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Armored car service accused of misappropriating millions from ATM ISO
August 8, 2010 - Frederick Lowe
Cardtronics Inc., the world’s largest non-bank owner of ATMs, alleges Mount Vernon Money Center, a third-party armored-car service provider, may have misappropriated millions of dollars slated for deposit in Cardtronics ATMs.
“It appears that all or some of the cash, which was delivered to MVMC (Mount Vernon Money Center) vaults for the sole purpose of loading such cash into our ATMs, was misappropriated by MVMC,” Cardtronics wrote in an Aug. 6 United States Securities and Exchange Commission filing. “We estimate that immediately prior to the cessation of MVMC’s operations, the amount of vault cash that MVMC should have been holding for loading into our ATMs totaled approximately $16.2 million.”
Mount Vernon Money Center, which also supplied cash to more than 5,300 ATMs, began ceasing operations in February when agents from the FBI and the Office of the Special Inspector General for the Troubled Asset Relief Program arrested Robert Egan, 64, president of Mount Vernon Money Center, and Bernard McGarry, 50, the company’s chief operating officer.
Preet Bharara, U.S. Attorney for the Southern District of New York, announced the indictments against Egan and McGarry in March.
The U.S. Attorney’s office charged Egan and McGarry with defrauding banks, other financial institutions, retailers, hospitals and universities out of $50 million in funds that had been entrusted to Mount Vernon Money Center, which had offices and vaults in Elmsford and Mount Vernon, N.Y.
Following the arrests and indictments of Egan and McGarry, the U.S. District Court for the Southern District of New York appointed a receiver who seized all of Mount Vernon Center’s assets.
“As a result of these actions, we were required to convert over 1,000 ATMs that were being serviced by MVMC to another third-party armored-service provider, resulting in a minor amount of downtime being experienced by those ATMs,” Cardtronics said in its SEC filing.
Cardtronics officials said they will seek forfeited assets owed to the company, but on May 27, the Mount Vernon Money Center filed for voluntary Chapter 11 in U.S. Bankruptcy Court. Chapter 11 allows businesses to reorganize under the nation’s bankruptcy laws.
“Accordingly, at this point, it is uncertain what amount, if any, may ultimately be made available to us from the vault cash seized by law enforcement authorities….Regardless, we currently believe that our existing insurance policies will cover any residual cash losses resulting from the incident, less related deductible payments,” Cardtronics said in the SEC filing.
Company officials added they cannot “reasonably estimate the amount of residual cash losses that may result from the incident.” Businesses had until Friday to file a proof of a claim against the armored car company under the bankruptcy code.
As of June 30, Houston-based Cardtronics operated more than 33,700 ATMs in the United States, United Kingdom, Mexico, Puerto Rico and the Virgin Islands.
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