PEP Episode 035 — Exposing Malicious Schemes in the Payments Industry: Landmark Case Against Sabin Burrell

Podcast Description:

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.

On October 29, 2024, after a seven week trial, and nearly three years of litigation, a 12 person jury awarded $8,000,000.00 to plaintiff, Cliq, Inc. The suit detailed twelve causes of action, including, but not limited to, Intentional Interference With Contractual Relations, Conversion, Usury, Breach of Contract, and Unfair Competition.

The litigation, led by Global’s legal team, further detailed to the jury how Defendants, among other acts, committed tortious interference by wrongfully acquiring a valuable Arizona merchant.

The lawsuit detailed many violations by the Defendants, not limited to erroneous defaults and withholding residuals.

Perhaps most notably, the jury awarded $3M in punitive damages, which highlights the Defendants’ intentional, fraudulent actions as reprehensible.

About Global Legal Law Firm. Based in San Diego, California, Global Legal Law Firm has specialized in electronic payments law across the nation, since 2008. Global’s payments attorneys have established themselves as complex litigation experts, representing Fintech businesses across the payments industry, including ISOs, Payfacs, processors, card brands, and helping merchants get off the MATCH list. From transactional work to the courtroom, Global Legal Law Firm are your Expert Payments Attorneys.

James Huber (00:00):

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.

Karen Heumann (00:11):

Oh.

James Huber (00:11):

And then I’d go to it, and I was talking about the attorney and I asked, Hey, do you think Mr. Griffin would talk to you that way in the parking lot? And, objection, objection, objection. But I think it was lively because he’s just hammering on him. And as a trial attorney, you have to be careful there because I’ll do that sometimes too. And it usually

Karen Heumann (00:35):

Backfires

James Huber (00:36):

Because people, there’s a couple jurors that like that person, it doesn’t matter

Karen Heumann (00:40):

Who it’s, they start to feel sorry for the

James Huber (00:42):

Witness. And nobody felt sorry for Mr. Burrell though because they did award $3 million in punitive damages against Mr. Burrell personally. Against him personally.

Jeremy Stock (00:54):

Welcome to the Payments Experts podcast, a podcast of global legal law firm. We hope you enjoy this episode.

James Huber (01:08):

My name’s James Huber. I am the partner at Global Legal Law Firm.

Karen Heumann (01:13):

Hi, I’m Kieran Heman. I’m chief of staff at Global Legal.

James Huber (01:19):

Alright, 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 Saban 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 residual. So for example, he went to Mr. Burrell and said, Hey, I’d like to borrow a million dollars. And so Mr. Burrell would do these agreements where he is going, okay, 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 ’em.

James Huber (02:37):

So he would take actually double what 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 were 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, I’ll give you a million dollars, you pay it back each month with your residuals. So he did this widespread across the industry, 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, I’m in a pickle.

James Huber (03:39):

This guy, I did a loan with him and he took all my residuals. And I would say, okay, I’ve heard this story before. And they’re like, you ever heard of a guy named Saban Burrell? It’s like, I sure have. So we took this personally because these players in the space, there’s no room for that. The credit card processing, merchant service 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. One of my clients, he did this too, and I’d say this client is as close to what you would call a real friend. They’re still the attorney-client relationship. But I’d say that we’re good friends. We’ve known each other for over 10 years. His business, Saban 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 ’em 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.

Karen Heumann (05:07):

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. 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

Jeremy Stock (05:45):

To that.

Karen Heumann (05:46):

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 his obligations under the contract. Can you talk about that a

James Huber (06:00):

Little bit? Yeah. So what that was was, so Saban Burrell, his company was actually a sub ISO of Qlik. So they were sending merchants up to Qlik. And so when Qlik goes, okay, 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 are 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 are 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.

James Huber (07:01):

Burrell did it. They said it was this company that Mr. Burrell was a majority shareholder in, did it. So he wasn’t liable in that arbitration. 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, or not him, but the company he worked for, and he was involved. And we have the emails, Mr. Burrell’s wife, Kayla Jantz, she was involved with it too. There’s tons of emails. And 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 click’s merchants at the time. We just figured they can do whatever they want. They’re there merchants. So he was actually creating these default events.

James Huber (07:52):

And then another thing was everyone in the space knows that when a processor or a bank says, get rid of a merchant, you get rid of ’em. Otherwise the whole jig is up. Then 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, Hey, Andy, have you moved any merchants? And Andy’s like, sure, yeah, I moved a few of ’em because the processor said to terminate ’em, sent it over to him. 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. So they also were using these gotcha techniques.

Karen Heumann (08:37):

Well, it’s one thing you talked about, about the industry being kind of small and insular. The players are the same. 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 is a company, and Eva 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.

James Huber (09:06):

Yeah.

Karen Heumann (09:06):

Tell us about the shell companies that these companies are creating and how that plays into these complex litigation cases.

James Huber (09:17):

Yeah, I mean, what he did is he admitted it on the stand. He’s like, I spin up a new company for every different transaction, and that kind of makes sense, but it’s also, it’s still him behind it. And that was one of the things we were arguing is, look, okay, if I get a judgment against, one of ’em was capital managers, the company probably doesn’t have any money or whatever. So we have a big verdict against capital managers, but our argument is capital managers is just saving and braille, you can’t spin all of these companies up. And one really interesting thing that happened in this case is one of the original defendants was Saban Burrell’s business partner. But as 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.

James Huber (10:13):

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 quite a bit of fireworks for the jury because now Saban’s attorney was indemnifying him and he’s up there cross-examining his own client going, what are you talking about? 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’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 Buffet quote that my wife sent me the night before. And she was like, what you’ve used it is he said, look, you can’t get a good deal with bad people. So we had an agreement, these agreements, they were very draconian and you sign ’em, but you’re going, look, as long as everything’s good,

Karen Heumann (11:26):

As long as everybody’s upstanding,

James Huber (11:28):

As long as everybody’s performing like they should and they’re not going, gotcha. Ding, ding, ding. Our judge early on in the case, he’s saying, look, you’ve got a harsh agreement, and 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. My client wasn’t responsible for these things that they’re saying is a huge default

Karen Heumann (11:53):

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?

James Huber (12:27):

Well, I mean, one thing is this case was made for us. We’ve been suing this guy. We knew all the players. One of the reasons that we were able to bring in all of these people and we were trying to bring in more to say, no, look, he’s done this to all these people. It’s a pattern and practice. It shows motive, opportunity, intent, purpose, plan, knowledge, all the things that you need to do to bring in what they would others say is character evidence is we’re just picking up the phone. We know everybody in this space. His old accountant, we picked up the phone and said, Hey man, how’s it going? He is good. What’s up? And we’re going, can you tell us about this? This? He goes, oh yeah.

Karen Heumann (13:10):

So is the phone ringing now even more

James Huber (13:13):

When we did an announcement, the phone was ringing. We did a LinkedIn post, and people are like, yes, yes. Someone finally got him because that’s what Warren, the rest of the Warren Buffet quote is, you don’t do this with these bad people because they win. They know the tricks. They like litigation, they like fighting. I’m looking at Mr. Burrell’s sheet of litigation. We have another case against him in a month or two. Then he’s got,

Karen Heumann (13:44):

And he didn’t even come to the trial for

James Huber (13:45):

Half the time. He didn’t even show up to the trial. I don’t think that was a good

Karen Heumann (13:48):

Move. You have your client sitting there every day sitting, this is his livelihood is with

James Huber (13:52):

His wife. His wife. His daughters were there most of the day too.

Karen Heumann (13:54):

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,

James Huber (14:06):

Who didn’t show up. 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 the guy’s running on a script. I would ask a question like, okay, Mr. Hines, tell us about this email here where you say X, Y, Z. 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 guy was wind him up and let him go. But apparently when we pulled the jurors, they’re like, they liked him, but apparently not enough because they awarded damages against him personally.

Karen Heumann (14:51):

Well talk about too, about the differences in lawyering styles and about on the other side, you have attorneys hawking in, they’re not even from California, right? Talk about how that kind of played out.

James Huber (15:04):

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. They didn’t mind. Yeah, no. Well, one of, actually, I only remember one. There was one really vocal juror and he was saying, no, I liked him. Okay, everyone else is going, oh, I was miserable. But then we asked,

Karen Heumann (15:34):

He yelled a lot. He was real aggressive.

James Huber (15:36):

Yeah, really aggressive. He called sidebar every three or four a day where he’s going back and doing his thing back there. So

Karen Heumann (15:48):

Less of an issue, more of an issue between the witnesses. You feel like that?

James Huber (15:52):

Well, 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 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, 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.

Karen Heumann (16:27):

Oh,

James Huber (16:28):

And then I’d go to it, and I was talking about the attorney and I asked, Hey, do you think Mr. Griffin would talk to you that way in the parking lot and objection, objection, objection. But I think it was lively because he’s just hammering on him. And as a trial attorney, you have to be careful there because I’ll do that sometimes too. And it usually backfires because people, there’s a couple jurors that like that person, it doesn’t

Karen Heumann (16:57):

Matter who, they start to feel sorry for them, right? Witness.

James Huber (17:00):

And nobody felt sorry for Mr. Barre though, because they did award $3 million in punitive damages against Mr. Burrell personally,

Karen Heumann (17:08):

Against him

James Huber (17:08):

Personally. And again, this is just the jury verdict where they’re going to fight this and all of that, and maybe they get that lowered because punitive damages are something where it’s not really based. They’re just going, well, they said they checked a box that it was malicious, fraudulent, intentional. Intentional. He meant to do this. So

Karen Heumann (17:32):

They said, he’s a bad guy. We want to punish him.

James Huber (17:34):

They said he is a bad guy, and I’m glad they remembered because we called Mr. Burrell first because we wanted to, there’s a tactic to that. You want to get them up there. You don’t want them getting too comfortable. You want our client to get comfortable of how this trial’s going. But when you got him up there, it wasn’t good. He was smug. He was cocky and arrogant,

Karen Heumann (18:01):

And the jury saw right through it,

James Huber (18:02):

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

Karen Heumann (18:25):

To, I love that part of it. I love picking the people. I love getting to know the, 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 hard

James Huber (18:50):

And favorable to your case. I mean, that is what you’re trying to do. Our case was, we were going on the emotions. These are bad people because the agreements, the agreement, if you look at it technically, maybe, I mean, they still didn’t even win on that technically because they couldn’t even hold their own story straight between the deposition. Actually, Jeremy put together a video. It was a 15 minute highlight reel of both Sabr and John Hein saying, I don’t know. I don’t remember. 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 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, if we had somehow lost this case, we would be fighting too,

Karen Heumann (19:47):

Saying

James Huber (19:48):

We shouldn’t have lost. And so we are taking issues with certain things. We’re trying to get more, they’re saying, get less.

Karen Heumann (19:57):

You still have to fight over attorney fees.

James Huber (19:59):

Attorney’s fees are going to, we picked up this case halfway. The case was actually halfway, more than halfway along. We picked the case up. So we need the other attorney’s fees. And yeah, it’s going to be, 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. Make sure that there aren’t the hidden gotchas when the other side is saying things like, oh, that’s boilerplate. This, that, the other thing, alarm bells should be going off. The big thing is we’ve always prided ourself in this is call an industry attorney and call, of course, saying, call us, because we literally know everyone in the, if you’re getting into an agreement with a bad dude, we’ll know it.

Karen Heumann (20:52):

If

James Huber (20:52):

You’re getting into an agreement with somebody who’s just a harsh negotiator, we’re going to know that too. So even though we always say it was like, I got this great agreement, my uncle who does family law help negotiate it, it’s not the same. We are payments experts. This is almost all we do.

Karen Heumann (21:15):

We can investigate the people on the other side.

James Huber (21:18):

You investigate the people, and then we know how these things work. Because a lot of the times you’re in an agreement and you’re with these m and a attorneys who they just work behind the desk and great, we have a bunch of m and 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 mega firm and he’s going, this section really, really matters. And I was like, it matters to you, but let me tell you what a judge thinks about it. I was just in federal court in San Francisco, and this judge came down and said this about that clause. They’re agreements. They’re all the same. Even these 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,

Karen Heumann (22:13):

But we have a team to do that.

James Huber (22:14):

But we meet on it and we provide training to them of here’s the feed on the street. It also helps everything go faster because you’ll have somebody on the other end going, oh, this is so important. We’re going fine. Take it. Because nobody cares about that section. 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 currently and it doesn’t feel good, probably because it’s not.

Jeremy Stock (22:45):

Thank you for listening to this episode of the Payments Experts podcast, a podcast of global legal law firm. Visit us online today at global legal law firm.com.