Alaska alleges ‘widespread fraud’ by Anchorage ATM enterprise serving villages, smaller companies

The state of Alaska has joined extra than a dozen civil lawsuits alleging “widespread fraud” by the owner of an ATM enterprise that serves Alaska Native village firms and other compact firms.

In a lawsuit filed Wednesday in Anchorage Exceptional Court, the condition accuses a guy named James Dainis of fraud, civil conspiracy and violating the state’s customer safety guidelines by pocketing income that belonged to ATM entrepreneurs. 

The go well with asks a decide to demand Dainis to return funds owed to the homeowners, to levy fiscal penalties, and to issue an order prohibiting even further identical actions.

Dainis operates a series of ATM-servicing companies, like Alaska ATM Services and Societe Financial LLC, that are also named in the lawsuit.

“This unhappy circumstance highlights the remarkable quantity of problems that an unscrupulous particular person in the financial market can bring about,” claimed Legal professional Typical Treg Taylor in a published statement asserting the lawsuit. “The Section of Legislation is dedicated to bringing undesirable actors to justice, but we also encourage small enterprises to be thorough who they do business with, and to routinely audit their financials.”  

By phone, Dainis claimed he was not mindful of the lawsuit till educated by the Beacon and that each and every of the state’s claims is mistaken.

“We’ve been in this organization given that 2006,” he stated. “It’s not a fraud scheme.”

He’s had challenges with 3rd-get together processing companies, and some firms have absent unpaid, he mentioned, but in every single situation, he stated he’s labored to make the problem much better.

“Given the actuality that we’ve been in organization for a extensive amount of time and we do support a vast foundation of consumers all around the point out, it’s not good and it’s a minor nefarious to paint this as some sort of fraud plan. Granted, there is an problem with a handful of shoppers, but it does not replicate our enterprise general,” he mentioned.

The point out is also accusing Dainis of defrauding companions that he sold organization pursuits to. In 1 case, he allegedly marketed contractual rights to 307 ATMs. Those people rights did not exist, the condition explained, and he then unsuccessful to execute the offer.

With regard to these allegations, Dainis explained he’s currently settled just one circumstance stated by the state, and in many others, the COVID-19 pandemic and resulting financial downturn impacted his profits just like it did numerous other companies all over the United States.

He expects litigation will take care of individuals challenges, he mentioned.

The point out also alleges Dainis employed two out-of-point out corporations as “shell companies” to conceal property from creditors. 

Untrue, Dainis explained. Those people firms are actually one, and they are holding corporations employed to personal a parcel of property.

“There’s no workplace buildings or condominiums or a number of homes or nearly anything like that,” he mentioned.

In a lot of pieces of rural Alaska, an ATM is the only banking institution offered, and the state’s grievance places ATM problems at its middle.

Court docket files submitted by the state and other plaintiffs clarify how they believe that the alleged fraud labored. 

Ordinarily, a retail store will personal the ATM on its property, then inventory it with money. A 3rd-get together processor records each individual transaction and is in cost of deducting cash from the customer’s lender account and sending it to the ATM owner’s account.

According to the state’s lawsuit, Dainis would provide ATMs to small organizations, which include rural suppliers, then operate as a intermediary. Payments from a third-party processor would go to accounts he managed, and he would send the revenue on to the ATM owner’s account.

In accordance to the condition and a lot more than a dozen other lawsuits, that didn’t often occur. 

The Aleut Group of St. Paul Island said in July that “the defendants’ history and apply of participating in deceptive and predatory organization methods with organizations in distant Alaska is demonstrated by court docket documents in similar legal steps versus the defendants.”

A 2017 lawsuit filed by Qemirtalek Coast Corporation of Kongiganak in Southwest Alaska is equivalent to quite a few of those people cases.

According to attorneys representing QCC, “at the very least $80,000 that Alaska ATM should really have deposited into QCC’s lender account … was missing from QCC’s bank account,” and the problems weren’t found for just about a 12 months.

QCC attempted to get its cash again and a total accounting of the issues, but when Dainis unsuccessful to cooperate to the company’s fulfillment, it sued. 

In 2019, QCC claimed that Dainis’ perform “is outrageous, finished with malice and undesirable motives, wanton, willful, (and) in reckless disregard to the legal rights of QCC.”

In November final calendar year, subsequent practically 5 years of legal battles, it received a judgment of pretty much $100,000 from a single of Dainis’ organizations. 

But since then, court documents clearly show that QCC has not been capable to accumulate, and before this thirty day period, a point out judge issued a demonstrate-bring about purchase necessitating Dainis to describe why he hasn’t complied with the judgment.

“Hopefully, that is settled within the up coming handful of months below,” Dainis mentioned. “That is anything we’re going to settle for the total amount. The merchant’s not getting rid of money, and we’re not inquiring them to settle for significantly less than they were being owed. We’re settling the issue and they’re staying refunded what they ended up doing.”

Various other circumstances continue to be unresolved in court, and the condition thinks other smaller businesses could have experienced comparable scenarios without the need of its expertise.

In addition to filing a lawsuit, the Alaska Office of Regulation is inquiring any ATM homeowners who believe that they might have been defrauded by Dainis to deliver an e-mail to [email protected] or to connect with (907) 269-5200.

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