Evergreen E-Pay Solutions Inc., a Palm Coast e-commerce payment processing company, filed a federal suit Friday alleging Visa allowed three Belize banks to process international transactions without proper licensing, leading them to suddenly terminate Evergreen's agreement.
Sir Michael Ashcroft, one of Britain's wealthiest businessmen and a former deputy chairman of its Conservative Party, controls the Belize banks, according to the 21-count complaint assigned to U.S. District Judge Donald Graham.
Ashcroft owns Caribbean Investment Holdings, formerly known as BCB Holdings Ltd., which controls British Caribbean Bank International Ltd., Belize Bank Ltd. and Belize Bank International Ltd.
The three banks provided Visa credit and debit card processing services in Belize, processing up to 800,000 online purchases made by cardholders who were Internet customers of Evergreen's international merchants.
From August 2012 to February 2014, the banks and Visa processed $10 million to $15 million of Visa credit and debit card transactions for Evergreen's client merchants, including Film World Media, Razzle Enterprises Ltd., and UAB Click2Sell Ltd., according to the complaint.
Evergreen argues each of 700,000 to 800,000 transactions coming from the online merchants it brought to the banks were fraudulently coded as Belize retail transactions when they should have been coded "cross-border, high-brand-risk transactions."
"If they used the official code on paper, Visa would have to shut them down on paper," said Joseph J. Pappacoda, a Fort Lauderdale solo practitioner and former assistant statewide prosecutor who filed the complaint. "The Belize banks did not have the proper Visa licensing, did not have the proper capital reserves or the bank rating to process international Visa transactions. Visa turned a blind eye because they processed about 800,000 international transactions for Evergreen, because it was convenient for them to do so and because they were making a lot of money."
For the proper licensing, the banks would have needed capital reserves of $100 million and a high bank rating, Pappacoda said.
Evergreen and its owner, Robert Allen, were placed unfairly on a terminated merchant file list, bringing Evergreen's business to a screeching halt in early 2014. Allen was initially told his agreement with the banks was canceled because he had too many returns, but after investigation he discovered the banks didn't have the licenses they needed to process international payments as they had for years before he took them his business, Pappacoda said.
The Belize Supreme Court ruled last year that Belize Bank must pay Evergreen E-Pay Solutions over $3.3 million for abruptly ending the agreement where Evergreen provided online payment services and e-commerce merchant referral program, a Belize news report said. As of April, the award had not been paid.
Pappacoda said Evergreen used an offshore bank because although one merchant client was based in the United States, others were international clients.
"Any profits brought back to the United States by these merchants is fully taxable," Pappacoda said. "They need an acquiring bank that is authorized by Visa to process online transactions from outside the United States. The international merchants would not pay U.S. taxes but would likely have to pay taxes in their own countries."
He said U.S. banks are not always willing or able to provide Visa card processing services based on the international citizenship of some Visa merchants.
Counts include fraud, breach of contract, negligence, business defamation and conversion. Daily Business Review