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Wednesday, May 22, 2024 | Back issues
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‘About That $16 Million in Cash …’

HOUSTON (CN) - An ATM machine owner-operator claims Lloyd's of London wrongfully denied its $16.1 million claim after the money went missing while in the hands of an armored car company. On the day of the theft, Cardtronics says, the president of the armored car company was arrested on a charge of conspiracy to commit fraud, involving $49 million - including Cardtronics' money.

Cardtronics sued Certain Underwriters at Lloyd's London in Harris County Court.

"On or around February 8, 2010, Cardtronics suffered a major theft of over $16 million in funds when those funds were in the care and custody of Mount Vernon Money Center ('MVMC'), one of the armored vehicle companies used by Cardtronics," according to the complaint.

"MVMC's job was to pick up the cash from Bank of America, load it into cassettes, and transport the cash-filled cassettes to the ATMs. When the consumer withdraws cash from the ATM, the amount withdrawn is debited from his checking account at his bank and settled back to Bank of America on a daily basis through the electronic interbank system."

Cardtronics says that until the day of the theft, MVMC serviced 1,069 of its ATM machines.

Under the "armored carrier agreement" among Cardtronics, MVMC and Bank of America, Cardtronics "leased certain U.S. currency from Bank of America and made that currency available to MVMC (the 'ATM Cash')," according to the complaint. "MVMC was to store the ATM Cash temporarily in MVMC's vaults until such cash was delivered by MVMC to ATMs owned and operated by Cardtronics."

On the day of the theft of Cardtronics' $16.1 million, MVMC president Robert Egan "was arrested on a charge of conspiracy with unnamed others to commit fraud," Cardtronics says. And "At or around that time, MVMC's ATM-servicing business ceased operations."

The Manhattan Federal Court appointed a receiver for MVMC's assets on Feb. 12, 2010, and on March 1, 2010 the receiver filed a status report that stated that "some $48.9 million in cash belonging to MVMC's customers, including Cardtronics, was missing," according to the complaint.

MVMC president Egan and its CEO Bernard McGarry were indicted on charges of conspiring with unnamed others to commit fraud, and six counts of bank fraud concerning six of MVMC's customers, according to the complaint.

"The indictment charges that Egan and McGarry 'misappropriated their customers' money and used it to fund tens of millions of dollars in operating losses in MVMC's businesses and to enrich themselves.' Specifically, concerning the funds leased by Cardtronics from Bank of America, the indictment charges that Egan and McGarry 'fraudulently misappropriated millions of dollars in cash entrusted to MVMC by Bank of America,'" according to the complaint.

Cardtronics says it submitted a claim to MVMC directly and MVMC's insurers.

It says MVMC and its insurers "refused to pay a single dollar to Cardtronics towards this loss," and MVMC filed for Chapter 11 bankruptcy protection.

Cardtronics claims that MVMC's denial of its claim triggered Lloyd's London's obligation to cover its losses.

However, "In spite of the fact that almost two years have passed since the loss, Underwriters have still not paid single dollar to Cardtronics for what is an unquestionably covered claim," the complaint states.

"Underwriters' failure to timely reimburse Cardtronics for its loss forced Cardtronics to borrow $16 million from a group of seven banks led by JP Morgan Chase in order to repay Bank of America the amount of the stolen funds."

Cardtronics seeks punitive damages for breach of contract, breach of faith and fair dealing, deceptive trade, and Texas insurance code violations.

It is represented by Stephen Moll of Gardere Wynne Sewell.

Certain Underwriters at Lloyd's London are the only defendants.

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