Indo-Canadian Brothers Accused of Money Laundering Indicted in U.S.

A federal grand jury in Columbia, United States, indicted on March 20 two Canadian brothers accused of operating an Internet-based unlicensed money service business that processed more than $250 million in transactions, the U.S. Department of Justice said in a statement. Each of the brothers, if convicted, faces a maximum sentence of more than 25 years.

Firoz Patel, 43, and Ferhan Patel, 37, the founders and operators of Payza.com, AlertPay.com and Egopay.com, have been charged with one count of conspiracy to operate an unlicensed money transmitting business and to violate anti-money laundering program requirements. They have also been charged with one count of a money laundering conspiracy and one count of operating an unlicensed money transmitting business in the District of Columbia.

MH Pillars, Ltd., doing business as Payza, is charged with operating an unlicensed money transmitting business, the statement said. The Patel brothers, who are Canadian citizens from Montreal, Quebec, together with co-conspirators, created and maintained websites from which they provided money transmission services to millions of customers in the United States and elsewhere.

“These websites claimed to provide legitimate money transmission services. Customers set up accounts via the websites that could be used to transfer money to, and receive money from, others for a fee,” the indictment said, adding that the criminal activity took place around March 2012 until now.

“The defendants, through Payza.com, are accused of operating a money transmitting business that operated without the necessary state licenses and knowingly transmitting funds that were derived from illegal activity,” the statement said.

Despite receiving cease and desist letters from various U.S. states and even after being told by a consultant that operating a money transmission business without the necessary licenses was a crime, the brothers continued their illegal activity, the indictment claims. The California Department of Financial Institutions, for instance, sent a letter to Payza in September 2012.

The Patels, together with other co-conspirators, are suspected to be responsible for transmitting over $250 million throughout the United States.

“The arrest and indictments in this case demonstrate that we will vigorously enforce laws meant to protect the American consumer. Money transmitting businesses are required to be registered federally and licensed in most states and jurisdictions, including the District of Columbia,” said U.S. attorney Jessie K. Liu

Liu added that consumers should be careful of those who do not follow these laws as they could be acting as a cover for other illegal activity.

Ferhan was arrested on March 18, 2018, in Detroit. He made his first appearance on March 19 in the U.S. District Court for the Eastern District of Michigan. He will continue to remain held as further proceedings in the District of Columbia are pending. His brother remains at large.

Payza’s customers allegedly included ponzi schemes, pyramid schemes and a child pornography site. The Patels are accused of opening bank accounts in the United States and laundering their illegal proceeds through those accounts.

“The indictment also seeks forfeiture of any property involved in these offenses or traceable to these offenses.  In addition, the indictment seeks the specific forfeiture of approximately $10 million that has already been seized and frozen,” the statement added.

Under the District of Columbia law, money transmission businesses must obtain a license from the superintendent of the office of banking and financial institutions of the District of Columbia, and the failure to do so is a felony.