A Glendale, California lawyer has pleaded guilty in connection with a conspiracy to defraud a bank into processing more than $5m in credit and debit card payments.
Rudy Dekermenjian, 42, pleaded guilty before US District Judge Randolph D. Moss of the District of Columbia to an information filed in the District of Massachusetts.
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The charges include one count of conspiracy to commit wire fraud affecting a financial institution, and bank fraud, and one count of alteration and falsification of records.
Acting Assistant Attorney General Brian C. Rabbit of the Justice Department’s Criminal Division and U.S. Attorney Andrew E. Lelling of the District of Massachusetts made the announcement.
A sentencing date has not yet been scheduled
The lawyer’s shenanigans were for the benefit of a student loan debit relief merchant that had previously been terminated by the bank’s risk department.
He subsequently attempted to obstruct a federal grand jury proceeding and a civil investigation conducted by the Consumer Financial Protection Bureau, both of which were investigating this scheme.
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By GlobalDataDekermenjian admitted at the plea hearing that, from 2017 to 2018, while working as the general counsel at a payment processing company based in Los Angeles, California (Company A), he conspired to fraudulently obtain payment processing services on behalf of a merchant providing student loan debt relief services.
As alleged in the information, Company A had obtained payment card processing for the merchant from Fifth Third Bank beginning in 2016, but the bank’s risk department terminated the merchant in May 2017.
Fake websites purported to sell retail items
Following the termination, executives at Company A counselled the merchant to re-apply for processing in the names of “sham merchants.”
The sham merchants’ applications, backstopped by fake websites that purported to sell housewares, jewellery, leather goods and other retail items made it appear to Fifth Third Bank that there was significantly less risk associated with the business.
In fact, the “sham merchants” were fronts for transactions that involved student-loan debt-relief and not retail goods.
Dekermenjian learned of the scheme shortly after it commenced, joined the conspiracy, and subsequently earned commission payments of approximately $20,292 on the fraudulently obtained processing.
