Donor helping fraudsters, offshore bettors backs Trump
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 women.
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 e-mail 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.”
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 GOP 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 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 industry.
“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 occurring.”
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 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.
‘IT JUST SCARED ME SO I PAID IT’
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 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.