Payment processing firm, Allied Wallet, its owner, and two other officers recently settled charges that they participated in many schemes in which they knowingly processed fake transactions to customers’ accounts.
Allied Wallet, its owner and CEO, Ahmad Khawaja, its chief operating officer, Mohammad Diab, and its former vice president of operations, Amy Rountree, agreed to settle the Federal Trade Commission’s (FTC) complaint that it knowingly processed payments for businesses that were committing fraud.
The Final Orders Against Allied Wallet and Its Officers
Khawaja, his four corporations that do business as Allied Wallet, and Rountree, can no longer process payments for some types of merchants, including sellers and marketers of money making opportunities and debt collection services, according to the stipulated final orders. AlliedWallet, Inc., Allied Wallet, Ltd., GTBill, LLC, and GTBill Ltd. do business as Allied Wallet.
Furthermore, the order imposes strict screening and monitoring requirements on payment processing for other types of merchants to ensure that all are properly vetted by Allied Wallet, Khawaja, and Rountree.
A $110 million equitable monetary judgment was imposed against Khawaja and his companies, according to the order. After Khawaja turns over a home in Los Angeles, California, the remainder of the judgment will be suspended due to his inability to pay. A $320,429.82 equitable monetary judgment was imposed against Rountree but has been suspended due to her inability to pay.
Diab has been permanently banned from payment processing and required to pay $1 million to the FTC in equitable monetary relief, according to the final order.
The FTC filed the complaint and final orders in the U.S. District Court for the Central District of California. The commission can file a complaint when it has “reason to believe” that defendants are violating or are about to violate the law and it appears to the FTC that a proceeding is in the public’s best interest.
Background on the Complaint
In close collaboration with FTC scofflaw and Allied Wallet sales agent, Thomas Wells, helped a number of dishonest merchants hide their fraud from credit card networks and banks, according to the FTC. Some of their deceptive practices included creating fake foreign shell companies so they could open accounts in their names and submitting dummy websites and other incorrect information to merchant banks. Also, the FTC claims they actively worked to skirt card network rules that were create to monitor and prevent fraud.
Some of the merchants they worked with included the fake debt collection scam, Stark Law, the pyramid scheme, TelexFree, and two business coaching schemes that bilked consumers with claims that they would make large amounts of incomes. All of these merchants also faced legal actions from the FTC and the U.S. Securities Exchange Commission (SEC).
In April 2019, Wells and his payment processing company, Priority Payout Corp., agreed to settle FTC charges that they repeatedly violated an existing court order. In 2009, the FTC found that Wells and his company, InterBill, violated the law by processing debit transactions to consumers’ bank accounts on behalf of a fraudulent enterprise known as Pharmacycards. Following the settlement, Wells agreed to monitor merchants more closely. He failed to do so, the FTC permanently banned him and Priority Payout Corp. from participating in or helping others with payment processing. Also, a $1.8 million contempt judgment was filed against Wells and his company.
All payment processing firms must ensure that the merchants they work with are responsible and reputable. Failing to properly vet businesses or to knowingly process fraudulent transactions can lead to hefty fines and cost them opportunities to work in processing in the future.
Processors should take steps to ensure merchants are following all local, state, and federal rules, has good refund and other policies, and have fully operational websites.
Those who want to file a consumer complaint with the FTC, which works to promote competition and protect and educate consumers can call 1-877-FTC-HELP (382-4357).
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