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U.S. Authorities Finger Chexx for Criminal Activity

U.S. Authorities Finger Chexx for Criminal Activity
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Oct 3, 2016 2:10 PM PDT    Text size: 

VANCOUVER, B.C. — The sudden termination of Chexx Inc.’s services has impacted payees and the payment methods available to adult paysites that use the third-party payment provider for international check and electronic funds transfer withdrawals.

Chexx and its parent company, PacNet Group, last month were fingered for criminal activity by the U.S. Treasury Department’s Office of Foreign Assets Control, charges that specifically included money laundering and facilitating mail fraud.

The Treasure Department named 12 individuals and 24 entities across 18 countries that resulted in the seizure of property and interests in property that fall into U.S. jurisdiction. Additionally, the agency said that all “U.S. persons are prohibited from engaging in transactions with them.”

Immediately, two third-party payment companies that are used primarily to pay adult affiliates, models and advertisers cut ties with Chexx Inc. and its parent.

Paxum, in a statement last week, said that it is in communication with Chexx to determine which payments have already been issued, and which are pending. 

Another payment firm cutting ties was Payoneer, which late last week said that customers will need to change their method of payment to a Payoneer Prepaid MasterCard.

“We realize that the situation is challenging and are doing our best to minimize the inconvenience to your payees,” the Payoneer statement said.

The Treasury Department said it coordinated the action against PacNet Group and its Chexx unit, based out of Vancouver, B.C. and Ireland, with the Consumer Protection Branch of its agency and the U.S. Postal Inspection Service, as well as the U.K.’s National Crime Agency.

PacNet Group has operations in Canada, Ireland and the U.K. and subsidiaries or affiliates in 15 other countries.

Chexx, according to the Treasury Department’s statement, issued outgoing payments on behalf of PacNet clients from PacNet Europe and Chexx bank accounts.

The Treasury Department, calling the parent company and its divisions a “significant transnational criminal organization,” noted that criminal complaints against individuals will be filed shortly and that it will be executing search warrants in several U.S. locations, filing civil injunctions against multiple mail fraud services providers, including those that processed “psychic scams” and seizing a PacNet bank account. 

“Despite [the payment company’s] prior acknowledgement and the many notifications it has received regarding the fraudulent activity of its clients, [it] continues to knowingly process checks on behalf of numerous companies that are actively involved in widespread mail fraud campaigns,” the Treasury Department said.

Chexx, in a statement last week, said it denied the accusations against its parent company, PacNet.

“As a result of the sanctions, U.S. businesses and individuals can no longer trade with us and worldwide bank accounts have been affected,” the company said on its website. “Chexx Inc. has ceased processing payments, but will stay in touch with clients directly regarding an orderly wind down.”

Because some accounts have been frozen, the company said, “U.S., Canadian and British checks that are presented to the bank may be returned to the beneficiary unpaid.”

“Other currencies may also be affected in coming days. If you are unable to deposit a Chexx Inc. check, please contact the company that issued the payment to inform them.”

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