A startup company seems to believe its new technology can revolutionize the credit card transaction business, by allowing users to substitute a selfie for a signature when authorizing a purchase.
And a Chicago businessman who invested in the venture believes he is being wrongly denied his cut of what he expects to be a windfall once the tech lands in the hands of the world’s largest processors of electronic payments.
Chicago businessman Mario Short filed a four-count complaint on Dec. 14 in Chicago federal court against erstwhile business partner Sharon Battle, of Georgia, as well as two of Battle’s corporate entities, identified in the complaint as Selfiepay and Derbywire.
Short, president and CEO of SYTE Corporation, a nationwide construction firm, described himself in his complaint as a mentor for “other entrepreneurs looking to start or grow a business but without the resources or experience to capitalize on their ideas.” It was in this capacity he said he was introduced by a mutual colleague – who, like Short, graduated from Tuskegee Institute – to Battle and her ventures.
Short said Battle, as founder, president and CEO of both Selfiepay and Derbywire, approached him as a potential investor and mentor. They communicated over phone and email, as Battle focused her pitch on Selfiepay, “a mobile wallet service provider designed to use facial recognition technology for credit card payment verification” by matching information stored with the app to a selfie taken at the purchase point to verify identity, thereby ostensibly limiting credit card fraud.
Derbywire, by contrast, “does not have a single product focus,” the complaint said. “Instead, it seems to be a parent company for many of Ms. Battle’s endeavors. For example, Derbywire includes a music streaming website, a headphones brand, and a digital music label.” Short said Battle told him “investing in Derbywire meant investing in Selfiepay” and referenced documents that underscored that implication.
In March, Battle share with Short "a patent application for the Selfiepay technology, a confidential evaluation of Selfiepay prepared by Thomson Reuters including Brokers notes, and a Selfiepay company,” according to the complaint. Short allegedly agreed to invest $50,000 with Battle’s companies, issuing a promissory note on March 18. Of that, $16,872.68 went to “Snimokaji IP for legal work relating to the patent application for the Selfiepay technology and an application to register the Selfiepay trademark,” his complaint said.
He issued a second note on April 20 for $70,000, payable April 3, 2016. The complaint detailed further advice and money Short provided Battle, including traveling to and paying for the funeral and burial of Battle’s father. The complaint explained how Battle, with cash in hand, then “ignored and marginalized” Short. Now, the complaint said Short believes Battle is “negotiating with MasterCard to sell or license the Selfiepay technology” or the company itself. Short accuses Battle of machinations that keep him from having a stake in Selfiepay.
According to published reports, Mastercard began testing the new technology in October for shoppers using their credit cards and a Selfiepay-like app when buying online.
“Battle made both written and oral assurances that Selfiepay was part of Derbywire,” the complain stated. “Short was provided written materials exclusively touting Selfiepay.” Yet the complaint said Battle now contends Short never “invested in Selfiepay or the Selfiepay technology, instead incorrectly insisting that he invested only in Derbywire. Under the circumstances, he is unlikely to be paid back the value of the two promissory notes.”
The formal counts alleged fraud, a violation of Illinois Securities Law, and another alleging Battle failed to register securities. In respect to the first three counts, Short has demanded the two promissory notes be rescinded and he be allowed to reclaim his $120,000 plus interest, legal fees and any additional relief.
The fourth count was presented as an alternative — a request for declaratory judgment that asserts Short did indeed invest in Selfiepay and its technology through his two promissory notes, and should have the legal rights of an investor.
Short’s attorneys are Heather L. Maly and Tomas A. Walsh, of Ice Miller, with offices in Chicago and Indianapolis.