A Florida man pleaded guilty today in the U.S. District Court for the District of Massachusetts to conspiracy to commit wire fraud in connection with a scheme to deceive banks and credit card companies into processing credit and debit card payments on behalf of merchants involved in prohibited and high-risk businesses, including online gambling, debt collection, payday lending, and prescription drugs.
According to court documents and statements made during the plea proceeding, Thomas Wells, 74, of Martin County, fraudulently represented that his merchant clients were engaged in the sale of low-risk retail goods to obtain debit and credit card payment processing for those clients from banks and credit card companies. Wells, through his company Priority Payout, introduced merchant clients seeking payment processing to Allied Wallet Inc., a payment processing company that served as an intermediary between merchants seeking to accept debit and credit cards and financial institutions that were members of the global electronic payment networks run by credit card companies such as Visa, Mastercard, American Express, and Discover. Wells’ clients included merchants engaged in prohibited or high-risk transactions and merchants that had already been terminated from card payment processing networks such as Visa and Mastercard for fraud, chargeback, or other compliance concerns. Wells admitted that he conspired with others to defraud several financial institutions and credit card companies by fraudulently inducing them to provide payment processing services to these merchant clients. Wells accomplished this with his co-conspirators by, among other means, creating shell companies, designing fake websites that purported to sell low-risk retail goods, and using industry-standard codes that miscategorized the true nature of the transactions. Wells admitted that he earned approximately $700,000 from the scheme.
Wells faces a maximum penalty of 20 years in prison, a $250,000 fine, three years’ supervised release, restitution, and forfeiture. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; Acting U.S. Attorney Nathaniel R. Mendell of the District of Massachusetts; Special Agent in Charge Jeffrey Ebersole of the U.S. Food and Drug Administration, Office of Criminal Investigations, New York Field Office; Inspector in Charge Ketty Larco-Ward of the U.S. Postal Inspection Service; and Special Agent in Charge Matthew B. Millhollin of Homeland Security Investigations in Boston made the announcement.
The case is being prosecuted by Trial Attorney Randall Warden of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Assistant U.S. Attorney and Deputy Chief Seth B. Kosto of the Securities, Financial & Cyber Fraud Unit at the U.S. Attorney’s Office for the District of Massachusetts.
MLARS’s Bank Integrity Unit investigates and prosecutes banks and other financial institutions, including their officers, managers, and employees, whose actions threaten the integrity of the individual institution or the wider financial system.
The details contained in the charging document are allegations. The remaining defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.