E-wallet company says credit card processor defrauded it. Arbitration award is later overturned.
Summary
E-wallet company says credit card processor failed to pay millions owed. Arbitration award to plaintiff MH Pillars Ltd. is later vacated by the LA Superior Court when plaintiff Pillars is criminally charged by the U.S. Attorney's office.
The Case
- Case Name: MH Pillars, Ltd. v. Payment World, LLC, et al.
- Court and Case Number: American Arbitration Association, International Centre for Dispute Resolution Case No. 01-16-0004-6934
- Date of Verdict or Judgment: Wednesday, May 02, 2018
- Date of Arbitration Award : Wednesday, May 02, 2018
- Date Action was Filed: Friday, January 15, 2016
- Type of Case: Breach of Contract, Fraud
- Judge or Arbitrator(s): M. Scott Donahey
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Plaintiffs: MH Pillars, Ltd.
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Defendants: Payment World, LLCRoman Balanko
- Type of Result: Arbitration Award
The Result
- Gross Verdict or Award: $20,733,285
- Net Verdict or Award: Zero. Arbitration Award vacated by the LA Superior Court after plaintiff MH Pillars is criminally charged with money laundering by U.S. Attorney's Office.
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Award as to each Defendant:
Joint and several.
Post-award, defendant filed in LA Superior Court to vacate the award. Motion to vacate the award was granted. Here is the court's summary:
Defendants filed a motion to compel arbitration under the Agreement, which the Court granted.
All claims asserted against Defendants were compelled to arbitration.The Current Motion
Defendants filed a renewed motion (the “Motion”) to vacate the resulting arbitration award (the
“Arbitration Award”). The Motion is made on the grounds that: (1) the arbitrator exceeded his
authority by issuing an order pursuant to an illegal contract; and (2) the Arbitration Award was
procured by fraud or undue means. The Arbitration Award is attached as Exhibit 9 to the
declaration of Shoshana E. Bannett (“Bannett”) in support of the Motion.
The Arbitration Award states that: (1) Defendants, jointly and severally, were ordered to pay
Plaintiff the sum of $20,733,285.00 for breach of contract, and interest thereon at the legal rate,
running from the entry of judgment on the Arbitration Award; (2) Defendants, jointly and
severally, were ordered to pay to Plaintiff the sum of $100,000.00 for unlawful conversion, and
interest thereon at the legal rate, running from the entry of judgment on the Arbitration Award;
and (3) Plaintiff was awarded $69,607.10 in fees and expenses. The Arbitration Award was
issued on May 2, 2018.
In opposing the Motion, Plaintiff advances the following arguments: (1) public policy favors
confirmation of arbitration awards; (2) Defendants have not produced any admissible evidence to
vacate the Arbitration Award; (3) there is no evidence that the Agreement was entered into for
unlawful reasons; and (4) Defendants cannot establish that fraud or undue means led to the
Arbitration Award. - Trial or Arbitration Time: 4 days.
The Attorneys
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Attorney for the Plaintiff:
Pivtorak Law Firm by David Pivtorak, Los Angeles.
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Attorney for the Defendant:
Gabriel Law Group PC by Jonathan Gabriel, Encino.
Alpert Law Group, APC by Jeffrey Alpert, Encino.
Facts and Background
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Facts and Background:
M.H. Pillars, Ltd. (“MHP”) is an e-wallet company which runs a website similar to PayPal. E-wallet companies normally can’t process customers’ credit card transactions directly for regulatory reasons so they have to contract with third parties that have existing connections to Visa/MasterCard approved banks.
MHP agreed to utilize a company named PaymentWorld in Orange County as its processor. After more than $20 million owing to MHP had accumulated in overseas bank accounts, PaymentWorld stopped sending the funds owed to MHP under their agreement. MHP demanded their funds and this dispute arose. For the first time, PaymentWorld asserted that it never had a contractual relationship with MHP. Apparently, the contracts signed by MHP were purportedly with foreign entities also bearing the PaymentWorld name which were owned by Russian and Moldovan nationals.
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Plaintiff's Contentions:
That PaymentWorld and its owner, Balanko, knew that MHP would not entrust its customers’ money to Russian businessmen who had no ties to North America and could disappear into the lawless fog of Eastern Europe. So he concealed their true identities by giving these various entities the same PaymentWorld name and used the same logo and markers for all of them, making them indistinguishable to anyone unfamiliar with the scheme. MHP was deceived long enough for the relevant bank accounts to be drained and the alleged perpetrators to vanish.
Further, defendant's claim that it was also a victim was contradicted by the carefully arranged structure of the various PaymentWorld entities and the repeated representations by PW-USA and Balanko himself throughout their dealings with MHP that these were all the same entity.
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Defendant's Contentions:
PaymentWorld claimed it was also a victim that was left holding the bag. When Payment World filed in LA Superior Court to have the arbitration award overturned, it claimed that MH Pillars was engaged in a criminal enterprise and that the arbitration of criminal matters is not valid.