WASHINGTON, D.C.—A federal grand jury sitting in the District of Columbia today unsealed an indictment against payment processor M.H. Pillars Ltd., doing business as Payza.com, formerly known as AlertPay.com and Egopay.com, and its owners/operators Firoz Patel and Ferhan Patel, brothers based in Canada. The indictment was returned earlier in March.
The main accusations in the indictment accuse Payza and the Patel brothers of operating unlicensed money-transmitting businesses in the United States beginning around March 2012, and receiving and transmitting payments totaling over $250 million in several states where licenses to do so were required. They are also charged with knowingly transmitting funds that were derived from illegal activity, including child pornography, illegal drugs and various financial pyramid schemes. No mention was made in the indictment regarding Payza's or its predecessors' processing payments from legal adult businesses. However, Payza did do business with companies serving the legal adult industry.
A web page detailing the services offered by AlertPay may be found here.
Payza and the Patels were warned as early as October of 2011 that their money-transmitting businesses, which were operating without state licenses, were illegal, but the indictment charges that the Patels ignored this and several succeeding warnings. However, the Patels did incorporate Egopay in Belize in an attempt to circumvent the licensing requirements, but the grand jury found that action to be illegal as well.
According to one paragraph of the indictment, "On or about January 8, 2013, after co-conspirator Payza had received a cease and desist letter from the California regulator, a co-conspirator informed another co-conspirator that co-conspirator Payza was 'not a licensed money transmitter in California.'" However, the company continued to do business in the state, though the Patels and other unnamed co-conspirators had directed Payza in 2012 to transition the accounts of Payza's "high-risk and criminal customers" to Egopay, another processor also owned by the Patels. Later, sanitized lists of Payza and Egopay customers were prepared, omitting any "merchants" having to do with "pharma," "adult," "gambling" and low end "mlms," or "multi-level marketers" aka pyramid schemes.
Payza, its prececessors, the Patels and other unidentified co-conspirators were also contacted by the Department of Homeland Security over concerns that their unlicensed activities may be related to illegal money laundering, in part owing to the large amounts of cash—over $20 million—that had been transferred across national boundaries.
Those transfers led to Count Two of the indictment, which accused the Patels and co-conspirators with illegally "transporting, transmitting, or transferring, or attempting to transport, transmit, or transfer a monetary instrument or funds from a place in the United States to or through a place outside the United States, that is Canada and other countries, and to a place in the United States from or through a place outside the United States, that is Canada and other countries, with the intent to promote the carrying on of specified unlawful activity," including wire fraud and illegal monetary transmissions.
The indictment seeks to forfeit various properties owned by Payza and the Patels, including all funds already seized from various Payza bank accounts in the U.S., all funds from two Payza accounts in the UK, the Payza.com domain, the AlertPay.com domain—and to seek out any property previously owned by the defendants that may have been transferred to a third party and/or has been "placed beyond the jurisdiction of the Court." This would also include properties that have been purposely diminished in value or commingled with other property that would be difficult to separate out from non-infringing property.
In addition, if convicted of all charges, the Patel brothers each face prison sentences of 25 years or more.
"I am proud of the skilled and professional teams of investigators and attorneys involved in today’s indictment and commend their efforts," said Special Agent in Charge Patrick J. Lechleitner of the Homeland Security Investigations office in Washington. "Through this type of routine interagency cooperation we ensure our safe, reliable and just society."
No trial date has yet been set for this case.
The full indictment can be read here. A press release from the Department of Justice relating to this case may be read here.
