STARTUP, FOUNDER FILE $250 MILLION FRAUD SUIT AGAINST WELLS FARGO BANK, OTHERS
FOR IMMEDIATE RELEASE
NASHVILLE, TENNESSEE— NASHVILLE, TENNESSEE, June 20, 2019— E-commerce startup VIMALA LLC dba ALECIA (“Alecia”) and its founder, ALECIA VENKATARAMAN, filed suit today in the US District Court for the Middle District of Tennessee against defendants WELLS FARGO BANK, N.A., WELLS FARGO MERCHANT SERVICES, LLC, and FIRST DATA MERCHANT SERVICES, LLC for compensatory, statutory, and punitive damages totaling more than $250 million.
The lawsuit alleges that in 2016, the startup signed up for a merchant services account with the Defendants so that it could process its customers’ credit card payments. Alecia, an e-commerce platform that created and marketed popular shoppable videos, was growing at an astounding rate and needed a merchant services provider—the technical and banking power behind each swipe of a credit card—able to handle its growing volume of transactions.
Ms. Venkataraman says that instead of funneling customers’ credit card payments to Alecia, the Defendants kept the money and have not turned over a dime to Alecia. The complaint alleges that Defendants made excuses for their refusal to pay over the funds, insisted on opening multiple accounts for Alecia, demanded Alecia to establish a “reserve” but still refused to remit any of the credit card payments to Alecia. Ms. Venkataraman alleges that Wells Fargo Bank, N.A., Wells Fargo Merchant Services, LLC, and First Data Merchant Services, LLC knowingly and intentionally concealed the whereabouts of more than $1.6 million in funds that belonged to Alecia and then covered it up, repeatedly lying to the plaintiffs and promising that Alecia would be paid even though the Defendants knew that would never happen.
When the Plaintiffs requested to terminate the service that wasn't paying them, the Defendants threatened Alecia with more than $1 million in penalties and fees. Unable to afford such an unconscionable termination fee, Ms. Venkataraman spent two years demanding the money. In January of this year Wells Fargo shut down its open investigation and has refused to communicate with Ms. Venkataraman since.
More than two years later, Alecia still hasn’t seen any of the money from credit card charges processed by Defendants. The suit alleges that the Defendants knew that Alecia relied on the revenue from credit card transactions to stay in business but refused to pay the company its funds without any valid reason or justification, knowing that keeping the money was choking off Alecia’s cash flow. Alecia was forced to take on millions in debt to fund operations. Without the credit card revenues, Alecia then ran out of cash, had to lay off a staff of forty employees, and ceased business operations in October 2018. Since then, attempts to bounce back have hit a wall. Ms. Venkataraman can’t get funding for the business, and the company is foundering under the weight of its debt.
The federal lawsuit accuses defendants Wells Fargo Bank, N.A., Wells Fargo Merchant Services, LLC, and First Data Merchant Services, LLC of fraud, violations of the Tennessee Consumer Protection Act, conversion, negligence, breach of contract, and other torts. It alleges that the Defendants are directly responsible for knowingly, intentionally, and recklessly ruining Alecia, destroying its value, and causing the company to lose more than $40 million in open contracts.
"The facts in this case are shocking," says attorney Scott Maucere of Barham & Maucere LLC, the Nashville-and-Chattanooga-based law firm that filed the suit on behalf of Alecia and Ms. Venkataraman. “Here's this small business that's literally the American Dream. It's woman-and minority-owned, founded by Ms. Venkataraman in her living room with nothing but her hard work and innovation. And it's super successful, beyond anyone's wildest dreams. And they place their trust in Wells Fargo and the other defendants; Alecia needs Wells Fargo to make the volume of credit card transactions it's processing work. And Wells Fargo has this very basic responsibility of processing the transactions and timely paying out the money to Alecia.
“Instead, as the complaint alleges, Wells Fargo induces Alecia and Ms. Venkataraman to enter this really toxic relationship with the bank. The Defendants won't pay Alecia its hard-earned money. When the Alecia tries to leave the relationship, the Defendants say it can't leave until Alecia pays THEM a million dollars. Then, the Defendants spend two years gaslighting Ms. Venkataraman about the money: 'no one knows where it is,' 'yes it's coming,' 'those accounts never existed' - all in an attempt to keep her quiet. It's corporate gaslighting. They took Alecia's money and lied about it, all the while knowing the company was crashing without those funds it needed to stay in business. Never once has Wells Fargo or any of the other defendants explained why they took millions of dollars of this small business' money. Not once.”
Barham & Maucere LLC Managing Member Daniel Barham agrees: “The facts in this case go far beyond poor customer service. Once you get into the evidence, it's outrageous and appalling the way that a major bank and merchant services institutions can treat small businesses and their owners. This is not a complaint about overcharging fees or opening accounts without permission. The facts stated in the complaint show that these financial institutions literally wiped out a growing small business by hiding and misappropriating the very money they were supposed to protect. It's hard to imagine a situation in which a trusted financial institution could have acted more egregiously. Punitive damages are damages in a lawsuit used to punish parties for especially egregious actions. Alecia and Ms. Venkataraman are seeking punitive damages in this case in hopes they can prevent this sort of corporate malevolence from happening to other small businesses.”
The complaint was filed in the U.S. District Court for the Middle District of Tennessee (Nashville) and is styled Vimala, LLC et al v. Wells Fargo Bank, N.A. et al, Case No. 3:19-cv- 00513. For additional information, media or press inquiries, or requests for interviews, please email firstname.lastname@example.org or call 423.855.1755.