Friday, November 8, 2024
James C. Huber and Joshua Herndon, attorneys at Global Legal Law firm, won the lawsuit filed on behalf of Cliq Inc. against Capital Managers LLC, Eventus Holdings LLC (dba Boom Commerce), Sabin Burrell, individually, and John Hynes, individually.
The jury found that Burrell, an entrepreneur and founder of several private investment firms and Boom Commerce, Hynes, general counsel at Boom Commerce, and their companies, breached multiple portfolio agreements and a loan note with Cliq Inc., a California-based ISO and financial technology company.
The monetary award includes $3 million in punitive damages against Burrell. It does not include attorney fees. An award for attorney fees is yet to be determined.
The lawsuit, filed in Superior Court in Orange County, Calif., detailed 12 causes of action, including but not limited to, intentional interference with contractual relations, usury, breach of contract and unfair competition.
James Huber, a partner in Global Legal Law Firm and lead attorney in the lawsuit against Burrell, Hynes and their companies, said he is aware that many ISOs have had issues with Burrell, but most lacked the monetary resources needed to pursue litigation.
"Global is aware that many ISOs have had issues with Sabin Burrell and what many believe are predatory practices," Huber said. "At one point I was getting three calls a week from ISOs that were having their residuals [wrongfully] held by Burrell and his companies."
Huber said Global was "grateful" that Andy Phillips, Cliq president and CEO, "made a stand and took Burrell and Hynes to the mat and proved a point!"
Here's what was going on. Burrell and his companies would make "loans to own" agreements with ISOs, with repayments collected through monthly portfolio residuals, Huber explained in an interview with The Green Sheet.
"The business model wouldn't have been bad if they had done it right," he said. But instead "Burrell had all these ways to keep ISOs captive."
For example, Burrell would make up bogus reasons for agreements to be in default and then withhold residuals. There were even instances when Burrell's companies contributed to merchants leaving Cliq, Huber said.
The lawsuit detailed many violations by Burrell, his companies and Hynes, including erroneous defaults and withholding residuals. The $3 million in punitive damages "highlights the defendants intentional, fraudulent actions as reprehensible," Huber and his co-counsel, Joshua Herndon, said in a press release.
"The electronic payments industry is a tight group, and while competition is fierce, the players should be treating each other fairly," Huber said. "When they don't, justice is right around the corner." 
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