Card processing execs plead guilty to fraud scheme

It took three years, two mistrials and a several guilty pleas, but a case involving a Virginia-based credit card processing company and a handful of principals and other executives was finally put to rest Oct. 6, 2025, with a plea deal and the forfeiture of $7.63 million in cash.

According to an indictment handed down in July 2022 by a federal grand jury in Texas, executives of Electronic Transactions Systems Corp. (ETS), at the direction of the company's president, Edward Walsh Vaughan, were alleged to have defrauded thousands of ETS merchants through undisclosed markups of their processing fees between 2012 and 2019.

One of those clients was the city of Sherman, Texas, which brought the scam to the attention of the U.S. Attorney's Office for the Eastern District of Texas.

Hidden markups, misleading emails, obscured fee structure

In addition to Vaughan, who was listed as residing in California, those originally indicted on charges of conspiracy to commit wire fraud were Hadi Akkad of Virginia, Jill Hall Mandichak of Virginia, Sean Lynch of Virginia, Katherine Nguyen of North Carolina and Gina Ellingsen of Minnesota. Vaughan and Akkad were also charged with money laundering conspiracy.

The indictment described how Vaughan and the others executed the fraud, including embedding hidden markups in interchange fees, misleading merchant clients in emails and contracts, and failing to disclose the company's true fee structure in billing and account statements.

The indictment also detailed how Vaughan and Akkad used fraudulently obtained funds to personally enrich themselves with multimillion-dollar bonuses, luxury vehicles and private aircraft, as well as high-end real estate purchases. ETS was purchased—at an inflated value, according to the indictment. That sale, which was to Elavon in 2018, netted Vaughan $107 million, and Akkad received $33 million, according to charging documents filed by the U.S. attorney's office.

Two mistrials and guilty pleas

According to published reports, three of the accused pled guilty to the wire fraud charges in 2022. Two trials of Vaughan and Akkad ended in mistrials in federal district court in Texas. As reported by media outlets, the Department of Justice secured new indictments charging Vaughan and Akkad with conspiracy to commit fraud, charges to which the two pled guilty.

Under terms of the plea agreements, Vaughan forfeited over $5 million and Akkad forfeited nearly $2 million. Each also was ordered to pay a $100,000 fine, according to media reports. The city of Sherman, Texas, received $34,184 in restitution.

Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.