Four people in the District of Massachusetts were charged with inducing banks and credit card companies to process more than $ 150 million in credit and debit card payments on behalf of merchants involved in prohibited and high-risk transactions, including online Gambling and collections, debt reduction, prescription drugs and payday loans, according to an indictment unsealed in Boston today. Three of the four defendants were arrested today. The fourth defendant has not yet been arrested and is a refugee who is being held on separate federal indictments.
According to court records, Ahmad “Andy” Khawaja, 49, of Los Angeles, California, and Thomas Wells, 74, of Martin County, Florida, are charged with conspiracy to commit wire transfer fraud. Mohammad “Moe” Diab, 45, of Glendale, Calif., And Amy Ringler Rountree, 38, of Logan, Utah, are charged with bank fraud conspiracy and bank fraud conspiracy. Federal agents arrested Diab, Rountree and Wells this morning. They are expected to appear in federal court in Los Angeles, Salt Lake City, Utah, and Chicago, Illinois today or tomorrow. Khawaja is a refugee from a federal indictment filed in the District of Columbia in December 2019 indicting him, Diab, and others of campaign finance violations and obstruction of justice.
According to the indictment, executives at Allied Wallet Inc., a Los Angeles-based payment processing company, secured payment processing for high-risk businesses by fraudulently misrepresenting merchant customers. Khawaja served as the owner and chief executive officer of Allied Wallet, Diab as chief operating officer, and Rountree as vice president of operations. Allied Wallet offered services that enable merchant customers to accept debit and credit card payments over global electronic payment networks operated by card brands such as Visa, Mastercard, American Express and Discover. Allied Wallet acted as an intermediary between its merchant customers and the members of the financial institutions of the card brand networks. Wells introduced Priority Payout to merchant customers looking for payment processing at Allied Wallet.
The indictment alleges that Khawaja, Diab, Rountree, Wells, and others were involved in a system to defraud multiple financial institutions, the card brands, and others of money and property by fraudulently tricking them into providing payment processing services to merchants, those of prohibited or high risk transactions and merchants terminated for fraud, chargebacks, or other compliance concerns through knowingly misrepresenting the types of transactions the merchants were processing and the true identities of the merchants. The defendants and their co-conspirators carried out the plan by, among other things, setting up mailbox companies, creating fake websites purporting to sell low-risk retail and housewares, and using industry-standard codes that incorrectly categorized the true nature of the transactions. Through the program, the defendants and their co-conspirators fraudulently received more than $ 150 million for payment card processing through more than 100 bogus dealers.
This was announced by Assistant Attorney General Kenneth A. Polite Jr. of the Department of Justice’s Criminal Police Department and acting US Attorney Nathaniel R. Mendell of Massachusetts.
The Food and Drug Administration – Office of Criminal Investigations, the US Postal Inspection Service, and the Homeland Security Investigations of the US Immigration and Customs Enforcement are investigating the case.
Trial Attorney Randall Warden of the Department of Money Laundering and Asset Recovery (MLARS) of the Department of Justice and Assistant Attorney General and Assistant Director Seth B. Kosto of the Massachusetts District Attorney’s Securities, Financial and Cyber Fraud Division are pursuing the case .
The MLARS Bank Integrity Department investigates and prosecutes banks and other financial institutions, including their officers, managers and employees, whose actions endanger the integrity of the individual institution or the financial system as a whole.
An indictment is just an accusation and all defendants are presumed innocent until proven beyond doubt in a court of law.