Calif. Atty Cops To Credit Fraud, Campaign Finance Schemes

Law360 (September 9, 2020, 10:05 PM EDT) -- A California lawyer pled guilty to fraud and campaign finance charges on Wednesday in two separate cases in D.C. federal court over different multimillion-dollar schemes connected to his employer, payment processor Allied Wallet.

Rudy Dekermenjian copped to conspiring with several other people to cover up excessive campaign contributions that Allied Wallet CEO Ahmad "Andy" Khawaja and lobbyist and convicted pedophile George Nader made during the 2016 election and beyond, the government said.

Prosecutors dropped two aiding and abetting charges, and estimated that under the sentencing guidelines, Dekermenjian would be sentenced to serve between a year and 18 months in prison, according to an Aug. 6 plea agreement filed Wednesday.

At the same hearing before U.S. District Judge Randolph D. Moss Wednesday morning, the attorney also admitted to participating in the payment processor's scheme to trick Fifth Third Bank into processing over $5.4 million in fraudulent credit and debit card payments, court records show.

According to the Aug. 28 plea agreement in that case, the government said it would seek a prison term "at the low end" of the sentencing guidelines for a "total offense level" of 12, which falls in the range of 10 to 16 months.

Dekermenjian also agreed to forfeit the $20,293 in illicit commission earnings, to waive his right to appeal a conviction and his right to challenge any sentence less than 16 months, among other terms.

Although neither the indictment in the campaign contribution case nor the criminal information in the credit card fraud case name Allied Wallet, the company was identifiable through the names and positions of several executives and employees allegedly involved with the conduit contributions.

Dekermenjian, Khawaja, Nader and five others were indicted in November on charges of conspiring to make $3.5 million in illicit campaign contributions to political committees between March 2016 and 2018 that went over the federal limits.

The attorney issued a fake invoice to Nader in the amount of 10 million euros for what was purportedly a one-year license for one of Nader's companies to use Allied Wallet's software, but was actually intended to disguise payments from Nader, according to the 53-count indictment.

Khawaja also funneled hundreds of thousands of dollars to Dekermenjian, who then donated Khawaja's money in his own name at fundraising events organized by the CEO, prosecutors said.

Nader and the other alleged co-conspirators, which include a travel agent, a Las Vegas liquor store owner and three other Allied Wallet officers or employees, have pled not guilty to the charges, while Khawaja remains at large, court records show.

Allied Wallet is also at the center of a credit card fraud scheme, in which Dekermenjian helped the company create a front for a student loan debt-relief client that was deemed too risky by Allied's bank account provider, Fifth Third Bank.

Dekermenjian invented a number of "sham merchants" purporting to sell various retail items in order to continue to use Fifth Third's services while hiding the nature of debt-relief merchant's transactions, according to an Aug. 28 criminal information.

He created fake websites for the non-existent retail merchants and intentionally hid any reference to lending in the transaction descriptions, causing the bank to unknowingly service millions of dollars worth of the debt-relief merchant's payment card transactions, prosecutors said.

The attorney also admitted on Wednesday to falsifying the sham merchants' applications during the course of a federal investigation by a Massachusetts grand jury and a regulatory investigation by the Consumer Financial Protection Bureau into Allied Wallet, both in 2019.

Sentencing dates in both cases have not yet been set, the government said.

Allied Wallet was previously embroiled in a Federal Trade Commission enforcement action alleging that Khawaja and two other executives helped merchants pilfer $110 million from customers using their system. They settled the claims last May, with Khawaja forfeiting his Los Angeles residence in the deal.

Counsel for Dekermenjian, representatives for the government and for Allied Wallet, which is not a party to either case, did not immediately respond Wednesday to requests for comment.

Dekermenjian is represented in both cases by public defender Michelle M. Peterson, and in the campaign finance case by Christopher T. Berg of Williams & Connolly LLP.

The government in both cases is represented by James C. Mann and Michael J. Romano of the DOJ's Criminal Division.

The cases are U.S. v. Khajawa et al., case number 1:19-cr-00374, and U.S. v. Dekermenjian, case number 1:20-cr-00174, both in the U.S. District Court for the District of Columbia.

--Additional reporting by Hailey Konnath. Editing by Amy Rowe.

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