Robert O. Carr, former Chairman and CEO of Heartland Payment Systems, Inc. (HPS), and Katherine M. Hanrathy are innocent.

The July 10, 2018 article in Digital Transactions describes in dim light his involvement in what has been “alleged” as insider trading by Securities and Exchange Commission (SEC) pending lawsuit in U.S. District Court in Bridgeport, Connecticut. The article offers a balanced view of the facts: Mr. Carr sought the advice, and received the blessing, of Heartland Payment System’s Chief legal counsel prior to purchase by Katherine M. Hanratty, Mr. Carr’s girlfriend, of $1 million in HPS stocks.

The June 1, 2018 article in Digital Transactions discusses the facts related to Ms. Hanrathy’s innocent purchase of Heartland stocks prior to public announcement of the acquisition. Heartland is claiming breach of contract and fiduciary duty; Mr. Carr calls it a ‘smear campaign.”

The case is Heartland Payment Systems LLC v. Carr, 3:18-cv-09764, U.S. District Court, District of New Jersey (Trenton).

In my view, these accusations are without merit, objectionable, and questionable.

Mr. Carr is a very smart man. He single-handedly created the sixth largest credit card processor in the U.S. He made a number of acquisitions, which I think were extremely useful. He weathered the massive 2008 data breach of over 100 million cardholders information when nearly everyone thought Heartland would not survive it. He envisioned entrenching Heartland’s position by forging relationship with states’ restaurant associations. At the time of his official departure on April 1, 2016, 38 state restaurant associations were in partnership with Heartland. The list goes on and on.

Mr. Carr is a philanthropist. He has raised and contributed over $35 million to provide college scholarship for impoverished students through his Give Something Back foundation. The likes of Anthony Robbins have poured in millions of dollars to help this worthy cause. Mr. Carr has a good heart. He is also a man who loves his girlfriend. He gave her $1 million of his own money, and she invested it in the stock of the very company her beloved man had built because she believed in it wholeheartedly. I would not put my money anywhere else if I were given a choice. Which man in love does not want to help his partner? We all do. That is honorable and only human. Also, which woman does not want to feel secure financially? Regardless of gender, we all want to feel financially secure. Mr. Carr and Ms. Hanrathy did exactly what any of us would do.

There is simply no motive here.

He sold his company for $4.3 billion in October 2015. Strangely, Global Payment gave him only a one-year non-compete clause, whereas that period usually stretches to three years. In retrospect, I surmise Global Payment regrets accommodating Mr. Carr with that short period. Had Mr. Carr been given a three-year non-compete, I think none of this would happen. Global Payments was eager enough to buy the resourceful and strong Heartland with its strong tentacles deep across the U.S. business landscape. But it has probably frowned realizing its own mistake of allowing Mr. Carr to come back to the game too early, a serious miscalculation.

He started Beyond, a new acquiring ISO, right after the 12-month period ended. Global Payments laid off some HPS staff in different departments due to duplication of efforts. A number of HPS sales force flocked to Beyond to work with the man they had come to admire. It is not difficult to imagine the reason for the allegation is motivated by money. It is entirely plausible and highly likely Global Payments did not think Mr. Carr, in his 70s, would return and weaken a competitor, let alone through departure of many former HPS sales force and managers to Beyond. That mindset, however, is ludicrous because there is plenty of business for everyone to compete for.

Mr. Carr’s attorney, Michael McGovern of Ropes & Gray, said “key facts are misrepresented in the lawsuit” and “critical exculpatory information known to [the company] was intentionally withheld.” Heartland’s accusations amount to “a smear campaign and an anti-competitive initiative thinly disguised as a lawsuit,” said Mr. McGovern.

In my opinion, SEC’s action is clear as the blue sky: some overzealous prosecutors who make poor decisions and wrongfully charge innocent people for their own current and future political gains and upward mobility. Winning cases, albeit many with no merit, increases their score on their “progress board” they could show to constituents and voters to portray themselves as fighters for justice and winners with a higher score. Many run for political offices and judgeship. Sounds familiar?

Additionally, it makes absolutely no logical sense that a man who made a huge amount of money would engage in insider trading all for (in relative terms) a very meager profit of $250,000 in pre-tax profit. He loves Ms. Hanrathy so much that he gave her $1 million on the fly and could and would give even more money.

Alleging Mr. Carr would engage in insider trading assumes Mr. Carr would be thoughtless and shortsighted. He is anything but. No one in their right mind would jeopardize their life and risk tarnishing their reputation for an amount that is a drop in the bucket relative to their wealth. Plus, the allegation is akin to a brazen bank heist in broad daylight in front of customers in the bank with NO MASK ON! Are you kidding me?

Mr. Carr’s attorneys have issued the following statement:

““Although not included in the SEC’s complaint, we have brought to the Government’s attention exculpatory information regarding the legal advice Mr. Carr received directly from Heartland’s General Counsel at the time these events were occurring. We are continuing to discuss this matter with the SEC, and we remain confident that this matter will be resolved favorably.”

These sinister allegations espoused by Global Payments smell like a smear campaign. I stand with a man who is helping thousands of poor children to better their lives and that of their nation than greedy corporations and ill-intentioned prosecutors engaging in ill-conceived charges moving in the wrong direction. I would say to them: “Go catch and fight real criminals.”

I ask everyone in this industry to stand up and speak against this travesty. If we do not, we will have allowed corrupt sentiments override the truth any time a competitor feels threatened or the judicial system uses its mighty power and flexes its massive tentacles to trample on innocent lives like an elephant over a mouse.

Robert O. Carr and Katherine M. Hanrathy are absolutely innocent.

Robert Carr And Katherine Hanratty Are Innocent

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