US authorities have indicted six former executives and company leaders at the Virginia-based card processing company Electronic Transactions Systems Corporation (ETS) for their role in defrauding nearly 7,000 merchant clients out of millions. All six defendants have been charged with conspiracy to commit wire fraud; two of them have also been charged with money laundering conspiracy.
ETS supplied equipment and services to US merchant clients to help them process card payment transactions. During 2012-19, the defendants allegedly defrauded thousands of these merchant clients by disguising a part of their processing fees by embedding them in “interchange fees”. They allegedly misled the merchant clients and never disclosed the true fee structure in financial statements.
Two of the defendants allegedly also redirected part of the fraudulently obtained funds towards huge bonuses, luxury vehicles, and real estate. One of these defendants received an additional $107 million, and another received $33 million when ETS was acquired, since the fraud was concealed prior to the acquisition.
Source: US Department of Justice
