Originally Syndicated on May 19, 2024 @ 8:19 am
Several former high-risk retailers have reportedly filed a lawsuit against T1 Payments, Donald Kasdon’s high-risk payment processor, alleging they were not paid for past-due invoices. Those who are keen to learn more about the situation can find it beneficial to familiarize themselves with Donald Kasdon’s background to comprehend the situation more fully.
Donald Kasdon: Who is he?
Born and bred in Miami, Donald Kasdon has gained global recognition as a prominent figure in the high-risk payments industry. Working in a challenging environment, this industry frequently treads the thin line between legitimate pursuits and those that can be viewed as dubious or unlawful.
Up until the company’s insolvency in the first few months of 2023, the Kasdon family was in charge of running the high-risk payment system known as T1 Payments Group. This enterprise was among the more well-known ventures connected to the Kasdon family.
The financial landscape of high-risk payments is notable for the prevalence of businesses involved in transactions deemed riskier by traditional banking institutions.
This group of businesses includes, for example, chargeback-prone companies or those that are unclear of their legal status. These enterprises are consequently faced with a wide range of challenging regulatory and compliance issues.
In this context, Pixxles Ltd., an Electronic Money Institution (EMI) licensed by the Financial Conduct Authority (FCA), is also noteworthy. Pixxles Ltd. was founded and is currently run by Amber Fairchild, who was previously engaged to Donald Kasdon.
One intriguing aspect that raises questions about this EMI’s operations and economic viability is the fact that it appears to be squandering a significant amount of cash resources without any clear or discernible business strategy.
The intricacies of the high-risk payment sector, T1 Payments Group’s bankruptcy, and the mystery behind Pixxles Ltd. all contribute to the complexity of Donald Kasdon’s story about this challenging and varied profession.
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Donald Kasdon: US Fraud And Bankruptcy Allegations
T1 Payments, a US payment processor, is involved in legal disputes and scandals. Fraud and misconduct charges have been made against company executives Donald Kasdon, Debra Karen King (also known as Debra Karen Kaisen), and Amber Fairchild. To lower risks like chargebacks and other commitments, T1 Payments abruptly terminated many businesses’ accounts and withheld cash.
Since the withheld funds were not given as promised, numerous companies have filed fraud lawsuits against T1 Payments. In its early 2023 bankruptcy petition, T1 Payments LLC highlighted its legal concerns by disclosing ten litigations from Nevada and California.
A growing number of lawsuits and complaints caused T1 Payments LLC to declare bankruptcy in Nevada. Although the firm may have taken this action to protect itself from lawsuits, many creditors are now requesting repayment as a result of the bankruptcy process.
Among the 1,500 debtors, the great majority were previously pleased T1 Payments customers. New U Life Corporation, which has outstanding funds totaling more than $5.2 million, Hyper Sls Ltd, which has approximately $350,000, G Com Pte Ltd, which has $231,000, and D.N.G FZE, which has $225,000, are some of the customers who have suffered significant losses. The bankruptcy procedures have resulted in losses estimated to be in the tens of millions of dollars.
T1 Payments’ chief technologist, Donald Kasdon, has attempted to shift the blame for the company’s financial problems onto his mother, Debra Karen King, by alleging that she embezzled a sizable portion of the funds that were under the company’s control.
The situation is so complicated that questions have been raised about the company’s financial operations and the principal participants’ accountability. To find a solution and compensation, many creditors and retailers have therefore turned to the bankruptcy process.
The Problems With UK Pixxles
Furthermore, through its affiliations with T1 Payments Ltd. and TGlobal Services Ltd., T1 Payments’ reach was extended to the United Kingdom. While the second one was able to escape the same fate by filing an appeal, the first one had to be deleted from the Companies House database in June 2023. Following her tenure as a director of TGlobal Services Ltd., Amber Fairchild founded Pixxles Ltd.
The company that the Financial Conduct Authority (FCA) approved as an electronic money institution in 2021 under reference number 927960 has seen a significant amount of financial transactions. Where this money comes from has not been revealed. Nonetheless, Pixxles is currently dealing with an increasing financial deficit.
The company suffered a loss of more than 1.1 million GBP in 2022, according to the most recent filing made to Companies House. Compared to the 954,463 GBP deficit that was noted the year before, this indicates a rise.
The company has already lost more than three million pounds, even with a massive infusion of 3.5 million British pounds in share capital. Furthermore, although they had decreased to a little more than 165,000 GBP by October 2022, Amber Fairchild’s financial relationships with Pixxles show continued liabilities.
Donald Kasdon: Payvision Claims and T1 Payments
Two individuals, Ray Akhavan and Ruben Weigand, were found to be accountable by a court in March 2021 for a bank fraud scheme involving the Eaze firm.
By pretending that transactions totaling over $150 million for marijuana were actually for face creams and dog supplies, this scheme deceived banks in the United States by using credit and debit cards to make these purchases.
As a result, the financial institutions were duped by the scam. Akhavan received a thirty-month prison sentence, while Weigand received a fifteen-month sentence.
It is alleged that between 2016 and 2021, a scheme similar to this one was carried out by ING’s subsidiary Payvision and T1 Payments, which is its American partner.
The Eaze case revolved around the fraudulent use of what are known as Merchant Category Codes (MCC) and a country of origin to conceal the true identity and whereabouts of the merchants, along with the kind of goods that they were offering.
Rather than just being a money laundering scam, it was found that this one involved fraud against banks.
According to information provided by the European Funds Recovery Initiative (EFRI), Payvision and T1 Payments were payment processors involved in the drug trade in the United States.
By establishing overseas aggregators and altering MCC codes, it is claimed that T1 Payments and Payvision knowingly concealed the true nature of the transactions. The accusations leveled against Eaze are comparable to this one.
Donald Kasdon: American Court Procedures
Claiming to have been duped by T1 Payments and Payvision, a few drug dealers brought lawsuits in the United States. In the United States, drug-dealing merchants and former clients of these companies have filed the following lawsuits against T1 Payments and/or Payvision.
Since marijuana is illegal in the United States, MasterCard and Visa do not allow its purchase. Sometimes shops manage payments for marijuana or Kratom by misusing merchant codes; this is known as “miscoding” or “transaction laundering.” This evades the policies of credit card companies.
Regarding a Payment Processing Agreement for online cannabis product retailers at bionicbliss.com, Sarah Grauert and HANNAVAS Enterprises LLC filed a complaint on February 27, 2020 (Case No. 2.20-cv-00411-KJD-VCF). It looks like the $1 million early termination fee at issue in the complaint is being contested.
On July 2, 2022, GAIA Ethnobotanical LLC filed Nevada Court Case 2:22-cv-01046-CDS-NJK. According to the complaint, Kratom payment processing started on August 12, 2020, and terminated on May 28, 2021. GAIA Ethnobotanical is requesting $0.4 million in its case.
A payment mechanism was devised in 2015 by the CEOs of T1 Payments and Payvision, Donald Kasdon and Rudolf Booker. According to court documents, Rudolf Booker advised Kasdon on European companies for this endeavor.
ING is still in business with US pharmacy merchants even after acquiring Payvision at the start of 2018. ING withdrew from these operations approximately in 2021. After Rudolf Booker and his co-founders departed in April 2020, Andre Valkenburg took over as CEO of Payvision, keeping the T1 Payments agreement through 2021.
ING/Payvision and T1 Payments battled while facing legal problems in the US. ING continuously kept an eye on Payvision’s U.S. operations and dangers, according to Donald Kasdon. In December 2022, Kasdon submitted T1 Payments’ bankruptcy petition.
Donald Kasdon: Decision on Bankruptcy for T1 Payments
T1 Payments, formerly connected to Payvision, faced fraud lawsuits from merchants. T1 Payments filed for bankruptcy due to these allegations in January 2023.
T1 Payments was run by Don Kasdon, his mother Debra Karen King (now Debra Karen Kasdon), and his fiancée Amber Fairchild. Following T1 Payments’ bankruptcy, Pixxles Ltd.—which is governed by the Financial Conduct Authority—was established.
A significant court decision concerns Donald Kasdon and his family, creditors of T1 Payments. Feeling duped, creditors demand their money back. This court decision exposes T1 Payments’ customer service practices.
I am not familiar with T1 Payments’ operations or the reasons behind the legal issues, but the court order might disclose the company’s business methods and the reasons behind the bankruptcy and fraud claims.
Main Ideas Discussed by the Court
1. Doing Without T1 Payments Stay
To temporarily protect debtors from legal action and collection efforts, NULC filed a request for relief from the involuntary stay.
NULC intended to proceed with its lawsuit against non-bankruptcy parties and obtain a ruling on additional T1 Payments.
The court determined that there was no justification for stay relief in this case. The case filed by NULC against T1 Payments was deemed legitimate by the bankruptcy procedure. T1 Payments do not need to be litigated individually.
2. Removing Debtors from Stay
A fundamental component of bankruptcy law, the automatic stay, was emphasized by the court as being restricted to the assets of the bankruptcy borrower and their property as well as assets that are part of the bankruptcy property. During the bankruptcy process, it serves to protect the contested property against potential claims by creditors.
The automatic stay does not bar claims against individuals who are not debtors in the bankruptcy proceedings. There is no need for a stay relief because NULC’s claims against non-debtors are not covered by the automatic stay. Thus, NULC shall be able to pursue its legal claims against the previously listed third parties notwithstanding the bankruptcy stay.
3. Relieving Order
Under Section 362(j) of the Bankruptcy Code, NULC filed for a “comfort order” as part of its bankruptcy proceedings. A consolation order is a court order that grants permission to a party to continue with a certain set of claims or legal actions.
Donald Kasdon: Final Case
The court denied NULC’s motion for a comfort order as well as its request to modify the automatic stay for judgment alone. By ensuring that external litigation on the same subject is unnecessary and redundant if a claim is admitted and permitted inside bankruptcy, the verdict essentially maintained the procedure’s integrity.
This was achieved by making sure that a claim cannot be contested outside of bankruptcy once it has been acknowledged and approved within bankruptcy.
Put more simply, this implies that the court’s ruling highlights how important the filing procedure is to ensure that any claims made against a bankrupt company be settled within the bankruptcy procedure’s bounds rather than being fought in a different context.
The Bottom Line
As a result, legal issues and fraud accusations have arisen from Donald Kasdon and T1 Payments’ insolvency. The importance of resolving disputes during bankruptcy has been highlighted by the bankruptcy court’s dismissal of requests for relief from the bankruptcy stay and a comfort order. Due to Donald Kasdon and his family’s high-risk payment processing, creditors have incurred significant financial losses and are currently involved in legal proceedings.
