Four Charged in Alleged $150 Million Payment Processing Scheme

BOSTON – Four individuals have been charged with conspiring to deceive banks into allegedly processing more than $150 million in credit and debit card payments on behalf of merchants involved in prohibited and high-risk businesses, including online gaming, debt collection, debt relief, online pharmaceuticals and payday lending, among others. 

Ahmad “Andy” Khawaja, 49, of Los Angeles, and Thomas Wells, 74, of Martin County, Fla., were charged with wire fraud conspiracy. Mohammad “Moe” Diab, 45, of Glendale, Calif., and Amy Ringler Rountree, 38, of Logan, Utah, were charged with wire fraud conspiracy and bank fraud conspiracy. Diab, Rountree and Wells were arrested today and will appear in federal court in Boston at a later date. Khawaja was charged in a December 2019 indictment along with Diab and others with campaign finance violations and obstruction of justice. Khawaja remains a fugitive.

According to the charging documents, Khawaja was the owner and Chief Executive Officer of Allied Wallet, Inc., a payment processing company headquartered in Los Angeles that served merchants doing business over the internet. Diab served as Chief Operating Officer of Allied Wallet and Rountree was the Vice President of Operations. Allied Wallet obtained for its clients access to services that enabled them to accept debit and credit card payments over global electronic payment networks run by Visa, Mastercard, American Express and Discover, among others (card brands). Allied Wallet served as an intermediary between its merchant clients and financial institutions that were members of the card brand networks (acquirers). Wells, through his company, Priority Payout, introduced merchant clients seeking payment processing to Allied Wallet.

It is alleged that the defendants and others engaged in a scheme to defraud several acquirers, the card brands and others of money and property by fraudulently inducing them to provide payment processing services to merchants engaged in prohibited or high-risk transactions, as well as to merchants that were terminated for fraud, chargeback or other compliance concerns, by knowingly misrepresenting the types of transactions the merchants were processing and the true identities of the merchants. The defendants and their co-conspirators allegedly accomplished the scheme through, among other steps, 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. Through the scheme, it is alleged that the defendants and their co-conspirators fraudulently obtained more than $150 million in payment card processing through more than 100 sham merchants. In furtherance of the scheme, the defendants and their co-conspirators allegedly caused telephone calls and emails to be directed into Massachusetts.

The charge of wire fraud conspiracy provides for a sentence of up to 20 years in prison, three years of supervised release, a fine of $250,000 or twice the gross gain or loss, forfeiture and restitution. The charge of bank fraud conspiracy provides for a sentence of up to 30 years in prison, five years of supervised release, a fine of $1 million or twice the gross gain or loss, forfeiture and restitution. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

Acting United States Attorney Nathaniel R. Mendell; Assistant Attorney General Kenneth A. Polite of the Justice Department’s Criminal Division; Jeffrey Ebersole, Special Agent in Charge of the U.S. Food and Drug Administration, Office of Criminal Investigations, New York Field Office; Joshua McCallister, Acting Inspector in Charge of the U.S. Postal Inspection Service; and Todd M. Lyons, Field Office Director of Enforcement and Removal Operations, U.S. Immigration and Customs Enforcement (ICE), Boston, made the announcement. Assistance was provided by the Food and Drug Administration, Office of Criminal Investigations, Rhode Island Task Force. Assistant U.S. Attorney Seth B. Kosto, Deputy Chief of Mendell’s Securities, Financial & Cyber Fraud Unit, and Trial Attorney Randall Warden of the Criminal Division’s Money Laundering and Asset Recovery Section are prosecuting the case.

The details contained in the charging documents are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.