Allied Wallet Case: Two Plead Guilty in $150 Million Bank Fraud Conspiracy Involving High-Risk Payment Processing

tamir
Thu, 15 Aug 2024 09:54:31 +0000
Bank Fraud, Money Laundering, ticker

Two individuals, Mohammad “Moe” Diab and Amy Rountree, have pleaded guilty to their involvement in a massive bank fraud conspiracy that processed over $150 million in credit and debit card payments for merchants engaged in prohibited and high-risk businesses. Diab and Rountree were charged along with co-defendants Thomas Wells and Ahmad “Andy” Khawaja. Wells pleaded guilty to wire fraud conspiracy in October 2021 and is awaiting sentencing. Khawaja is a fugitive.

Key Takeaways:

High-Risk Transactions: The conspiracy involved processing over $150 million in transactions via Los Angeles-based payment processor Allied Wallet for prohibited and high-risk businesses through fraudulent means.

Guilty Pleas: Mohammad Diab and Amy Rountree, both former executives at Allied Wallet, have pleaded guilty to bank fraud conspiracy charges. Thomas Wells, a co-defendant, pleaded guilty to wire fraud conspiracy in 2021, while Rudy Dekermenjian pleaded guilty in 2020 to related charges. Ahmad Khawaja remains a fugitive.

Deceptive Practices: The scheme used shell companies, fake websites, and miscategorized transaction codes to deceive financial institutions and payment card networks.

Penalties: The charge of bank fraud conspiracy carries 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.

This case highlights the ongoing risks in the payment processing industry, particularly involving high-risk businesses and the sophisticated methods used to circumvent regulatory safeguards.

The Case Narrative

Mohammad “Moe” Diab, 48, and Amy Rountree, 41, both former executives at Allied Wallet, Inc., a Los Angeles-based payment processing company, admitted to conspiring to deceive financial institutions into processing transactions that would otherwise have been rejected. They pleaded guilty to one count of bank fraud conspiracy before United States District Judge Nathaniel M. Gorton. Their sentencing hearings are scheduled for November 2024.

Fugitive Allied Wallet founder Andy Khawaja

According to the indictment, Allied Wallet executives secured payment processing for high-risk businesses through fraudulent misrepresentations about merchant clients. Ahmad “Andy” Khawaja, a dual American and Lebanese citizen, served as Allied Wallet’s owner and CEO, Diab as the COO, and Rountree as VP of Operations. The conspiracy involved creating shell companies and fake websites and using deceptive coding practices to disguise the true nature of the transactions, thus tricking banks and payment card networks like Visa, Mastercard, and American Express into processing transactions for high-risk or prohibited merchants.

The scheme operated from 2020 to 2024 and facilitated over $150 million in transactions through over 100 fraudulent merchant accounts. These accounts were created to circumvent fraud detection and compliance checks, allowing merchants previously terminated for fraud or other violations to continue processing payments.

Read our reports on the Allied Wallet case here.

In addition to Diab and Rountree, several other individuals were implicated in the conspiracy:

Ahmad Khawaja remains a fugitive, facing charges not only in this case but also in a separate 2019 indictment for campaign finance violations and obstruction of justice;

Thomas Wells, 77, a co-defendant, pleaded guilty to wire fraud conspiracy in 2021;

Rudy Dekermenjian pleaded guilty in 2020 to related charges.

The charge of bank fraud conspiracy carries a potential sentence of up to 30 years in prison, along with significant fines and restitution obligations.