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  5. California Lawyer Pleads Guilty to Fraudulent Credit Card Payment Processing Scheme and Obstruction
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California Lawyer Pleads Guilty to Fraudulent Credit Card Payment Processing Scheme and Obstruction

OCI BadgeDepartment of Justice
U.S. Attorney’s Office
District of Massachusetts

FOR IMMEDIATE RELEASE
Wednesday, September 9, 2020

BOSTON – A California lawyer pleaded guilty today in connection with a conspiracy to defraud a bank into processing more than $5 million in credit and debit card payments for a student loan debit relief merchant that had been terminated by the bank’s risk department.

Rudy Dekermenjian, 42, pleaded guilty before U.S. District Judge Randolph D. Moss of the District of Columbia to an Information filed in the District of Massachusetts charging one count of conspiracy to commit wire fraud affecting a financial institution and bank fraud and one count of alteration and falsification of records. A sentencing date has not yet been scheduled.   

Dekermenjian 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. 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. Following the termination, executives at Company A counseled 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, jewelry and leather goods, disguised the student loan debt relief company as a relatively low fraud and compliance risk. 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.

The scheme was the subject of two separate federal investigations. In approximately November 2018, a federal grand jury sitting in the District of Massachusetts issued a subpoena to Company A for records relating to processing for merchants involved in loans and debt collection and records relating to the creation of merchant websites. In approximately May 2019, the Consumer Financial Protection Bureau (CFPB) issued a civil investigative demand to Company A seeking documents relating to the “sham merchants” that Company A used to obtain payment processing for the student loan debt relief merchant. Dekermenjian admitted in the plea hearing to falsifying and altering the sham merchant applications in June 2019 to conceal the existence of the scheme and his knowledge of it. Company A subsequently produced Dekermenjian’s falsified documents to the CFPB.     

United States Attorney Andrew E. Lelling of the District of Massachusetts and Acting Assistant Attorney General Brian C. Rabbit of the Justice Department’s Criminal Division made the announcement. The Food and Drug Administration – Office of Criminal Investigations, Rhode Island Task Force, U.S. Postal Inspection Service, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations investigated the case. Assistant U.S. Attorneys Seth B. Kosto and David J. D’Addio of the District of Massachusetts’s of Lelling’s Securities, Financial & Cyber Fraud Unit and Trial Attorney Randall Warden of the Criminal Division’s Money Laundering and Asset Recovery Section are prosecuting the case.

Component(s):
USAO - Massachusetts

 
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