked with claims
of ‘transaction laundering’, reports James Hurley
Smoke and mirrors for cannabis trade
The allegations against
Hamid Akhavan and
Ruben Weigand centre
on how card
transactions were
processed at Eaze, a
California-based start-up
that delivers medical
marijuana to homes
(James Hurley writes).
Its investors include
Silicon Valley venture
capitalists and Snoop
Dogg, the rapper.
Last year, Herban
Industries, owner of
Chill and a rival to Eaze,
alleged in a lawsuit that
Eaze was involved in
defrauding credit and
debit card companies
into accepting payment
for the products. In
claims like those of
American prosecutors,
Herban alleged that
Eaze worked with shell
firms owning fakemerchants that existed
solely to “misrepresent”
the transactions, fooling
banks into thinking that
payments for marijuana
were for such things as
drone components.
Cannabis use
and sales are
legal in
some
form in
most
states,
but it is
illegal
at a
federal
level and
most banks
will not process
associated payments.
Mr Akhavan was
accused of co-ordinat-
ing the alleged scam,
using his “experience of
payment solutions in
gambling and porno-graphy” run via Euro-
pean banks, filings show.
The operation allegedly
was agreed by Eaze,
pharmacies and Mr
Akhavan in California,
with his “purple Lambor-
ghini” parked
outside the
meeting.
The
Herban
Indust-
ries
claim
was
settled
and the
company
no longer
trades.
A spokeswoman
for Eaze said that it was
co-operating with
authorities and had
moved to “supporting
new payment systems
over a year ago”.g p
outside
meet
T
He
In
ri
c
w
se
and
com
nno long
ttttrades.
A spokeswom
fE idthtits arenks
rocess
ed payments.
h