Two Chicago online merchants accuse San Antonio payment processing firm Usio Inc. of stealing a combined $1.8 million from them.
World Health Merchants and Laitan Group sued Usio and others in state District Court in San Antonio last week to recover the money they allege Usio won’t turn over.
World Health and Laitan sell books, guides and software- and web-development services focusing on health, lifestyle and alternative therapy healthcare management, according to the suit.
Publicly traded Usio provides merchants with payment processing services, including for credit and debit cards used for internet transactions.
Usio, through its San Antonio attorney Eric Pullen, denied it has engaged in improper conduct. It has to follow legal requirements imposed by the card associations, including Visa and Mastercard, he said.
Usio had concerns about the “validity” of some of the transactions it processed, Pullen said. The money is in the possession of its partner bank, Central Bank of St. Louis, which also is a defendant in the case.
“Part of the reason we have not asked the bank to release the funds is we had a third party who also made a claim to the very same money,” Pullen said.
Los Angeles attorney Eugene Rome, representing Crop King Seeds, an online seller of marijuana seeds, made the claim in a November letter to Usio, Pullen said.
Rome, though, subsequently tried to “withdraw the demand letter,” Pullen said. Rome now is among the attorneys who sued Usio on behalf of World Health and Laitan.
Rome confirmed he initially represented Crop King Seeds. He said he was retained by World Health and Laitan because of his “particular expertise” in payment processing.
But Rome wasn’t buying Pullen’s reason for why the money is still held by the bank.
“If the intention was to actually release the money, Usio and Central Bank could have behaved differently,” Rome said. He intends to scrutinize the bank’s oversight of Usio and its compliance with Visa and Mastercard rules.
World Health and Laitan say in their lawsuit that they were referred to Usio by Las Vegas-based Allied Platforms. Its Nevada business license is in default, the suit says.
Allied’s two managing members include Dmitry Kasatov, the complaint says. A McClatchy investigation, which the lawsuit links to, last year described Kasatov as partners with Russian businessman Andrei Muraviev in the marijuana business in California.
McClatchy reported Muraviev is believed to be the “Foreign National-1” referenced in the 2019 indictment of Soviet-businessmen and one-time Rudy Giuliani associates Lev Parnas and Igor Fruman.
The indictment says Parnas, Fruman and others conspired to make political donations — funded by “Foreign National-1” — to state and federal politicians. Election laws prohibit foreign nationals from making campaign contributions to candidates. Parnas and Fruman, figures in President Donald Trump’s first impeachment, are headed to trial themselves in October.
Kasatov is not a defendant in the San Antonio lawsuit, but Allied’s other managing member, Heriberto Cepeda, is named. Through Allied, Cepeda referred World Health and Laitan to Usio, the suit says. A call to Allied, which also in a defendant, was not returned.
Usio processed payments for World Health and Laitan from March 2 to April 1 last year, their complaint says.
At the conclusion of the processing relationship, the petition says, Usio retained more than $1.1 million from sales generated by World Health and almost $681,000 from Laitan’s sales.
Usio held those funds as “reserves” to protect itself from possible fines or charge-backs resulting from “trailing activity” on the merchants’ accounts, the court filing says. Charge-backs include instances when customers asks their bank to return funds for a purchase because they couldn’t get a refund from the merchant.
World Health and Laitan say the 180-day limit on charge-backs has expired, yet Usio continues to hold the funds “under a claim of ‘due diligence’ against the risk of loss, long after all activity on the accounts has stopped and all risk of loss has passed, in a transparent and self-serving effort to help itself to plaintiffs’ money,” the suit says.
“This due diligence effort is an ever-moving target, which defendants have employed as a pretext for Usio’s clear objective of theft,” the lawsuit adds.
An investigation by World Health and Laitan found a “pattern and practice on the part of Usio and Allied” involving the “onboarding and subsequent exploitation of merchants.”
Usio’s actions are in breach of its obligations to Central Bank and various Visa and Mastercard rules, the suit adds. Bank representatives did not respond to requests for comment.
In an interview earlier this year, Usio CEO Louis Hoch said it shares in a small percentage from card sales that players in the payment ecosystem split up. The players include card issuers, the card associations and the companies that process the payments. Allied got a cut for referring the business to Usio, the suit says.
Usio terminated the merchant accounts April 21, 2020, though the suit doesn’t give a reason why it did so.
Efforts to find an online presence for World Health and Laitan were unsuccessful. Rome, the lawyer for the companies, didn’t know if they were still conducting business.
Source: Credit Link