Gopalkrishna Pai Indicted in $98M Wire Fraud Scheme

A $98 million web of deceit unraveled this week as Gopalkrishna Pai, of Euless, Texas — formerly residing in Puerto Rico — was hit with a 34-count federal indictment for orchestrating one of the island’s most elaborate wire and bank fraud schemes. Charged with conspiracy, wire fraud, aggravated identity theft, and money laundering, Pai stands accused of weaponizing Puerto Rico’s tax incentives to fuel a criminal enterprise disguised as legitimate e-commerce.

The indictment, returned by a federal grand jury on May 15, 2019, lays bare a years-long operation beginning in May 2014 and stretching through October 2018. Pai allegedly created over 100 shell companies — dubbed Straw Companies — each equipped with falsified IRS Employer Identification Numbers and commercial bank accounts under his control. These entities were used to submit fraudulent applications to major merchant processors, including Humboldt Merchant Services, Paysafe Group Limited, and PayKings, to process electronic payments under false pretenses.

Central to the scheme was F9 Advertising LLC, a Puerto Rico-based limited liability company registered under the Export Services Act (Law 20 of 2012). Pai owned and operated F9, which sold personal care products online using a predatory negative option marketing model — charging customers by default unless they actively canceled. The model, paired with forged documentation, allowed Pai to funnel millions in credit card payments through merchant accounts that never should have been approved.

According to the Justice Department, Pai concealed his role by submitting fake IDs, stolen Social Security numbers, and forged signatures to merchant processors. These lies enabled him to bypass standard due diligence and open merchant accounts in the names of the Straw Companies. Payments processed by the companies were then routed into bank accounts controlled by Pai and ultimately transferred to F9, laundering the origins of the illicit revenue.

The fraud generated approximately $98 million in gross revenue — all built on falsified documents and interstate wire communications. Each submission of false data across state lines triggered additional wire fraud charges. With 19 counts of wire fraud, five of aggravated identity theft, and nine of money laundering, the charges reflect the sprawling nature of the alleged conspiracy. The FBI is continuing its investigation.

“This individual took advantage of Puerto Rico and Law 20 to create a company, F9 Advertising, to generate significant revenue through a fraudulent scheme based on lies and falsified documents,” said U.S. Attorney Rosa Emilia Rodríguez-Vélez. “The indictment underscores the USAO’s commitment to the investigation and prosecution of all types of fraud, and to our continued vigilance against those who exploit economic incentives for criminal gain.”