The Payments Experts Podcast
Expert payments attorneys discuss the electronic payments industry from a legal perspective.
The Payments Experts Podcast
Exposing Malicious Schemes in the Payments Industry: Landmark Case Against Sabin Burrell | PEP035
What if you discovered that the person you trusted with your financial future was systematically plotting to ruin it? Join Global Legal Law Firm's very own James Huber, and Karen Heumann, as they unravel the decade-long saga of Cliq, Inc.'s David-and-Goliath battle against the deceitful schemes of Sabin Burrell. This episode lays bare the elaborate "loan to own" traps Burrell set to destroy the careers of unsuspecting sales agents and seize their residuals. We share a deeply personal account of a close friend whose life was nearly shattered by these unethical practices, only to rise from the ashes against all odds. With a remarkable $3 million punitive damages award, this landmark case strikes a blow against fraudsters in the credit card processing industry.
Step into the riveting courtroom theater, where a seven-week trial tested legal strategies, exposed bombastic lawyering styles, and underscored the crucial role of character evidence. From memorable exchanges to the jury's decisive verdict against Burrell, we highlight the strategic maneuvers and contrasting performances that led to justice being served. This episode emphasizes the significance of courtroom demeanor in high-stakes litigation and shines a spotlight on the tireless efforts to hold such malicious actors accountable. Witness how the triumph over Burrell marks a pivotal moment in the fight against fraudulent business practices.
Press release related to matter:
https://www.businesswire.com/news/home/20241101490613/en/Global-Legal-Law-Firm-Wins-8M-at-Trial-for-Its-Client-Cliq-Inc.-in-Suit-Against-Sabin-Burrell-John-Hynes-and-Their-Companies-for-Breach-of-Contract-and-Tortious-Interference
For expert payments litigation:
https://www.globallegallawfirm.com/
A payments podcast of Global Legal Law Firm
you know, have you ever had anybody talk to you like that? And he's like no, I've never had anyone talk to me like this, and he goes. Actually Mr Burrell used to talk to me like that, oh. And then I go to it and I was talking about the attorney and I ask you know, hey, do you think Mr Griffin would talk to you that way in the parking lot? And you know, objection, objection, objection. But I think it was, it was lively because he's just hammering on him as a trial attorney. You have to be careful there, because I'll do that sometimes too and it usually backfires. Yeah, because people, there's a couple jurors that like that person doesn't matter to feel sorry for the witness.
Speaker 1:And nobody felt sorry for Mr Burrell, though, because they did award $3 million in punitive damages against Mr Burrell Personally, personally.
Speaker 3:Welcome to the Payments Experts Podcast, a podcast of Global Legal Law Firm. We hope you enjoy this episode. We hope you enjoy this episode.
Speaker 1:My name's James Huber. I'm the partner at Global Legal Law Firm.
Speaker 2:Hi, I'm Karen Heumann.
Speaker 1:I'm chief of staff at Global Legal. All right, we're here today. We're going to talk about a recent jury verdict that we got in a case where it's our client was Click Inc was suing Sabin Burrell and the companies that he owned and operated. We were successful in this case. It was a knockdown drag out case. The general facts were our client was entered into three separate agreements and these agreements, we argued, were loan agreements. The jury actually disagreed with us on the loan agreements but what it was was Mr Phillips agreed to sell or use as collateral merchant residuals. So each month the merchants that are his customers generate an amount of residuals. So, for example, you know, he went to Mr Burrell and said hey, you know, I'd like to borrow a million dollars and so Mr Burrell would do these agreements where he's going. Ok, I'll give you a million dollars in return, you give me all of your residuals, not just enough to pay back the million dollars, all of them. So he would take actually double what the payments were under the agreements. The payments were under the agreements and what he ended up doing is creating default against fabricating default events and then just keeping all of his money and then not paying Mr Phillips click all of the money. So this business practice I can back up a little bit. One of the reasons we're so excited about this case is that we've been suing Mr Burrell probably going on roughly 10 years for this practice where he gets people into these agreements that are called loan to own agreements, which is it's just a loan. You know I'll give you a million dollars, you pay it back each month with the residuals.
Speaker 1:So he did this Widespread across the terrorized the industry. We, at one point we were getting, I will say, three calls a week of sales agents calling me up and saying, hey, you know I'm in a pickle, this guy, I did a loan with him and he took all my residuals and I would say, ok, I've heard this story before and they're like you ever heard of a guy named Saban Burrell? I did a loan with him and he took all my residuals and I would say, ok, I've heard this story before and they're like you ever heard of a guy named Saban Burrell? I sure have. So we, we took this personally because these players in the space, there's no room for that. You know the credit card processing merchant service industry it's a small industry. It's a small industry. I mean, it's a huge industry but the players in it, particularly the salespeople there's not a ton of them out there and when you have somebody going in, I mean he's literally ruining people's lives.
Speaker 1:One of my clients he did this too and you know I'd say this client is as close to you, know what you would call a real friend. There's still the attorney-client relationship, but I'd say that we're good friends. We've known each other for 10 years. He, his business saving, did the same thing to him and he had to move his whole family into a two-bedroom apartment shared with his sister and luckily he was able to rebuild. But it's pretty hard to rebuild because what happens when he takes these residuals, all of your sales agents? You still have to pay them or they're going to leave, and Mr Burrell knows this. And then what he also knows is that if he's holding all your money, you can't afford an attorney.
Speaker 2:So part of the issue is you have these really complex agreements and they have all these different layers to them. All these triggering events that's why we have jobs as attorneys is we're looking into these contracts, we're reviewing the provisions, we're finding equitable situations for our clients so that they can achieve the best result. But one thing you don't plan on is the unscrupulous other side manipulating the contract in such a way so as to create the default.
Speaker 2:It's one thing to have a trigger. It's reasonable to have a triggering event where if one side doesn't do what they're supposed to do, there are consequences to that. But in this situation he was actually going to great length to make them go into default, to have reason to hold back their money to not meet his obligations under the contract. Can you talk about that a little?
Speaker 1:Yeah, so what that was was so Saban Burrell, his company, was actually a sub ISO of click, so they were sending merchants up to click and so when click goes OK, I want to do a loan over here Mr Burrell was actually, they say they're purchasing, but we said it was using as collateral his own merchants. And so in the agreement that Mr Burrell and his personal attorney, who is also a defendant, john Hines, put in there is that if your residuals drop significantly, you're in default. Even if I'm getting my monthly payments, even if everything else is going fine, if your residuals drop below this arbitrary number that we made up, you're in default. And what happened here is that Mr Burrell was actually siphoning his own merchants away from that. And this is in a previous arbitration. They had proven that and an arbitrator said yes, and they didn't say Mr Burrell did it. They said it was this company that Mr Burrell wasa majority shareholder in did it, so he wasn't liable in that arbitration.
Speaker 1:So what we did in this trial is we took that decision and we go look, he was taking at least this one merchant, and it was a huge merchant, it was a restaurant conglomerate. He at least took this one. Not him, you know. But the company he worked for and he was involved, and we have the emails. You know Mr Burrell's wife, kayla jance, she was involved with it too. There's tons of emails.
Speaker 1:We had mr burrell's own employees and officers coming in and saying, yeah, we were moving these merchants. We didn't know that they were clicks merchants at the time. We just figured, you know, they can do whatever they want, they're their merchants. So he was actually creating these default events. And then another thing was everyone in the space knows that when a processor or bank says, get rid of a merchant, you get rid of them, otherwise the whole jig is up. Then you know Saban's not getting any of his money and he's never going to get any of his. And so at some point John Hines, saban's attorney, goes. You know, hey, andy, you know, have you moved any merchants? And Andy's like sure, yeah, I moved, you know, a few of them, because the processor said to terminate them, sent it over to them. They didn't say anything for six months. And then we found out they got into a little bit of financial trouble and they had to call all these things in default, and so they also were using these gotcha techniques.
Speaker 2:Well, it's one thing you talked about about the industry being kind of small and insular. The players are the same, and so one way, though, that they get away with this sort of behavior is they do create all these different companies you were talking before about. In the arbitration. It was a company, and Sabin was kind of behind the scenes In this, he was a little bit more in front of it. You were able to bring him directly into the litigation and indirectly bring in that other arbitration in order to prove your case. Tell us about the shell companies that these companies are creating and how that plays into these complex litigation cases.
Speaker 1:Yeah, I mean what he did, is he you know? He admitted it on the stand. He's like I spin up a new company for every different transaction and that, you know, kind of makes sense. But it's also you know, know it's still him behind it and that was one of the things we were arguing is, you know? Look, okay, if I get a judgment against, one of them was capital managers. The company probably doesn't have any money or whatever. So we have, you know, we have a big verdict against capital managers. But our argument is capital managers is just save and braille. You can't spin all of these companies up.
Speaker 1:And one really interesting thing that happened in this case is one of the original defendants was Sabin Burrell's business partner. But as we the case went along and his trial went along, we realized, oh my gosh, he did the exact same thing to this guy. He got this guy in a bunch of loans and called him in default and did the same thing to him. So in front of the jury it all unfolded of we're going, here's the defendant, and he actually was way more favorable to our case because apparently they're in a dispute and he's not too happy with Mr Burrell either. So he actually ended up being our witness, which was, you know, quite a bit of fireworks for the jury, because now Saban's attorney was indemnifying him and he's up there, you know, and cross-examining his own client going what are you talking about?
Speaker 1:That didn't happen. What he's like? Yeah, it did. Yeah, it did. So, yeah, that was really interesting. And I want to go back to what you said of you know, you've got an agreement, but you've got these bad people behind it, and actually I think I use this in my rebuttal closing argument to the jury is a Warren Buffett quote that my wife sent me the night before and you know she was like what you used it is. He said look, you can't get a good deal with bad people. So we had an agreement. These agreements, yeah, they were very draconian and you sign them, but you're going, look, as long as everything's good as long as everybody's upstanding as long as everybody's performing like they should and they're not going gotcha.
Speaker 1:You know, ding, ding, ding. You know our judge early on in the case he's saying you know, look, you've got a harsh agreement and you know these are shrewd businessmen. Don't enter into the agreement, it's going well, hold on a minute. There's more going on than just this. This, this, this. My client wasn't responsible for these things. That, they're saying, is a huge default.
Speaker 2:Going to that point. It's a complex litigation matter Millions of dollars, shell companies, different individuals, seven-week trial Very unusual to have a seven-week trial, jury trial. You got to pick a jury, you have to put up witnesses. You have an entire office that's still working on all your other cases at the same time. So how were you able to manage having that level of complexity and manage all the other cases in the office?
Speaker 1:Well, we. I mean one thing is you know this. This case was made for us. We've been suing this guy. We knew all the players. You know one of the reasons that you know we were able to bring in all of these people and we we were, we're trying to bring in more to say, no, look, he's done this to all these people. It's a pattern of practice. It shows motive, opportunity, intent, purpose, plan, knowledge. All the things that you need to do to bring in. You know what they would others say is character. Evidence is we're just picking up the phone. We know everybody in this space. You know his old, you know his old accountant. We picked him, picked up the phone and said hey, man, how's it going? You know he, you know he's good, you know what's up and we're going. Can you tell us about this, this, this? He goes, oh yeah.
Speaker 2:So is the phone ringing now Even more.
Speaker 1:The phone. When we did an announcement, the phone was ringing. You know we did a LinkedIn post and people are like, yes, yes, you find someone finally got him. Because that's what, warren, the rest of the Warren Buffett quote is you don't do this with these bad people, because they win. They know the tricks. Yep, they like litigation, they like fighting. You know I'm looking at Mr Burrell's you know sheet of litigation. You know we have another case against him in a month or two, you know.
Speaker 1:Then, he's got and he didn't even come to the trial for half the trial, for he didn't even show up to the trial. I don't think that was a good. You have your clients sitting there every day. This is his livelihood, with his wife.
Speaker 2:His daughters were there most of the day. He's had his employees for decades. He cares about his people, he cares about the longevity, he cares about his reputation in the business, and then, on the other side, you have some shysters who don't even show up who didn't show up.
Speaker 1:And then they had the attorney, john hines, which apparently the jury really liked, which we were going. This is wild, because we're sitting there and like the guy's running on a script, because I would ask a question like, okay, mr hines, you know, tell us about, you know. You're this email here where you say you know xyz, and he would be like, well, let me tell you about andy and everything that he got into, and he turns to the jury and he's talking to him and we're going I mean, the guys it was wind him up and let him go, but apparently when we pulled the jurors they're like they all they liked him.
Speaker 1:Yeah, but Apparently not enough, because they awarded damages against him personally.
Speaker 2:Talk about to, about the differences in lawyering styles and about you know, on the other side you have attorneys pro hawking in. They're not even from California.
Speaker 1:Yeah.
Speaker 2:Right, talk about how that kind of laid out.
Speaker 1:Yeah, it's not uncommon, I mean, we practice all over the country too. But we had the attorney on the other end. He had this really aggressive kind of bombastic, more like histrionic style, that apparently the jurors, they didn't mind it as much as all of us, yeah, no. I don't Well one of, actually I only remember one. There was one really vocal juror and he was saying no, I liked him. Ok, everyone else is going. Oh miserable.
Speaker 2:But then we yelled a lot. He was real aggressive. Yeah, really aggressive.
Speaker 1:He called you know sidebar every, you know three or four a day where he's going back and know, yeah, doing his thing back there.
Speaker 2:So um, so less of an issue, more of an issue between the witnesses. You feel like that? Well it created.
Speaker 1:It did create some memorable, interesting testimony. I think one of a lot of people's favorite clips was he's really grinding on this witness who is he's been in banking for 25 years. He's know what he's talking about. He's he worked for Mr Burrell for an extended period of time and he's really hammering on this guy. And I asked the question. I was like you know, have you ever had anybody talk to you like that? And he's like no, I've never had anyone talk to me like this. And he goes actually Mr Burrell used to talk to me like that.
Speaker 1:Oh and then I'd go to it and I was talking about the attorney and I ask you know, hey, do you think Mr Griffin would talk to you that way in the parking lot? And you know, objection, objection, objection, but I think it was. It was lively because he's just hammering on him as a trial attorney. You have to be careful there, because I'll do that sometimes too and it usually backfires.
Speaker 1:yeah, because people, there's a couple jurors that like that person doesn't matter to feel sorry for the right witness and nobody felt sorry for mr burrell, though, because they did award three million dollars in punitive damages against mr burrell personally, personally and again, this is just the jury verdict, where you know they're going to fight this and all of that and you know, maybe they get that lowered because punitive damages are something where it's not really based. They're just going he well, they said they checked a box, that it was malicious, fraudulent, intentional.
Speaker 2:He meant to do this, so they said he's a bad guy, we want to punish him they said he's a bad guy and I'm glad they remembered because we called mr burrell first.
Speaker 1:Okay, because we wanted to. You know there's a tactic to that. You want to get them up there. You don't want them getting too comfortable. You want, you know, our client to get comfortable of how this trial is going. But when you got him up there it wasn't good. He was smug, okay, you know, he was cocky and arrogant.
Speaker 2:And the jury saw right through it.
Speaker 1:And the jury saw right through it and they remembered seven weeks later when they returned the verdict. I mean we had a really good jury panel, the judge. It took a week to pick them, which I have never seen before. Usually it is a two-hour, three-hour Karen, you were there for it and integral to it too.
Speaker 2:I love that part of it. I love picking the people. I love getting to know the you know. It's the only time you get to know them at all, because you're not supposed to have any contact. You're not supposed to look at them, you're not supposed to talk to them in the hallway, but in that little short space of time you get to ask them questions and try to find people that you think will be fair and unbiased and listen and stick it out.
Speaker 1:And favorable to your case. I mean, that is what you're trying to do. You know, our case was, we were going on the emotions. These are bad people, you know, because the agreement's the agreement If you look at it technically maybe. I mean they still didn't even win on the technically because they were. They couldn't even hold their own story straight. You know, between the deposition, actually, jeremy put together a video. It was a 15 minute highlight reel of both Saban Brill and John Hines saying I don't know, I don't remember, ask him, ask him that question. And I think that that was an effective. I think that's the first thing we did, actually is we played the, what we call the I don't know video. So it was effective, but overall, we are pleased with the outcome. We are still fighting, as I would say to anybody. You know, if we had, you know, somehow lost this case, we would be fighting too. Yeah, we shouldn't have lost. And so, um, we are, you know, taking issues with certain things. We're, we're trying to get more.
Speaker 2:They're saying get less, um you still have to fight over attorney fees attorneys fees are gonna.
Speaker 1:You know, we picked up this case halfway. The case was actually halfway, more than halfway along we picked the case up. So you know the other attorney, we need the other attorney's fees and yeah, it's gonna be quite, uh should be quite, a big award. And so the important thing in this agreement I mean you said at the outside karen is make sure your agreements are tight, um, make sure that there aren't the hidden gotchas. You know when the other side is saying things like, oh, that's boilerplate this, that the other thingchas. You know when the other side is saying things like, oh, that's boilerplate this, that the other thing, alarm bells should be going off.
Speaker 1:The big thing is, you know, we've always prided ourselves in this is call an industry attorney and call, of course saying call us, because we literally know everyone in in the space. If you're getting into a, an agreement with a bad dude, we'll know it. Yeah, if you're getting into an agreement with somebody who's just a harsh negotiator, we're gonna know that too. So even though you know, we always say it was like, you know, like I got this great agreement, my you know uncle, who does family law, help negotiate it. It's not the same. You know we're. We are payments experts. This is almost all we do.
Speaker 2:We can investigate the people on the other side.
Speaker 1:You investigate the people and then you know, we know how these things work. Yeah, because a lot of the times you're in an agreement and you're with these M&A attorneys who they just work behind the desk and great, we have a bunch of M&A attorneys who they just work behind the desk and great, we have a bunch of M&A attorneys in here and that's all they want to do. Wonderful, where we come over the top is we're in the courtroom litigating about it. So I love it when I'm up against you know mega firm and he's going.
Speaker 1:You know this, this section really, really matters, and I was like it matters to you. But let me tell you what a judge thinks about it. Because I was just in you know, federal court in San Francisco and this judge came down and said this about that clause Because their agreements they're all the same, even these, you know, loan to own agreements. It's all in the payments ecosphere. So, having an attorney that does both litigation and is familiar with the agreements, I don't do much of the agreement work anymore because we have a full team here.
Speaker 2:We have a team to do that, but we meet on it.
Speaker 1:Yeah, and you know and we provide training to them of you know, here's the feet on the street. It also helps everything go faster because you'll have somebody on the other end going. You know, oh, this is so important we're going to find, take it, because nobody cares about that section. Yeah, so that's a big benefit. But yeah, I mean, when you're negotiating these agreements, or even if you are in an agreement currently, you can always renegotiate. Maybe. I mean, if you're in an agreement you know currently and it doesn't feel good, yeah, probably, because it's not.
Speaker 3:Thank you for listening to this episode of the Payments Experts Podcast, a podcast of Global Legal Law Firm. Visit us online today at globallegallawfirmcom.