News broke of Allied Wallet executives being indicted on criminal charges last Friday.
At the time I was unable to access what I believed was a sealed indictment.
Sure enough a sealed indictment was filed on August 25th. Pending the arrest of three of the suspects, all of which were US-based, the DOJ requested the indictment be sealed.
The arrests went down on August 26th, prompting the unsealing of the case and access to the original indictment.
Today we go over the indictments of Allied Wallet defendants Ahmad Khawaja, Mohammed Diab, Amy Rountree and Thomas Wells.
The August 25th indictment was returned in the District of Massachusetts.
Allegations detailed in the indictment pertain to operation of Allied Wallet, of which Ahmad “Andy” Khawaja (right) is both owner and CEO of.
- Mohammed “Moe” Diab, a resident of California, is Allied Wallet’s Chief Operation Officer
- Amy Ringler Rountree, a resident of Utah, is Allied Wallet’s Vice President of Operations
- Thomas Wells, a resident of Florida, owns Priority Payout, a reseller of Allied Wallet’s services
Other parties named in the indictment (but who are not subject to indictment themselves), include
- Payvision, a Netherlands company Allied Wallet relied on to acquire payment processing services;
- WireCard AG, a German company Allied Wallet relied on to acquire payment processing services;
- an unnamed resident of Sweden who resold Allied Wallet’s services to online gaming businesses;
- Rudy Dekermenjian, a Californian attorney who serves as Allied Wallet’s general counsel;
- Fifth Third Bank, an Ohio financial institution used to settle merchant processing transactions for Allied Wallet through Vantiv Inc;
- Vantiv Inc, an Ohio based firm that Allied Wallet relied on to acquire payment processing services; and
- an unnamed merchant client operating a student debt consolidation business that utilized Allied Wallet’s services through Vantiv Inc.
The indictment alleges Khawaja, Diab, Rountree, Wells and several of the parties above
engage(d) in a scheme to defraud several Acquirers, Issuers, Service Providers, and Card Brands of money and property by fraudulently inducing them to provide payment processing services to merchants
(i) engaged in prohibited or high risk transactions; and
(ii) 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 DOJ alleges this scheme saw Allied Wallet obtain “more than $150 million in payment card processing through more than 100 sham merchants”.
The sham merchants set up to defraud financial institutions were
non-existent businesses that purported to sell home decor, kitchen supplies, musical instruments, and other retail products with low risk of chargebacks and fraud.
Allied Wallet and its executives went so far as to create fake websites that corresponded with the fake businesses they were acquiring processing services through.
These websites, referred to as “transaction laundering websites”
typically did not process transactions but existed only to conceal the true merchants’ prohibited and high risk transactions.
Not surprisingly, Allied Wallet’s jurisdiction of choice for setting up fake companies was the UK.
(Allied Wallet) Incorporated shell companies, most often in the United Kingdom.
The shell companies used nominee directors, rented mailing addresses … and generic names that backstopped the sham merchants’ names on the merchant applications and transaction laundering websites.
BehindMLM has repeatedly slammed the UK as a scam-friendly incorporation jurisdiction with no regulation to speak of.
To this day UK authorities allow scammers to set up fraudulent shell companies with no oversight, no effort minimal cost and no repercussions.
It’s worth noting that any time you see a dodgy MLM company aligning itself with an otherwise reputable finance company (MasterCard is a favorite for some reason), these services are always obtained through dodgy shell companies (set up in the UK or elsewhere).
To mask the actual merchants they were providing payment processing services to, Allied Wallet
- selected retail business merchant category codes for the shell companies they set up;
- structured shell companies so as to avoid payment of higher fees;
- used call centers that Thomas Wells owned to provide contact details for set up shell companies;
- instructed call center staff not to reveal the true merchant’s names if a service provider called regarding a chargeback or fraud allegation;
- distributed processing across multiple shell companies to “avoid chargeback and transaction thresholds that would trigger potential fines … and to subvert monitoring and compliance programs”; and
- lied to service providers if they uncovered the nature of the transactions being pushed through Allied Wallet’s shell companies.
The indictment details examples of fraud through Allied Wallet’s servicing of payday pending, debt collection, online gambling, prescription drugs and controlled substances.
In one example, Wirecard, a financial services company,
instructed Allied Wallet to terminate a sham merchant purporting to sell phone cards but that Wirecard suspected of being a front for online gambling.
Diab emailed Allied Wallet’s fake due-diligence for the Sham Merchant to Wirecard, promising to terminate all phone card merchants.
In response only to Diab, Khawaja wrote: “Good one :)”
On the same day that Wirecard instructed Allied Wallet to terminate (the) sham merchant, Diab emailed Wells and Khawaja requesting a new transaction laundering website for a new sham merchant.
In another example related to prescription drugs,
after Payvision alerted Allied Wallet that it suspected a retail jewelry merchant of being a front for online gambling in Turkey and Japan, Rountree shared Payvision’s suspicions verbatim with (an Allied Wallet) reseller, Diab, and others.
(She then) counseled them to create a new transaction laundering website “with a business that makes sense for the number of times customers are being charged as well as avoiding all other concerns the bank is having … That is why we gave you all the bank’s comments.
We don’t normally do that. Take their notes, come up with another (sham) website that will fit better.”
Unfortunately there are no MLM examples provided.
There are plenty more MLM companies Allied Wallet serviced. Typically we don’t list payment processors in our reviews however unless there’s related regulatory litigation.
To demonstrate profit as a motivating factor for fraud, the DOJ provides one email sent by Diab to Rudy Dekermenjian.
The email pertained to a student loan debt reduction business, specifically how much to charge them.
On that Diab instructed Dekermenjian;
You must remember, they can’t find homes, that’s why they need us. So sell them high and make money.
Based on the evidence submitted, a Grandy Jury indicted
- Khawaja, Diab, Rountree and Wells on one count of conspiracy to commit wire fraud; and
- Diab and Rountree on one count of conspiracy to commit bank fraud.
The DOJ is seeking forfeiture against all four defendants.
Diab Rountree and Wells were all arrested in the US on August 26th.
Ahmad “Andy” Khawaja remains a fugitive in hiding. He has been wanted by US authorities following a prior unrelated indictment in 2019.
Khawaja is married to a Lithuanian national. The DOJ believe Khawaja is hiding in Lithuania.
In September 2020 it emerged Khawaja, who is married to a Lithuanian national, had been picked up by Lithuanian authorities on an international arrest warrant.
The outcome or status of Khawaja’s extradition proceedings in Lithuania are unclear. I couldn’t find any followup information.
Khawaja’s current status remains unknown.