Two Plead Guilty to Bank Fraud Conspiracy Targeting Payment Card Industry

BOSTON – Two individuals have pleaded guilty to conspiring to deceive banks into 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, among others.  

Mohammad “Moe” Diab, 48, of Glendale, Calif., and Amy Rountree, 41, of Logan, Utah, pleaded guilty to one count each of bank fraud conspiracy before United States District Judge Nathaniel M. Gorton. The Court deferred acceptance of Diab and Rountree’s pleas until their sentencing hearings, which are scheduled for Nov. 20, 2024 and Nov. 19, 2024, respectively.  

Diab and Rountree were charged along with two co-defendants: Thomas Wells, 77, of Martin County, Fla. and Ahmad “Andy” Khawaja, 52, of Los Angeles, Calif. Wells pleaded guilty to wire fraud conspiracy in October 2021 and is awaiting sentencing. Khawaja is a fugitive on these charges as well as a December 2019 indictment charging him and others in the District of Columbia with campaign finance violations and obstruction of justice. A fourth defendant, Rudy Dekermenjian, 45, of Glendale, Calif., pleaded guilty in a related case to wire and bank fraud conspiracy and alteration and falsification of records in September 2020 and is awaiting sentencing.

According to the charging documents, Diab and Rountree worked at Allied Wallet, Inc., a payment processing company headquartered in Los Angeles that served merchants doing business over the internet. Khawaja was Allied Wallet’s owner; Diab was its Chief Operating Officer; and Rountree was Vice President of Operations. Allied Wallet obtained for its merchant clients the ability to accept debit and credit card payments over global electronic payment networks run by Visa, Mastercard, American Express and Discover, among others (card brands). Allied Wallet served as an intermediary between its merchant clients and financial institutions that were members of the card brand networks (acquirers). Wells, through his company, Priority Payout, introduced merchant clients seeking payment processing to Allied Wallet.

Diab and Rountree admitted that they engaged in a scheme allegedly with Khawaja, Wells, and others to fraudulently induce acquirers, card brands and banks that issued payment cards to consumers (issuers) to process prohibited or high-risk transactions, and to process transactions for 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. According to the charging documents, the defendants and their co-conspirators allegedly accomplished the scheme through, among other steps, creating shell companies, designing fake websites that purported to sell low-risk retail and home goods and using industry-standard codes that miscategorized the true nature of the transactions. Through the scheme, the defendants and allegedly their co-conspirators caused issuers and acquirers, some of which were federally insured financial institutions, to transfer more than $150 million in payment card transactions using more than 100 sham merchant accounts. In furtherance of the scheme, Allied Wallet entered into a processing agreement with Litle & Company, a Massachusetts-based payment processor.   

The charge of bank fraud conspiracy provides for 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. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.

Acting United States Attorney Joshua S. Levy; Principal Deputy Assistant Attorney General Nicole M. Argentieri of the Department’s Criminal Division; Fernando McMillan, Special Agent in Charge of the Food and Drug Administration, Office of Criminal Investigations; Ketty Larco-Ward, Inspector in Charge of the United States Postal Inspection Service, Boston Division; and Michael J. Krol, Special Agent in Charge, Homeland Security Investigations, in New England made the announcement. Assistant U.S. Attorney Seth B. Kosto, Deputy Chief of the Securities, Financial & Cyber Fraud Unit and Trial Attorneys Randall Warden and Elizabeth Carr of the Criminal Division’s Fraud and Money Laundering and Asset Recovery Sections, respectively, are prosecuting the case.

The details contained in the charging documents are allegations. The remaining defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.