Risk & Compliance

Former iPayment Execs Charged With $11M Fraud

Ex-employees Nasir Shakouri and Robert Torino allegedly embezzled funds through phony expense reimbursements, inflated invoices, and other improper...
Matthew HellerMarch 15, 2017
Former iPayment Execs Charged With $11M Fraud

Two former executives at iPayment have been accused of masterminding a scheme through which they allegedly embezzled more than $11 million from the credit card processing company through phony expense reimbursements, inflated invoices, and other improper accounting practices.

The U.S. Securities and Exchange Commission said former senior vice president of sales and marketing Nasir Shakouri and former chief operating officer Robert Torino concealed their misconduct for more than four years until August 2012, when another iPayment executive tipped off the company’s chief executive and CFO.

They allegedly were reimbursed by iPayment for more than $2.4 million in payments that they never actually made to third-party vendors using their personal credit cards, spending more than $1.8 million of the money on Dell computer equipment.

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The SEC also charged three other former iPayment executives — Bronson Quon, John Hong, and Jonathan Skarie — in a civil complaint with helping Shakouri and Torino by, among other things, falsifying books and records to hide the thefts of corporate funds.

In a parallel criminal case, Shakouri and Torino have agreed to plead guilty to federal charges of conspiracy to commit wire fraud.

“As alleged in our complaint, these executives manipulated iPayment’s internal accounting systems, lied to the external auditor, and caused approximately $11.6 million in losses to the company,” Sanjay Wadhwa, senior associate director of the SEC’s New York Regional Office, said in a news release.

iPayment primarily processes credit and debit transactions for small merchants, many of whom are recruited to use iPayment’s services by agents or independent sales offices. The company sometimes paid sales offices a portion of the fees it collected from the merchants recruited by the sales offices, as well as bonuses and referral fees collectively known as residuals.

In addition to the fake reimbursements, the SEC said Shakouri and Torino defrauded iPayment of residuals and other related payments totaling more than $6.1 million and pocketed about $2.1 million by inflating invoices to two third-party vendors, who then kicked back the overcharged amounts.