[Cyberduck-trac] [Cyberduck] #10932: How a business serving bettors, porn donated to Dems, Trump

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Sat Jan 11 13:23:42 UTC 2020

#10932: How a business serving bettors, porn donated to Dems, Trump
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 NEW YORK (AP) - One customer was a debt collector that threatened to jail
 people if they didn't pay back loans that they never took out. Another was
 an offshore gambling operation that hid bets behind innocuous-sounding
 websites, including one dedicated to orange cats. A third was a phone-sex
 business catering to men with diaper fetishes or fantasies of raping

 Ahmad "Andy" Khawaja made his fortune in online payment processing for a
 host of companies, providing a key conduit in e-commerce for "high risk"
 merchants by helping route customers' credit card purchases to banks. And
 recently Khawaja has shared that wealth in the form of multimillion-dollar
 political donations, first to Hillary Clinton and then to Donald Trump.

 But thousands of internal company documents obtained by The Associated
 Press reveal that Khawaja's company, Allied Wallet Inc., has profited from
 guiding dubious businesses past the gates of the banking system. The
 records, which include email conversations as well as business and
 financial documents, show Allied Wallet executives helped deploy sham
 websites and dummy companies to hide these businesses' tracks, even in
 cases where Allied Wallet's own staff deemed the underlying business
 activities to be "very, very illegal."

 This image from the website of Allied Wallet CEO Ahmad "Andy" Khawaja
 shows Khawaja posing with President Donald Trump in the Oval Office of the
 White House in Washington. Khawaja gave more than $4 million to Hillary
 Clinton's failed presidential campaign and other Democrats, then began
 extending his largesse to Republicans after a lunch with GOP fundraiser
 Elliott Broidy two weeks after Trump clinched the presidency. Records
 obtained by The Associated Press show that Khawaja has helped
 pornographers, payday loan debt collectors and offshore gambling
 operations get past the gates of the banking system.(Andy Khawaja via AP)

 The company's actions in these cases flout bank policies, credit card
 network rules and potentially U.S. laws designed to prevent money
 laundering. In one instance, a company official complained to Khawaja that
 a colleague had provided "specific instructions on how to set up and
 operate an illegal gaming operation online."

 Khawaja and a company lawyer didn't address a detailed list of questions
 from the AP about Allied Wallet's business, as well as Khawaja's political
 giving, for over a month.

 This week the Los Angeles-based company's marketing director, A.J. Almeda,
 said in a statement that "any accusations of illicit or prohibited
 activities are misleading and categorically false." Almeda called the AP's
 line of inquiry "a political hit job due to the Allied Wallet's
 contribution to President Donald Trump's inauguration and support of his
 tax cut agenda."

 The Lebanese-born Khawaja gave more than $4 million to Clinton's failed
 presidential campaign and other Democrats, then began extending his
 largesse to Republicans after a lunch with Republican fundraiser Elliott
 Broidy two weeks after Trump clinched the presidency.

 Within days of that lunch, Khawaja met Trump at a $5,000-per-person
 transition fundraiser in Manhattan. Soon after he contributed $1 million
 to his inaugural committee, eventually earning himself a photo with the
 president inside the Oval Office.

 The documents reviewed by the AP provide an unprecedented look behind the
 scenes of Khawaja's company, which claims to process billions of dollars a
 year in online transactions.

 They also come against the backdrop of a previous run-in with federal
 authorities over processing illegal online gambling proceeds: In 2010,
 Khawaja and his company were forced to give up $13 million in a civil
 forfeiture stemming from a sprawling FBI probe into the online poker

 "The reason they had to forfeit the money was they were acting on behalf
 of an illegal gambling outfit," said Roy Pollitt, a former FBI special
 agent who worked the case. "Based upon the agreement that was made years
 ago, it's troubling to hear there might be similar behavior still

 Allied Wallet's past hasn't stopped Washington from accepting Khawaja's
 political generosity.

 In all, Khawaja, his company and its executives have contributed at least
 $6 million to politicians and political organizations since late 2015,
 according to an AP review of disclosure reports.

 Since Trump's inauguration, the company and its executives have given
 nearly $1 million more to Republican candidates and committees, including
 $200,000 from Khawaja to Rep. Ron DeSantis, a Trump-backed candidate
 running for governor in Florida.

 Donations to Democrats include nearly $2 million to the Democratic
 National Committee, along with a who's who of top candidates, including
 Missouri Sen. Claire McCaskill.

 In June, the Senate minority leader, New York Democrat Chuck Schumer,
 appointed Khawaja as one of nine members on the U.S. Commission on
 International Religious Freedom. In April, Charlie Kirk, the outspoken
 head of the pro-Trump super PAC Turning Point USA, touted Khawaja on
 Twitter as a beneficiary of Trump's tax plan.

 Nobody in Washington, Democrat or Republican, appears to have questioned
 how Khawaja earned his money, and what exactly Khawaja might hope to gain
 from his political giving is not entirely clear. The records reviewed by
 the AP show that Khawaja has pursued foreign business deals, including an
 investment by a United Arab Emirates-controlled wealth fund, a prospective
 deal with an Iranian bank and a potential business arrangement with
 Lebanon. Some U.S. senators he has supported are on the banking committee,
 which writes laws governing his industry.



 Last August, the Trump administration ended a Justice Department effort
 called Operation Choke Point that investigated banks and other financial
 institutions working in industries such as payday lending that carry high
 risks of fraud.

 That kind of policy change could be helpful for Allied Wallet customers
 like Stark Law LLC of Chicago, an aggressive debt collector that posed as
 a law firm and threatened tens of thousands of Americans into giving them
 money - often for payday loans they never even signed up for.

 That's what happened to Mary Liz Nogueras when a Stark debt collector
 called her at work in late 2015 and threatened to take her to court if she
 didn't immediately pay $890 to cover an outstanding payday loan. Nogueras
 didn't recall owing any money but was frightened by the collector's
 abrasiveness, so she offered up her credit card number over the phone.

 "It just scared me so I paid it," said Nogueras, who lives in Cape Cod,
 Massachusetts, with her husband and their two children, one of whom has
 special needs.

 A few months later, in March 2016, Federal Trade Commission regulators and
 Illinois prosecutors charged Stark's owners with running a massive fraud
 operation, eventually forcing them out of the debt collection business
 entirely, issuing a $47 million judgment against them and making them
 personally forfeit $9 million - along with a 1-kilogram gold bar - to
 settle the claims.

 Eight months before Stark was busted, Allied Wallet set up credit card
 processing for a web of online merchants that supposedly sold home goods
 but actually were owned by payday loan-related companies with names like
 Clearwater Lending, the records reviewed by the AP show. The arrangement
 included some indications of suspicious activity: The websites lacked
 inventory, were unable to collect payments and failed to correctly spell
 words like "towels."

 Whenever a bank caught the obvious misconduct, Allied Wallet would shut
 down the site and notify the bank of its actions - but then route the same
 payments through a new fake company, the records show. In just one month
 in late 2015, consumers filed hundreds of fraud complaints with their
 credit card companies about bills from Stark and a web of other front
 companies, the documents show.

 In October 2015, just three months after Allied Wallet began processing
 for Stark Associates Ltd., a UK shell company that handled the Stark debt
 collections, a risk analyst warned Allied Wallet about questionable
 transactions on the account, examining in detail the sale of a yellow
 curtain valance supposedly shipped to a nonexistent address: 123 Main
 Street in Townsville, New York.

 Not only had one of the banks processing Stark's payments - OCBC Wing Hang
 Bank in Macau - noticed multiple fraud complaints on the account, the
 analyst wrote, but also the websites on the account itself were fishy,
 designed exactly like another site that Allied had recently shut down for
 engaging in "transaction laundering," according to the email.

 A month later, the risk analyst followed up with top Allied employees,
 this time certain Stark was not legitimate: "In case it is of interest to
 you, we have now received a chargeback case that confirms that the
 merchant STARK, which you already closed, was indeed misrepresenting its
 business and offering loan services instead of home decor," the analyst

 But the risk analyst was mistaken.

 Allied Wallet hadn't stopped processing for Stark and continued to do so
 until February 2016, one month before regulators busted the company, the
 emails show.

 The account itself was moved to a related company called Rolling Plains
 Ltd., according to a November 2015 email to Allied Wallet's chief
 operating officer, Moe Diab, from Tom Wells, an intermediary who brought
 Allied the Stark accounts in exchange for a percentage of the business.

 "They never stopped processing," Wells wrote. "In fact you made payment to
 new acct this week."

 Regulators named Gaurav Mohindra as a key player in the Stark debt-
 collection scheme. He told the AP he had never heard of Allied Wallet.
 Incorporation records show he was the director of Stark Associates Ltd.,
 the UK corporation Allied Wallet created for the supposed home decor
 website jvalances.com that was used to disguise Nogueras' $890 fake debt
 payment when it was passed along to Visa.

 Wells did not return phone and email messages seeking comment.



 With most of the questionable customers Allied Wallet took on, the
 documents show, the company appeared to seek plausible deniability.

 First, Allied Wallet helped businesses create dormant shell corporations
 in the United Kingdom to access its network of friendly banks from Malta
 to Macau, the records show. Then it coached clients on how to curate their
 websites to fool investigators performing compliance checks for banks and
 credit card companies, the documents reveal.

 "Remove the video of the woman being tortured in the top left corner of
 the home page," Amy Ringler, the company's vice president of operations,
 wrote to one pornography client in October 2012, noting the video would
 violate Mastercard's standards.

 Once websites passed muster, company officials would then route those
 businesses' incoming payments to banks willing to accept them. If a
 merchant racked up too many fraud complaints - or a bank caught on to
 suspicious behavior - Allied Wallet would sometimes simply shift the
 account to a new institution to start fresh. In exchange, Allied Wallet
 charged hefty rates and fees as a processor of last resort for especially
 risky clientele, the records show.

 These merchants were then mixed in with others that Allied Wallet sent to
 banks which, though considered in the industry to be "high-risk," weren't
 necessarily legally problematic. Among them: clients peddling multilevel
 marketing deals, IT help desk services and natural supplements, the
 records show.

 Not all customers were happy with Allied Wallet's insistence on holding
 funds for long stretches to cover expected chargeback and fraud fees, but
 the nature of legally dubious businesses prevented many from finding an
 alternative processor.

 "Why would anyone use a high priced processor unless they have a
 questionable product?" the frustrated CEO of an unusual Irish company that
 specializes in selling phony ATM receipts, forged hotel bills and other
 fabricated documents wrote in a March 2016 email to company officials. "If
 I'm going to go to the bother of pretending I am a clean green business,
 then I'll use a payment system that gets me more of the money in a quicker

 To help the now-defunct website website get its payments processed by
 American Express - which the credit card company wouldn't otherwise accept
 - Allied Wallet worked with the company to disguise its true business, the
 records showed.

 The website charged callers in the U.S. $2 a minute to talk about various
 fetishes or engage in elaborate rape fantasies with female accomplices,
 according to an archived webpage.

 To coordinate their arrangement, an Allied Wallet salesman used a private
 email address to communicate with Donna Jones, one of the sex line's
 owners: "I'll help you out but I need you to help me help you, notice the
 email I'm sending this from."

 To avoid raising the suspicions of American Express, Jones and Allied
 Wallet funneled the payments through another business Jones owned that had
 nothing to do with sex: a home-cleaning company called WKPS Group,
 according to the records.

 "We will do whatever is asked, and keep our mouths shut," Jones wrote.
 "You can make a lot of money with us, I will do as you say."

 Just 45 minutes after the arrangement started, Allied Wallet's chief
 compliance officer issued an urgent internal warning based on a tip: The
 cleaning company had already been identified by a rival processor as a
 front for phone-sex transactions.

 The November 2016 warning went unanswered. Some company officials knew the
 cleaning business was a front because they already were using it that way.

 American Express declined to address Allied Wallet or the records
 detailing how it processed funds for the defunct sex site. In a statement,
 a spokesman, Andrew Johnson, said the company could require a processor to
 cancel processing for merchants that break the law, violate its rules or
 damage its brand.

 Jones could not be reached for comment. She did not return a message sent
 to the email addresses she used to correspond with Allied Wallet.



 The records show that Allied Wallet also took extraordinary steps to
 disguise how it processed payments for online gamblers - a bold foray back
 into an industry that just years earlier had involved Khawaja in an FBI

 To settle claims from a 2010 federal probe involving the website
 PokerStars, Khawaja enlisted former FBI Director Louis Freeh to negotiate
 with federal prosecutors in New York and write anti-money laundering
 policies for Allied Wallet, according to court records.

 Since then, Khawaja appears to have avoided processing payments for U.S.
 bettors, the records show. But the documents show that his company has
 accepted and obscured international business from GVC Holdings PLC, one of
 the most prominent gambling outfits in the online industry,
 [https://www.megaceme.live poker88] often in places where online gambling
 is prohibited or highly regulated.

 For example, Allied Wallet handled processing for a company behind the
 now-defunct, bare-bones website totembazaar.com, which claimed to sell
 e-books and told credit card companies that it was selling miscellaneous
 general merchandise.

 It wasn't.

 The website was a front, listed in 2012 business paperwork for LLJH Ltd.,
 a company owned by Elizabeth Cullen, then a top corporate officer at GVC
 Holdings PLC, according to the records.

 The records obtained by the AP show that top GVC executives collaborated
 with Allied Wallet and a trusted middleman to hide gambling operations
 involving currencies from countries where online betting is illegal or
 highly regulated, including Turkey, Brazil and Mexico.

 Just before Christmas 2012, Jim Humberstone, GVC's head of operations,
 worked with Wells, the intermediary who would later bring the fraudulent
 Stark debt collectors to Allied Wallet, the emails show.

 The records show that Wells passed GVC's information along to Khawaja and
 other top Allied Wallet company officials, who placed the business in an
 Allied Wallet account called Bluestar 7. That account handled payments for
 totembazzar, along with the site radialmarkets.com, which GVC claimed was
 owned by a company called JHLL Ltd.

 "I'm concerned about the descriptor containing 'GVC' could we remove this
 and have 'Radial' and 'Totem' alone?" Lisa Lupi, then the head of GVC's
 risk department, wrote in an email to Wells.

 Allied Wallet made the changes and processed payments for the gambling
 sites, switching the Bluestar 7 account every week between two banks,
 Borgun in Iceland and Postbank in Germany.

 In February 2016, Wells wrote to top Allied Wallet officials to inquire
 about leftover reserves in the Bluestar gambling accounts on behalf of
 GVC, noting they were handling Brazilian, Mexican or Turkish currencies,
 according to the email.

 Online betting is highly regulated in Mexico and Brazil. In Turkey, it is
 prohibited altogether

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