WASHINGTON – The founders and parent company of Payza.com, AlertPay.com and EgoPay.com have been indicted by a federal grand jury in the District of Columbia on charges which include conspiracy, operating an unlicensed money transmission business and conspiracy to launder monetary instruments.
The announcement of the indictment was made Tuesday by U.S. Attorney Jessie K. Liu and Patrick J. Lechleitner, the Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations.
“The arrest and indictments in this case demonstrate that we will vigorously enforce laws meant to protect the American consumer,” Liu said. “Money transmitting businesses are required to be registered federally and licensed in most states and jurisdictions, including the District of Columbia. Consumers should beware of those that do not follow these laws because they could be acting as a cover for other illegal activity.”
Brothers Firoz and Ferhan Patel, both Canadian citizens, are the Executive Vice President and Chief Compliance Officer for Payza, respectively. In the indictment, both are said to have co-conspired with Payza as they “had the authority to bind the company.”
The indictment alleges the Patels “operated a money transmitting business that operated without the necessary state licenses and knowingly transmitted funds that were derived from illegal activity.”
Altogether, the indictment alleges the Patels, along with other co-conspirators, transmitted over $250 million throughout the United States and elsewhere,” the U.S. Department of Justice stated.
Somewhat confusingly, the DOJ press release states that the indictment “alleges that the criminal activity took place from in or about March 2012 until the present,” while the indictment itself states
AlertPay was incorporated in the U.S. “in or about May 2005” and “from on or about April 2005 to May 2012, co-conspirator AlertPay operated as an unlicensed money transmitting business.”
In any event, regulators from six different states notified AlertPay of its unlicensed activity in their states, and in 2011, “outside consultant warned defendants Firoz Patel and Ferhan Patel… that co-conspirator AlertPay was operating illegally without state licenses, which could lead to their arrest,” the indictment states.
The indictment alleges the illegal activity and unlicensed transfer of money continued when Payza began transmitting funds around May 2012, at which time the defendants “transitioned co-conspirator AlertPay accounts to co-conspirator Payza.”
“The transition occurred in part because co-conspirator AlertPay had been revealed to have taken on customers trafficking in child pornography,” the indictment alleges. “The transition also occurred because on June 7, 2012, defendant Firoz Patel was indicted on two counts of money laundering associated with his operation of co-conspirator AlertPay to launder illicit proceeds derived from the importation and distribution of anabolic steroids and other controlled substances.”
Egopay was incorporated in Brazil around the same time AlertPay began transferring money. The company operated from around May 2012 to January 2015.
The indictment alleges the Patels took measures to conceal their criminal conduct, including “creating customer lists that did not include customers of co-conspirator Payza known to be engaged in criminal activities,” other customer lists which “omitted customers in jurisdictions where co-conspirator Payza was operating without a license,” transferring “criminal customers” from AlertPay to Payza, and later from Payza to Egopay, and hiding the connection between Payza and Egopay.
Upon conviction for the offenses alleged in the first, second and/or third count of the indictment (which are conspiracy to operate an unlicensed money transmitting business, conspiracy to launder monetary instruments and operation of an unlicensed money transmitting business, respectively), the indictment states the defendants “shall forfeit to the United States any property, real or personal, involved in these offenses, and any property traceable to such property.”
In addition to the forfeiture of funds, the Patels each face a maximum prison sentence of over 25 years if convicted.
Ferhan Patel was arrested last Sunday in Detroit and made his first appearance in court the following day. He “remains held pending further proceedings in the District of Columbia,” while his brother is still at large.
As noted in the DOJ press release, an indictment is “merely a formal charge that a defendant has committed a violation of criminal laws and is not evidence of guilt. Every defendant is presumed innocent until, and unless, proven guilty.”
