Political Donor Linked to Payday Loan-Related Fraud
Inside Subprime: Aug 9, 2018
By Lindsay Frankel
Ahmad “Andy” Khawaja earned his wealth by providing payment processing services for “high-risk” companies. Executives at Khawaja’s Los Angeles-based company, Allied Wallet Inc., have helped set up sham websites and fake businesses to front for the legally dubious activities of their clients, according to internal company documents examined by The Associated Press. Khawaja has also made prominent political donations to Democrats and Republicans, including both Hilary Clinton and Donald Trump. Khawaja’s gifts included a $1 million donation to Trump’s inaugural committee. Recipients never questioned how Khawaja obtained his fortune, though many of the businesses Allied Wallet supported have engaged in disreputable, if not illegal, practices.
Khawaja and his lawyer did not respond to questions from the AP for more than a month. The company’s marketing director, A.J. Alameda, said last week in a statement that “any accusations of illicit or prohibited activities are misleading and categorically false.”
While it’s not clear if there is an agenda behind Khawaja’s political giving, he has supported senators on the banking committee, which is responisble for regulating his industry. The Trump administration’s steady deregulation of the payday lending industry may also be beneficial for Allied Wallet customers. Last year, the Trump administration halted Obama-era program Operation Choke Point, which discouraged banks from developing business relationships with payday lenders.
Helping Payday Loan Debt Collectors
One of Allied Wallet’s customers, a debt collection firm used aggressive practices to persuade tens of thousands of Americans into forfeiting money. In many cases, this included threatening consumers who never used payday loans and didn’t owe money.
The company was forced out of business in 2016 after the Federal Trade Commission charged company owners with fraud. Just eight months before the bust, Allied Wallet established credit card processing for a number of payday loan-related companies under the guise of online home goods merchants. But the websites were obvious shams that lacked inventory and the ability to collect payments. When a bank grew suspicious, Allie Wallet would take down the site and alert the bank before routing payments through a new front company.
Other Questionable Business Arrangements
Records also show that Allied Wallet used similar processes to redirect payments for online gambling operations, even after Khawaja was ordered to forfeit $13 million in a civil case that arose out of an FBI probe into the industry.
“The reason they had to forfeit the money was they were acting on behalf of an illegal gambling outfit,” said former FBI agent Roy Pollitt. “Based upon the agreement that was made years ago, it’s troubling to hear there might be similar behavior still occurring.”
While Khawaja has stayed away from doing business with U.S. bettors since then, records show that Allied Wallet began setting up front companies and processing payments for an international gambling outfit just three years later. The company’s chief compliance officer even verified that an Allied Wallet salesman had given “specific instructions on how to set up and operate an illegal gaming operation online” in an email to executives.
While it appears that Allied Wallet intends to claim plausible deniability, the AP’s review of the documents provides some insight into the company’s involvement with legally questionable businesses.