Grimstad accused of spending company money on escorts and more in salacious suit

The ex-CEO of an ex-Nashville payment processing company has been accused in Manhattan Supreme Court of spending nearly $500,000 in company money on escorts, shopping sprees and other markers of his “extravagant lifestyle.”

According to the lawsuit filed by the company he ran until being ousted last year, Carl Grimstad (pictured) hired an escort and her mother to work for iPayment, which he took private in 2006 along with founder and former CEO Greg Daily. He also spent north of $200,000 on hotel expenses during the move from Nashville, from which the company relocated to New York City after Daily was bought out in 2011, according to the suit.

The list of allegations is long. Among other things, the company claims Grimstad expensed golf trips and strip club jaunts, something he also encouraged employees to do, and those expenses caused “financial and reputational harm” to the company. The company’s claim that Grimstad inappropriately spent $445,000 in company funds also includes a charge that he used $10,000 to buy clothing for a bodyguard.

Grimstad’s attorney Marc Kasowitz told the New York Daily News the allegations about his client’s lifestyle were unfounded.

“Carl was not terminated for cause. This is more proof that this lawsuit contains total fabrications,” the attorney said, according to the tabloid.

Grimstad’s termination is also the subject of litigation. He sued last fall alleging that a hedge fund had plotted his ouster in order to gain control of the company.

Even before iPayment left Nashville, it was embroiled in legal battles.

A California investment group accused Daily of scheming to deny the group, fronted by Douglas Shooker, a majority stake in the company, which was founded in 2001. The settlement of that suit resulted in Daily selling his majority stake in the payment processor and Grimstad taking over as CEO; shortly after, the company moved to New York.

Daily now serves as CEO of Nashville-based i3 Verticals, a payment processing company he founded the year after leaving iPayment.