Payza and Patel Brothers Plead Guilty to Conspiring to Launder Money and Operating an Unlicensed Money Service Business
Defendants Plead Guilty to Laundering More Than $250 Million of Proceeds From Ponzi Schemes and Other Criminal Enterprises
WASHINGTON – Firoz Patel and his brother, Ferhan Patel, the founders and operators of Payza.com, AlertPay.com and Egopay.com, and the company MH Pillars doing business as Payza pled guilty to conspiring to launder money and operating an Internet-based unlicensed money service business that processed more than $250 million in illicit transactions. Firoz Patel also pled guilty to one count of conspiring to launder monetary instruments for charges related to a case out of the Middle District of Tennessee.
The plea, which took place July 17, 2020, in the United States District Court for the District of Columbia, was announced by Acting U.S. Attorney Michael R. Sherwin and Raymond Villanueva, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Washington, D.C.
Firoz Patel, 46, and Ferhan Patel, 39, are Canadian citizens, who operated Payza from offices in Canada. Payza was a money transmitting business, which transferred funds for a fee on behalf of customers across the globe to people within the United States and locations abroad.
As part of the plea, the Patel brothers and MH Pillars, Ltd., agreed to forfeit more than $12.5 million. Firoz Patel admitted to operating a prior money service business, AlertPay, which ignored repeated warnings from state regulators about its unlicensed activities. Firoz Patel transitioned AlertPay into Payza after Firoz Patel was the subject of a Tennessee indictment for laundering narcotics proceeds through AlertPay. The defendants admitted that no substantive changes took place during this rebrand.
Payza had numerous merchants that were “Cyclers” and “MLMs” which the defendants knew to be Ponzi/pyramid schemes. The defendants admitted to sanitizing Payza’s customers list by removing known illegal merchants, before producing that information to third parties requesting customer information. For example, a co-conspirator informed Ferhan Patel in a series of emails that he was looking through the merchant list to remove “any merchants who have gross violations such as adult, gambling, drugs, violence ect. [sic]. And what I think is the tricky part: Identify MLM’s that are set up as obvious illegal Pyramid schemes.” Payza failed to follow its own “Merchant Risk Guideline,” as internal documents revealed specific failures in relation to preventing the taking on/servicing of pyramid and Ponzi schemes.
The defendants further admitted that Payza struggled to maintain relationship with financial institutions, because Payza so frequently was found to have customers engaged in illegal activity. Firoz Patel’s solution to this was to create a new company, Egopay, which took on all of Payza’s high risk customers. Firoz Patel and Ferhan Patel caused an email to be sent to high-risk Payza customers directing them to migrate their accounts to Egopay. Ferhan Patel told Firoz Patel that Egopay was a problem in the U.S. because Egopay collected no customer due diligence data which created “obvious money laundering concerns.” Ferhan Patel further admitted to Firoz Patel that Egopay was classified as a money service business and that it had no know your customer checks in place. In spite of these known money laundering problems, Firoz Patel continued to allow Egopay to operate freely via the Payza platform. Ultimately Egopay was shut down by regulators in Belize, after which Payza began again directly servicing many of Egopay’s customers.
The defendants each admitted that their scheme caused over $250,000,000 to be illegally transmitted and to failing to conduct proper due diligence of their customers. The defendant lastly acknowledged that their actions were done willfully, knowingly, and with the specific intent to violate the law.
The Honorable Ketanji B. Jackson scheduled the sentencing for November 10, 2020.
Further information for victims is available at https://www.justice.gov/usao-dc/victim-witness-assistance/obopay-payza.
This case was investigated by Department of Homeland Security, Immigration and Customs Enforcement, Washington Field Office, with assistance from the D.C. Financial Crimes Task Force. The case was prosecuted by Assistant U.S. Attorneys Zia Faruqui and Arvind Lal and former Assistant U.S. Attorneys Kate Connelly and John Marston, with assistance from Paralegal Specialist C. Rosalind Pressley and former Paralegal Specialist Toni Donato; Victim/Witness Advocates Yvonne Bryant and Tonya Jones; Document Management Analyst Basizette Stribling; Legal Assistant Jessica McCormick; and Thomas Royal and Joshua Ellen from the Litigation Support Section.