Defendant Ordered to Pay $300M Seeks Bankruptcy

Late yesterday I did a post on this subject...but it was just breaking, sohere's a follow up.

LOS ANGELES—The defendant in a fraud lawsuit filed for bankruptcy the same day a jury ordered him to pay $300 million to a venture capitalist who accused him of stealing his research into a Web-based credit card processing system.  Greg Daily filed the bankruptcy papers Monday in U.S. Bankruptcy Court in Tennessee, where he is a resident, court records showed.

A Los Angeles jury had decided on its award for plaintiff Douglas Shooker on Monday, imposing an automatic stay on proceedings against Daily, the Los Angeles Daily Journal reported. Jurors had been scheduled to deliberate about punitive damages later in the week. 

Jurors announced their award at the end of a 4 1/2-month trial over research on capturing revenue from Web-based purchases that Shooker said he shared with Daily's Nashville-based credit card processing company iPayment Inc.  Shooker claimed Daily later blocked his firm, Auerbach Acquisition Associates Inc., from exercising a contract to buy a majority stake in iPayment.  It was unknown whether Daily had filed for bankruptcy before or after jurors announced their award.

Daily's lawyer James Penrod and Auerbach attorney Jennifer L. Keller did not return calls from The Associated Press seeking comment and clarification Wednesday.

Editor's Note:  Here's more information from iPayment Inc. via their press release:


On May 12, 2009, iPayment, Inc. (“iPayment”) disclosed in the Quarterly
Report for the quarter ended March 31, 2009, filed on Form 10-Q with the
Securities and Exchange Commission the following:


On May 11, 2009, a jury in the Superior Court of the State of California
for the County of Los Angeles handed down a verdict in the amount of
$300 million, plus potential punitive damages, against Greg Daily, the
Company’s Chairman and Chief Executive Officer. This lawsuit was brought
against Mr. Daily individually and not in his capacity as the Chairman
and Chief Executive Officer or Director of the Company. Neither the
Company, nor any other shareholders, officers, employees or directors
were a party to this action. The Company has no indemnification,
reimbursement or any other contractual obligation to Mr. Daily in
connection with this action.




In response to this verdict, Mr. Daily has filed for personal bankruptcy
protection under Chapter 11 of the United States Bankruptcy Code in
Nashville, Tennessee. The Company is not a party to these bankruptcy
proceedings.


Information in this press release may contain “forward-looking
statements” about iPayment, Inc. These statements involve risks and
uncertainties and are not guarantees of future results, performance or
achievements, and actual results, performance or achievements could
differ materially from the Company’s current expectations as a result of
numerous factors, including but not limited to the following:
acquisitions; liability for merchant chargebacks; covenants governing
the Company’s indebtedness; weakening consumer spending and a generally
weak economy; actions taken by its bank sponsors; migration of merchant
portfolios to new bank sponsors; the Company’s reliance on card payment
processors and on independent sales organizations; changes in
interchange fees; risks associated with the unauthorized disclosure of
data; imposition of taxes on Internet transactions; actions by the
Company’s competitors; and risks related to the integration of companies
and merchant portfolios the Company has acquired or may acquire. These
and other risks are more fully disclosed in the Company’s filings with
the U.S. Securities and Exchange Commission, including without
limitation the Company’s Annual Report on Form 10-K for 2008. The
Company undertakes no obligation to revise or update any forward-looking
statements in order to reflect events or circumstances that may arise
after the date of this release.


iPayment, Inc. is a provider of credit and debit card-based payment
processing services to approximately 145,000 small merchants across the
United States. iPayment’s payment processing services enable merchants
to process both traditional card-present, or “swipe,” transactions, as
well as card-not-present transactions, including transactions over the
internet or by mail, fax or telephone.

iPayment Inc., Greg Daily