Jeremy Johnson’s IWorks and numerous business shells must have caused a lot of card processors to kick something or other.
The lesson here isn’t about whether or not on-line gambling. It’s about merchant underwriting and transaction monitoring.
Of course, if the processing bank is itself complicit in establishing numerous shell accounts through which funds can be concealed, there may not be any real underwriting function involved.
The FTC sued Johnson and 2010 in federal court alleging that he sold products online for a minimal handling fee and then charged large unauthorized amounts on consumers’ credit or debit cards, harvesting some $350 million. As a matter of fact, one of his shells was named Money Harvest. Sweet.
According to the federal documents “A majority of these entities do not appear to have generated any business income and were used as conduits to reroute funds and to commingle and hide funds.”
And now, as real processors are hoping to fund some of the chargebacks from any seized assets, it appears that some nefarious potential felon has concealed them, per the most recent FTC filing. If just one gold brick had been left above ground, it could have been used to hire a lawyer. Who would, of course, have become richer ahead of the processors and consumers.
What does an underwriter do when told to approve questionable merchants? What does a risk manager do when told to disregard signs of fraud and impending chargeback losses?
I know nothing about “Patrick Pretty” (patrickpretty.com) but I like the digging he does on cases like this.