Droumavalla, Flying Ace Owners’ Co-Defendants Take Pleas in Federal Fraud Case

BY RENSS GREENE rgreene@loudounnow.com

The co-defendants in a multi-million-dollar federal fraud case have filed sealed pleas, as Droumavalla Farm owner Edward Walsh Vaughan and Flying Ace Farm Distillery and Brewery owner Hadi Akkad, and one other defendant head toward trial next year.

If Vaughan is convicted, the federal government could seize Droumavalla.

Vaughan, Akkad and four others were indicted in July 2022 on charges of conspiracy to commit wire fraud and conspiracy to commit money laundering, based on allegations about their credit card payment processing company Electronic Transactions Systems Corporation. The U.S. Department of Justice alleges from 2012 to 2019 the company defrauded approximately 7,000 merchant clients out of millions of dollars, attaching a hidden markup to nearly 87 million credit card transactions.

Also indicted were Jill Hall Mandichak, 43, of Virginia; Sean Lynch, 50, of Virginia; and Katherine Nguyen, 38, of North Carolina. All three filed sealed plea agreements on Dec. 15, 2022. They have also signed documents agreeing with prosecutors’ key allegations in the case, and the court ordered Nguyen forfeit a 2017 Mercedes-Benz CLS 450.

Vaughan was the company’s president and Akkad its executive vice president. Their remaining co-defendant, Gina Ellingsen, of Minnesota, was titled “payment industry expert,” according to the indictment. Prosecutors allege Vaughan and Akkad used the scheme to enrich themselves with multimillion-dollar bonuses, luxury vehicles, private aircraft and high-end real estate. ETS was sold in 2018, with Vaughan receiving approximately $107 million, and Akkad receiving approximately $33 million.

The Justice Department is seeking to seize assets they bought during that time, including Droumavalla. They are also seeking to seize Akkad’s house near Leesburg and condo in Georgetown, and Vaughan’s house near Leesburg, condo in Reston, two houses in Pebble Beach, CA, and a house in Malibu, CA. They could also face up to 30 years in federal prison.

Justice Department filings also indicate Vaughan brandished a gun at a process server attempting to serve him, and that he faces allegations of harassment, intimidation, and sexual assault from eight potential witnesses in the case, including two co-defendants.

Meanwhile, the prosecutors and the defense have agreed to more time to prepare for a trial. A jury trial is scheduled for April 1, 2024. The case is being tried in the U.S Eastern District of Texas, in Sherman, TX. The City of Sherman is one of the clients allegedly defrauded. n

Investment Advisor Jailed for Fraud

A Brambleton man was sentenced June 6 to serve two years in prison for an oil, gas, and energy investment fraud scheme.

According to court documents, between January 2014 and August 2019, Ryan Riley, 50, a registered investment advisor, defrauded at least nine investors of approximately $434,100 by making false promises about oil, gas, and energy investments.

Riley made false statements about promised returns, supposed partners, and specific wells and leases that had been identified for the projects he was pitching. He told investors that their funds were going to be used for oil, gas, and energy related projects. Over time, Riley told those victims that certain deals fell through, but that the victims’ investments would be converted to new oil, gas, and energy projects. However, Riley routinely transferred the funds to his personal accounts, using the money to pay at least $149,000 toward his mortgage and making risky stock trades, which resulted in substantial losses, according to the Department of Justice.

As part of his sentence, Riley was ordered to pay $434,100 in forfeiture, with $388,750 in restitution. n