The specifics of Payza’s business operations have always been murky.
We knew the company was co-founded by brothers Firoz and Ferhan Patel, Canadian citizens, who operated Payza via the UK shell company MH Pillars.
Beyond that though specifics have been elusive… up until now.
Following a federal indictment of the Patel brothers earlier this month, the scope and magnitude of their criminal enterprise have been revealed.
The federal indictment states the Grand Jury hearing the case was sworn in on November 3rd, 2016.
The indictment however wasn’t returned until March 8th, 2018.
In it, Firoz and Ferhan Patel stand accused of operating
a money transmitting business that operated without the necessary state licenses and knowingly transmitted funds that were derived from illegal activity.
MH Pillars, the latest incarnation of the Patel brothers criminal enterprise, began in 2012.
The indictment however goes back further than that, beginning with the incorporation of AlertPay in 2005.
Between 2005 and 2011
regulators from Arkansas, Georgia, Kentucky, New Hampshire, New York, and North Dakota notified co-conspirator AlertPay about its unlicensed activity in their respective states.
In 2011 an unnamed “outside consultant”
warned (the Patel brothers) that AlertPay was operating illegally without state licenses, which could lead to their arrest.
In 2012 it became public that, among other things, AlertPay had ‘taken on customers trafficking in child pornography.‘
Rather than cease enabling illegal businesses to continue to operate however, in May 2012 the Patel simply renamed AlertPay to Payza.
In an attempt to diversify their criminal enterprise after the AlertPay child pornography scandal, EgoPay was also simultaneously launched.
By that stage however the damage had been done and Firoz Patel didn’t emerge unscathed.
On June 7th, 2012, Patel was
indicted on two counts of money laundering associated with his operation of AlertPay to launder illicit proceeds derived from the importation and distribution of anabolic steroids and other controlled substances.
Despite the indictment Firoz Patel remained a free man and, along with his brother, through Payza and EgoPay continued to provide payment processing services to criminal organizations.
Payza’s customers were primarily merchants operating Ponzi and
Pyramid schemes, High Yield Investment Programs, Money Cyclers, and Multi-Level Marketing schemes with no products, and the related victims of such schemes.
This was probably the golden era of online scamming. The now defunct MoneyMakerGroup forum was thriving and, for the most part, operators and promoters of MLM scams operated with impunity.
These days the MLM underbelly is more of a cloak and dagger affair. Scams are secretly promoted in closed Facebook and Telegram groups and more often than not utilize cryptocurrency.
But I digress…
Over the years Payza attracted the attention of regulators in California, Connecticut, Kansas, Kentucky, New York, Ohio, Vermont, and West Virginia, who each ‘contacted Payza about its unlicensed activity in their respective states‘.
EgoPay meanwhile was more of a clandestine operation.
The Patel brothers registered EgoPay in Belize and actively attempted to conceal and association with the processor.
March, 2012 saw the Payza and EgoPay partner up with OboPay.
OboPay, federal investigators allege, was set up ‘an attempt to conceal co-conspirator Payza’s unlicensed money transmitting activities‘.
Whereas Payza and EgoPay were outright illegal businesses, OboPay was ‘registered with FinCEN‘ and ‘licensed as a money transmitting business in various states at various times‘.
MH Pillars, Payza’s “parent company”, appears to have been set up as an additional layer to conceal the Patel brothers’ fraud.
On March 28, 2012, Obopay entered into an agreement with co-conspirator Payza, which appointed co-conspirator Payza as an authorized delegate of Obopay.
ln certain states a delegate may forgo obtaining a license if the parent company has a license to operate as a money transmitting business.
The agreement specified that co-conspirator Payza would not take on a subdelegates and would comply with all legal requirements, including, but not limited to, state
money transmission laws and regulations relating to the prevention of money laundering.
That of course was pseudo-compliance baloney. The Patel brothers had no intention of complying with money transmission laws and regulations.
Payza took on a sub-delegate, co-conspirator Egopay, and Payza illegally continued operating in states where Obopay did not have a license, thereby voiding the agreement with Obopay.
Payza concealed from Obopay that Egopay was acting as a sub-delegate and that co-conspirator Payza was illegally operating without a license in numerous states.
OboPay terminated its partnership with Payza in June, 2013.
Not phased in the slightest, the Patel brothers simply went back to operating Payza and EgoPay illegally across the US.
The Patel brothers stand accused of conspiring to operate an
unlicensed money transmission businesses which transmitted over $250,000,000 throughout the United States and elsewhere.
Specific allegations in the Patel brothers’ indictment include
- providing money transmission services to Ponzi and pyramid schemes and criminals engaged in the distribution of child pornography and controlled substances
- attempts to conceal fraudulent conduct by creating customer lists that intentionally excluded Payza clients known be engaged in criminal activities
- attempts to conceal fraudulent conduct by creating customer lists that intentionally excluded Payza clients who were operating in jurisdictions Payza was not licensed to operate in
- transferring known criminal clients from AlertPay to Payza and from Payza to EgoPay
- intentionally hiding Payza’s corporate connection to EgoPay
- approving a co-conspirator’s request to transfer $1.5 million dollars in stolen funds from “Ponzi scheme 1’s” Payza account to an EgoPay account
Over the years the Patel’s have profited handsomely from their criminal enterprise.
The indictment details millions of dollars transferred out of US bank accounts to accounts in Canada held in the Patel brothers’ names.
Whereas Ferhan Patel appears to have kept a low profile, Firoz Patel’s personal Facebook account is full of photos of himself and his family holidaying around the world.
If convicted (which, let’s face it, is pretty much a given), the Patel brothers will be required to give up any money they made throughout the operation of AlertPay, Payza, EgoPay and MH Pillars.
Thus far assets of the Patel brothers investigators have identified as suitable for forfeiture include
- $4,000, 100 of Payza funds seized on or about November 2013;
- $100,000 of Payza funds seized on or about February 2014;
- $250,000 of Payza funds seized on or about June 2016;
- all funds restrained on or about December 2016 in the United Kingdom from an account at Global Reach Partners related to Payza;
- all funds restrained on or about June 2017 in the United Kingdom from an account at HSBC bank related to Payza;
- the Payza.com domain; and
- the AlertPay.com domain
As previously reported, Ferhan Patel was arrested by authorities in Detroit on March 18th.
The current whereabouts of Firoz Patel and his family are unknown.