Payment company Allied Wallet and its owner, Ahmad Khawaja, as well as two officers, Mohammad Diab and Amy Rountree, have settled with the Federal Trade Commission (FTC) over allegations of knowingly processing fraudulent transactions related to scams, the FTC reported on Tuesday (May 21).
Allied Wallet was accused of processing payments for firms that were known by law enforcement agencies as fraudulent, such as Stark Law, a debt collection scheme; TelexFree, a pyramid scheme; and MOBE and Digital Altitude, business coaching schemes that told customers they would make a large amount of extra income.
The FTC said the defendants, in collaboration with Allied Wallet sales agent Thomas Wells, intentionally hid fraud from banks and credit card networks. Allied Wallet created fake foreign shell companies, dummy websites and other false info and provided it to banks to skirt rules about payment processing.
“The stipulated final orders regarding Khawaja, his four corporations that do business as Allied Wallet, and Allied Wallet’s former VP of Operations, Amy Rountree, prohibit them from processing payments for certain types of merchants, including sellers and marketers of money-making opportunities and debt collection services,” the FTC said. “The orders impose stringent screening and monitoring requirements on payment processing for certain other categories of merchants to ensure proper screening and vetting by Allied Wallet, Khawaja and Rountree.”
The judgement against Allied Wallet also imposes a $110 million equitable judgement. Khawaja must turn over a residence in Los Angeles, and the rest of the judgement will be suspended due to inability to pay. Rountree’s $320,429.82 judgement will also be suspended due to inability to pay.
Diab is not allowed to work in payment processing and must pay the FTC $1 million.
“The Commission vote authorizing the staff to file the complaint and stipulated final orders was 5-0,” the FTC wrote. “The FTC filed the complaint and final orders in the U.S. District Court for the Central District of California.”