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Federal investigators arrested three individuals Thursday on charges of 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. A fourth individual remains at large.
Two of the individuals — Ahmad “Andy” Khawaja, 49, of Los Angeles and Thomas Wells, 74, of Martin County, Florida — were charged with wire fraud conspiracy.
Two others — Mohammad “Moe” Diab, 45, of Glendale, California, and Amy Ringler Rountree, 38, of Logan, Utah — were charged with wire fraud conspiracy and bank fraud conspiracy.
Diab, Rountree and Wells were arrested Thursday and will appear in federal court in Boston at a later date, investigators said. Khawaja was charged in a December 2019 indictment with campaign finance violations and obstruction of justice. He remains a fugitive.
A 2018 investigation by The Associated Press showed Khawaja’s company helped pornographers, shady debt collectors and offshore gamblers access the international banking system, often by using dummy foreign corporations and fake websites to disguise the underlying business.
The reporting was based on thousands of internal company records obtained by the AP.
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 and Rountree was the vice president of operations, according to the U.S. Attorney’s Office in Massachusetts.
Allied Wallet obtained access to services that enabled them to accept debit and credit card payments over global electronic payment networks run by Visa, Mastercard, American Express, Discover and other cards.
The company served as an intermediary between merchant clients and financial institutions. Wells, through his company, Priority Payout, introduced merchant clients seeking payment processing to Allied Wallet.
Investigators allege the four engaged in a scheme to defraud the card brands and others 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 allegedly created shell companies, designed fake websites that purported to sell low-risk retail and home goods and used industry-standard codes that miscategorized the true nature of the transactions, investigators said, ultimately fraudulently obtaining more than $150 million in payment card processing through more than 100 sham merchants.
The records obtained by The AP showed the company did so while Khawaja, Allied Wallet and top executives contributed at least $6 million to Democratic and Republican candidates and groups. The donations earned Khawaja access to Hillary Clinton during the presidential campaign and a post-election Oval Office visit with Donald Trump.
The charge of wire fraud conspiracy brings with it a sentence of up to 20 years in prison and a fine of $250,000. The charge of bank fraud conspiracy provides for a sentence of up to 30 years in prison and a fine of $1 million.
Khawaja did not return a message sent to his email address at Allied Wallet. A call to Allied Wallet was not answered.
