The father-son team behind a wholesale hops business has had a rough few years of late: first falling victim to a foreign scam, then grappling with legal action against two tech giants. ‘company. Now Randall and Tase Flores, the pair behind US Hop Source in Englewood, fear bankruptcy may be their only way forward.
The problems began in the fall of 2020 when US Hop Source received a quote request for 1,100 pounds of hops from a so-called Marcos Estrada of Estrada and Sons for a new brewery being built in Panama City, Panama. The Floreses company buys and sells hops all over the world.
“It wasn’t out of the ordinary,” said father Randall Flores, 63, of deals they made with a Swedish merchant and a craft brewery in Palau.
First, business was business as usual: providing pricing, chatting on the phone, starting the billing process, and making a credit card payment of approximately $19,000, which initially showed up, did he declare.
A follow-up email from Estrada prompted US Hop Source to keep those jumps because it placed an additional order worth $31,000. Another credit card payment was issued, but this time online payment company Paysafe flagged it for further investigation.
Later, the two main payments were determined to be fraudulent. “We fell prey to a very sophisticated international business scam,” the elder Flores said.
The Flores aren’t the first to be tricked into an elaborate scheme. The Federal Bureau of Investigation has listed business and investment fraud as one of the most common types scams and crimes he comes across.
The Denver District Attorney’s Office recently released a fraud alerts on home improvement scams, Internal Revenue Service phone scams, and tax season phishing, among others.
In 2020, the number of Americans who fell for online fraud totaled nearly half a million, with victims aged 50 to 59 typically losing the most, according to SEON, which helps online businesses manage fraud. An online fraud case in the United States costs the injured party around $7,000 on average.
However, for the Flores, the financial situation is worse. After receiving the first payment of approximately $19,000, the US Hop Source team had already begun purchasing supplies and shipping related products, not realizing that “the card number used was a card number bank JPMorgan Chase which does not exist and has never existed”, Randall says Florès.
Tase Flores, 32, said after figuring it out they tried to contact Estrada and Sons to no avail. They filed police reports and met with the Department of Homeland Security.
Paysafe quickly claimed their money, although “it took over two weeks before they realized they had paid $19,000 on a credit card number that never existed,” said Randall Flores . The Flores allege that Paysafe terminated US Hop Source’s account in December 2020 and attempted to withdraw money from the company’s bank account on multiple occasions.
Paysafe declined to comment on the story.
In January, US Hop Source filed a lawsuit against Paysafe and Chase in the 18th Judicial District Court for Arapahoe County, alleging breach of contract by the former and negligence by the latter. The Flores asked for a judgment that they had no debt and were hoping to get money for attorney’s fees.
“By approving credit card transactions to a nonexistent credit card number, Paysafe acted recklessly,” according to the Flores complaint. “JP Morgan has a duty to merchants to exercise due diligence when approving credit card transactions allegedly made on cards issued by it.”
After some legal back and forth, Paysafe representatives argued that “US Hop Source currently owes Paysafe $24,050.00 in rebilled funds that have not been paid,” according to the counterclaim filed in March.
Chase filed a motion to dismiss in April, describing the events as “unfortunate, but at law they do not and cannot engage Chase.”
The court dismissed the case in May. Eric Coakley, who represents the Flores, explained that the dismissal was likely due to case law that “a bank is not responsible for fraud committed by a third party”, although “these cases tend to arise when someone someone steals someone’s credit card.
He called this specific case with the Flores “new on me.”
When asked to comment, Michael Lindsay of Snell & Wilmer LLP, who represented Paysafe alongside Ciera Gonzalez, replied: “Paysafe does not comment on pending litigation.
Ronald Tomassi, Jr., and Gregory Carter of Leόn Cosgrove LLP, which represented Chase, did not respond to multiple requests for comment.
“Arapahoe County District Court found no fault on the part of Chase and dismissed US Hop Source’s complaint against the bank,” Chase spokeswoman Maura Cordova said in a statement. sent by email.
In June, Chase filed a motion for attorneys’ fees, with Tomassi writing that the bank had incurred more than $14,000 to fight the US Hop Source lawsuit.
“They’re just trying to put us – a struggling two-man small business – out of business just because they made a mistake,” said Randall Flores, who described the company’s current financial situation. company as “catastrophic”. ”
Coakley said, among a few possible legal actions, “the next step could be these guys’ bankruptcy, unfortunately.”
He hopes for an eventual legislative solution. “When a bank makes a mistake like this, the risk should not be on the merchant.”