According to news release issued late last week by the U.S. Department of Justice, indictments in the Mount Vernon Money Center ATM fraud now include Mount Vernon's chief operating officer, Bernard McGarry.
On March 10, the U.S. Department of Justice announced that the U.S. Attorney for the Southern District of New York had indicted Robert Egan, president of Mount Vernon Money Center, and Bernard McGarry, Mount Vernon's chief operating officer, on charges of defrauding financial institutions, retailers, hospitals and universities out of $50 million in funds that had been entrusted to MVMC.
Egan was arrested on Feb. 8 on a complaint previously filed in this case. McGarry was expected to surrender to federal authorities last week, the department said.
Egan and McGarry are both charged with one count of conspiracy to commit bank fraud and wire fraud and six counts of bank fraud. If convicted they face a maximum penalty of 30 years in prison and a maximum fine of $1 million or twice the gain or loss resulting from the crime for each of the counts. This case is assigned to U.S. District Judge John F. Keenan.
Egan, 64, resides in Bedford Corners, N.Y., and McGarry, 50, resides in Yonkers, N.Y.
"When we first brought charges relating to MVMC in February, the scope of the criminal conduct alleged was significant," said U.S. Attorney Preet Bharara in a news release from the Department of Justice. "After further investigation and according to today's indictment, however, it turns out that the alleged fraud was more than four times what was originally thought and victimized not just one bank, but also hospitals, retailers, universities and additional banks that entrusted hundreds of millions of dollars to Robert Egan and Bernard McGarry."
Story continues below...
Engage Customers with Strategic ATM Marketing
So, you’ve taken the plunge and launched one or more targeted offers at the ATM. But, are you getting those 20% take-up rates you were hoping for? Phoenix customers are. Find out five ways to drive more revenue with ATM marketing.
According to the indictment and other documents filed in the case:
MVMC engaged in various cash management businesses including replenishing cash in more than 5,300 ATMs owned by banks and other financial institutions. In addition, through a subsidiary called Armored Money Services, MVMC provided armored car services to financial institutions and retailers. MVMC also provided payroll services to various employers, including hospitals and universities, which permitted employees to cash their paychecks on their employers' premises.
In connection with these businesses, MVMC owned and operated several cash vaults, in which MVMC and its affiliated businesses stored and processed cash collected from and distributed to its clients, and other cash depositories such as the Federal Reserve Bank.
From 2005 through February 2010, Egan and McGarry allegedly solicited and collected hundreds of millions of dollars from MVMC's clients on the false representations that they would not commingle clients' funds or use the funds for purposes other than those specified in the various contracts between MVMC and its clients. However, according to the Department of Justice, Egan and McGarry misappropriated clients' money to fund tens of millions of dollars in operating losses in MVMC's businesses, to repay outstanding client obligations and to enrich themselves.
The defendants are accused of engaging in a practice known as "playing the float." Basically, MVMC was entrusted on a weekly basis to hold tens of millions of dollars for its clients for specific business purposes for a specified period of time. Relying upon the continual influx of funds, the Department of Justice says, Egan and McGarry misappropriated the clients' funds for their own use.
Furthermore, MVMC allegedly commingled different banks' and other clients' money in its vaults and bank accounts. Instead of segregating cash for each of its clients, investigators say MVMC personnel took whatever cash that arrived in the vault, regardless of its source, to fill the next day's ATMs. Additionally, McGarry, who controlled MVMC's bank accounts, transferred funds between and among MVMC's businesses in order to cover operating losses or to repay client obligations, the indictment says.
Egan and McGarry are alleged to have falsely represented to ATM clients in daily and weekly reports, often sent by email, how funds were being handled. The reports often purported, the department says, to represent the amount of cash MVMC held in its vaults on behalf of each client. These reports, called "Vault Inventory" reports, falsely represented to each client that its funds were segregated, the department says, and, in addition, the cumulative total cash balances represented on the vault inventory reports for all of MVMC's ATM clients falsely inflated the actual cash held in MVMC's vaults by tens of millions of dollars.
As a result of the alleged fraudulent commingling and misappropriation of customer funds, in February 2010 MVMC had been entrusted with approximately $70 million to $75 million by its clients, but only held approximately $20 to $25 million in cash in its vaults and bank accounts, according to investigators.
Following EGAN's arrest, the U.S. Attorney's Office for the Southern District of New York obtained a court-appointed receiver to administer the day-to-day business of MVMC, including administering claims by victims of the fraud.
Any business that believes it may have been a victim of this crime, should contact Wendy Olsen-Clancy, the victim witness coordinator at the U.S. Attorney's Office for the Southern District of New York, at (866) 874-8900 or http://www.usdoj.gov/usao/nys/victimwitness.html.
