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The U.S. Department of Justice has charged four people in Massachusetts with conspiring to deceive banks and credit card companies into processing more than $150m in credit- and debit-card payments on behalf of merchants involved in prohibited and highly risky businesses, including online gambling, debt collection, debt reduction, prescription drugs and payday lending.
The allegations are contained in an indictment unsealed in Boston. Federal agents arrested three of the four individuals on the same day, the fourth still being on the run.
According to court documents, Ahmad “Andy” Khawaja, 49, of Los Angeles, California, and Thomas Wells, 74, of Martin County, Florida, are charged with conspiracy to commit wire fraud. Mohammad “Moe” Diab, 45, of Glendale, California, and Amy Ringler Rountree, 38, of Logan, Utah, are charged with conspiracy to commit wire fraud and conspiracy to commit bank fraud. Federal agents have arrested Diab, Rountree, and Wells. Khawaja was a fugitive from a federal indictment filed in the District of Columbia in December 2019 that charged him, Diab and others with breaking the laws that govern campaign finance and with obstructing justice.
According to the indictment, executives of Allied Wallet Inc, a payment-processing company headquartered in Los Angeles, secured payment processing for high-risk businesses through fraudulent misrepresentations about merchant clients. Khawaja served as Allied Wallet’s owner and chief executive, Diab served as the chief operating officer and Rountree served as vice president of operations.
Allied Wallet provided services enabling merchant clients to accept debit- and credit-card payments over global electronic payment networks run by card brands such as Visa, Mastercard, American Express and Discover. Allied Wallet served as an intermediary between its merchant clients and financial institutions that were members of the card-brand networks. Wells, through his company Priority Payout, introduced merchant clients seeking payment processing to Allied Wallet.
The indictment alleges that these people and others defrauded several financial institutions, the card brands and others of money and property by fraudulently inducing them to provide payment-processing services to merchants engaged in prohibited or highly risky transactions, and to merchants that payment firms had ejected or "terminated" for fear that they were not complying with the laws that governed fraud, chargeback and other things.
They allegedly did this by misrepresenting the types of transactions that the merchants were processing and the true identities of the merchants. The Justice Department asserts that they met with some success, partly by creating shell companies, designing fake websites that purported to sell low-risk retail and home goods, and using industry-standard codes that miscategorized the true nature of the transactions. They allegedly obtained more than $150m in payment-card processing through more than 100 sham merchants.
