iPayment Loses Motion in Bankruptcy Case Brought by U.S. Bankruptcy Trustee

LOS ANGELES, CA – iPayment, Inc. today was handed a defeat in the case of ITSV Inc. v. iPayment et. al., pending in the United States Bankruptcy Court, Central District, Los Angeles, California. At a hearing today in the Courtroom of Bankruptcy Judge Vincent Zurzolo, Greenberg & Bass, iPayment’s long-time attorneys and present counsel defending iPayment against the fraud claims brought against the company and its principals by Howard M. Ehrenberg, United States Bankruptcy Trustee, were disqualified from further representation when the Judge ruled that they were in violation of the Rules of Professional Responsibility and the California Business and Professions Code by representing iPayment after they had previously represented adverse party, ITSV.

The Motion to Disqualify was successfully brought by Special Counsel to Trustee Ehrenberg, Pratter & Young, Attorneys, who alleged that the conduct of iPayments lawyers was a violation of the lawyer’s Canon of Ethics. Judge Zurzolo agreed and ordered their immediate removal. iPayment is now in search of new lawyers.

Robert J. Young, Esq., principal of Pratter & Young, commented on this initial victory: “This is but the first step toward the eventual defeat and exposure of iPayment’s fraudulent activities. We are confident of our case and its eventual successful resolution in favor of our client Mr. Ehrenberg, who represents the interests of those creditors and other parties damaged by scandalous conduct of the corporate defendants. When queried further into the particulars of the case, Mr. Young declined any further detailed discussion but did conclude: “iPayment’s entire foundation could very well be at stake if we are successful. Mssrs. Grimstad, Daily, and Torino, the individual perpetrators and driving force behind these schemes, are gambling that we won’t be. I’m not so sure that these businessmen will risk their entire company which is what this lawsuit is all about. The Trustee and his counsel are confident that they will come to their senses and accept responsibility before it is too late.”

All other motions in the case were continued until January 14, 2005, in order to give iPayment an opportunity to hire new counsel.