First Data Merchant Services is a subsidiary of Fiserv, a Brookfield, Wis., company that makes banking software. Fiserv acquired First Data in July 2019 for $22 billion.
Ko, who specialized in serving the Asian restaurant industry, was unaware his clients were conducting fraud and was himself a victim, his New York-based attorney said.
“Mr. Ko unequivocally denies prior knowledge that these agents and merchants were engaged in fraud,” lawyer Jim Walden said in an emailed statement.
The settlement related to a single client within First Data’s wholesale channel, Fiserv said in an emailed statement. Fiserv also agreed to enhance its fraud-monitoring and compliance policies.
“We remain committed to ensuring that our business partners and merchants operate with integrity,” Fiserv said.
Walden and a Fiserv spokeswoman declined to say if Ko was based in the Atlanta area during his employment with the company.
A federal judge still must approve the agreement that requires First Data to pay $40 million and Ko $270,000. They will have seven days from the judge’s approval to make the payments.
The FTC will use the settlement money to refund consumers hurt by the scams, said Jay Mayfield, an agency spokesman.