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Jury Orders Cardservice International, Humboldt Bank To Pay Escort Service $3.15 Million

A Los Angeles jury awarded the owners of the nation's largest escort service $3,150,000 in damages in their suit against Cardservice International (CSI) and Humboldt Bank on August 8, 2003.

The award includes the refund of a $150,000 security deposit, which the plaintiffs say was wrongly seized, and $3 million in punitive damages.

The plaintiffs, Security Network, Inc. and Custom Tooling and Service, Inc., based in Fort Lauderdale, Fla., were processing more than $200,000 a month in credit card charges, according to a statement made by their attorney, Howard King of Los Angeles.

The suit claims that CSI, a wholly owned subsidiary of First Data Corp., and Humboldt Bank terminated the agreement to process credit card transactions for the escort service and then withheld the security deposit and merchant processing funds.

CSI and Humboldt had been processing transactions for the plaintiffs for five years. The jury found that the termination of the merchant contract had no legal justification; according to King, the punitive damages awarded reflected the "reprehensibility of the defendants' conduct in both withholding the merchant's funds and trying to justify same by alluding to the adult entertainment nature of the plaintiffs' business."

Humboldt Bank CFO Pat Rusnak said this particular merchant account had been included as part of CSI's portfolio and that CSI had full discretion to ask for a large security deposit because of the inherent risk in the type of processing involved. Rusnak also said that verdicts on several other counts in the suit were returned in favor of CSI and Humboldt. "The jury set aside everything else; they rejected the charges of breach of contract and fraud," Rusnak said. "We think the award of punitive damages is not consistent with the charges. We think the jury made a mistake.

"We will continue to see this through the post-trial motion process, and through the appeals process if necessary, until the matter is resolved to our satisfaction."

CSI spokesperson Samantha Smith said that while the company's policy is to not comment on ongoing, open court cases, CSI will be "definitely appealing the verdict."

Netherlands native Arthur Vanmoor, owner of the Florida-based escort service, served time recently in the Broward County, Fla., jail on pandering charges; he has also been incarcerated by the Immigration and Naturalization Service for alleged irregularities on his green card application.

Vanmoor's complaint stated that Humboldt Bank and CSI cost him considerable income when they arbitrarily stopped processing transactions made by his customers. Both Humboldt Bank and CSI are based in California.

According to a story in the Los Angeles Daily Journal, nearly seven hours of videotaped depositions showed Vanmoor wearing sunglasses and a "black sparkly blazer;" he denies allegations he is a pimp.

In that article, King said during the deposition, his client often sneered at the camera and frequently took the Fifth Amendment by holding up five fingers. Defense attorneys also caught Vanmoor in several lies. "Let me put it this way: I was surprised I won," King said in the story.

Humboldt Bank is one of several banks that sponsors CSI for processing Visa and MasterCard transactions, said Smith.

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