Two Plead Guilty in $150M Allied Wallets Fraud

Posted on: August 19, 2024, 08:09h. 

Last updated on: August 19, 2024, 09:57h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

Two US citizens pleaded guilty last week to their part in the $150 million Allied Wallets fraud, which hoodwinked banks into processing payments for unregulated online gaming and other high-risk transactions.

Ahmad Khawaja, Andy Khawaja, Allied Wallets, Mohammad Diab, Amy Rountree
Ahmad “Andy” Khawaja, pictured before his indictment, flight, and arrest in Lithuania on an international warrant. In those days, he was a prominent LA businessman who donated millions to Democratic and Republican presidential campaigns. (Image: LRT)

Mohammad “Moe” Diab, 48, of Glendale, Calif., and Amy Rountree, 41, of Logan, Utah, pleaded guilty to one count each of bank fraud conspiracy in a federal court in Boston Wednesday. They face up to 30 years in prison.

Diab and Rountree were employees of Allied Wallets, a payment processing company headquartered in Glendale, Calif. The company was owned by one-time billionaire Ahmad “Andy” Khawaja, now a fugitive from justice who US authorities are attempting to extradite from Lithuania.

Transaction Washing

Allied Wallets was involved in a fraudulent practice known as “transaction washing,” where digital transactions for illegal or high-risk merchants are disguised as legitimate payments.

In addition to online gambling transactions, Allied tricked banks and credit companies into processing payments for businesses involved in debt relief, online pharmaceuticals, and payday lending, according to prosecutors.

The company achieved this by “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 transaction,” the indictment says.

Diab, Allied’s chief operating officer, and Rountree, its VP of operations, were arrested by federal agents in August 2021, along with another employee, Thomas Wells, 74, of Martin County, Fla. Wells pleaded guilty to wire fraud conspiracy in October 2021 and is awaiting sentencing.

Khawaja Campaign Donations

Khawaja was arrested in Lithuania in September 2020 on an international warrant. US officials asked that he remain in custody pending extradition proceedings, which are ongoing.

According to a June 2023 report by Lithuanian news outlet LRT, Khawaja has been released on bail by Lithuanian authorities. Although he claims to have no money to repay the millions he is accused of acquiring fraudulently, he is currently staying at one of the most luxurious hotels in the Lithuanian capital, Vilnius, per LRT.

Before his indictment and flight, Khawaja was a prominent Los Angeles businessman who donated at least $6 million to Republican and Democratic political campaigns from 2015 onwards, according to an Associated Press report.

In 2016, he held a fundraiser for Hillary Clinton’s failed presidential bid, illegally transferring $3.5 million to the campaign, according to prosecutors. Then, just weeks after the election, he met the newly elected Donald Trump, donating $1 million to his inauguration campaign, per the AP.

In 2020, Khawaja claimed he was being targeted by federal authorities because he had compromising information about Trump.