The Securities and Exchange Commission has charged two former executives at iPayment, a Westlake Village, California-based credit card processing company, with overseeing a scheme to steal millions of dollars via bogus expense reimbursements, inflated invoices and various accounting maneuvers.
According to the SEC, the company's former senior vice president of sales and marketing, Nasir N. Shakouri, and a former executive vice president and chief operating officer, Robert S. Torino, allegedly reimbursed themselves for payments that they claimed to be sending to outside vendors. Instead, the money allegedly went to their personal credit cards.
They also allegedly conspired with vendors to pump up the amounts on invoices and receive kickbacks for the overpayments. In addition, they allegedly claimed improper commissions and bonuses from other company funds that were diverted in various ways.
The SEC is also bringing charges against three other iPayment executives, Bronson L. Quon, John S. Hong and Jonathan K. Skarie. In its complaint, it accuses them of participating in the scheme and helping Shakouri and Torino falsify books and records to hide the stolen funds. Quon, Hong, and Skarie were allegedly rewarded for their assistance with misappropriated iPayment funds.
“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,” said Sanjay Wadhwa, senior associate director of the SEC’s New York Regional Office, in a statement.
The Securities and Exchange Commission headquarters
Also on Friday, the U.S. Attorney’s Office for the Central District of California announced it too had brought criminal charges against both Shakouri and Torino.
In a statement Friday, iPayment said it had cooperated with the investigations and the executives were no longer with the company.
“The Government's announcement, which relate to events publicly disclosed by the Company almost five years ago, brings to a close a regrettable period during which these former employees and outside contractors embezzled Company funds from 2008-2012,” said iPayment. “Since then, the Company has implemented controls to address and prevent these occurrences in the future. As publicly reported by the Company in 2012, the Company was the sole victim of the embezzlement schemes, and no merchants, agents or other business partners of the Company were affected. Beginning in 2012 when the Company discovered the wrongful conduct at issue, the Company has cooperated fully with the Government's investigation and remains committed to doing so going forward.”