In a significant development, two former executives of the Los Angeles-based payment processing company Allied Wallet have pleaded guilty to their roles in a massive bank fraud conspiracy. The individuals, Mohammad “Moe” Diab and Amy Rountree, were part of a scheme that processed over $150 million in credit and debit card payments for merchants engaged in prohibited and high-risk businesses. This case underscores the intricate methods used to circumvent regulatory safeguards in the payment processing industry.
The Fraudulent Scheme
From 2020 to 2024, Diab, Rountree, and their co-conspirators operated a complex scheme that involved processing high-risk transactions through fraudulent means. The conspiracy was orchestrated under the leadership of Ahmad “Andy” Khawaja, the CEO and owner of Allied Wallet, who remains a fugitive. The group employed deceptive practices, including the creation of shell companies, fake websites, and the use of miscategorized transaction codes, to disguise the true nature of the transactions. These tactics tricked financial institutions and payment card networks, including Visa, Mastercard, and American Express, into processing transactions for businesses that would otherwise have been rejected.
The fraudulent activities facilitated over $150 million in transactions through more than 100 fraudulent merchant accounts. These accounts were specifically created to circumvent fraud detection and compliance checks, allowing merchants previously terminated for fraud or other violations to continue processing payments.
Guilty Pleas and Legal Proceedings
Mohammad Diab, 48, who served as the Chief Operating Officer (COO) of Allied Wallet, and Amy Rountree, 41, the Vice President of Operations, both pleaded guilty to one count of bank fraud conspiracy. Their pleas were entered before United States District Judge Nathaniel M. Gorton, with sentencing hearings scheduled for November 2024. The charge of bank fraud conspiracy carries severe penalties, including up to 30 years in prison, five years of supervised release, a fine of $1 million or twice the gross gain or loss, and potential forfeiture and restitution.
In addition to Diab and Rountree, several other individuals have been implicated in the conspiracy:
- Thomas Wells, 77, another co-defendant, pleaded guilty to wire fraud conspiracy in October 2021 and is awaiting sentencing.
- Rudy Dekermenjian pleaded guilty in 2020 to related charges.
- Ahmad “Andy” Khawaja, the mastermind behind the scheme, remains a fugitive and is also facing charges in a separate 2019 indictment for campaign finance violations and obstruction of justice.
High-Risk Transactions and Regulatory Evasion
The Allied Wallet case highlights the ongoing risks within the payment processing industry, particularly regarding high-risk businesses. The methods employed by Diab, Rountree, and their co-conspirators illustrate the lengths to which some will go to bypass regulatory safeguards designed to protect financial institutions and consumers. The use of shell companies, fraudulent merchant accounts, and deceptive coding practices are just some of the tactics that were used to facilitate this massive fraud.
The implications of this case are far-reaching, as it not only exposes the vulnerabilities in the payment processing ecosystem but also serves as a stark reminder of the potential for abuse when regulatory compliance is circumvented. As the payment industry continues to evolve, the need for robust oversight and enforcement mechanisms becomes increasingly critical to prevent similar schemes in the future.
Conclusion
The guilty pleas of Mohammad Diab and Amy Rountree mark a significant milestone in the unraveling of a sophisticated bank fraud conspiracy that spanned several years and involved hundreds of millions of dollars in illicit transactions. With the impending sentencing of these individuals and the continued pursuit of the fugitive Ahmad Khawaja, this case serves as a cautionary tale about the perils of unchecked high-risk payment processing. The justice system’s response to this fraud will likely influence future regulatory practices within the financial industry, aiming to curb such deceptive activities and protect the integrity of financial transactions.