The bureau states MVMC practiced what is called “playing the float.” Simply put, playing the float is similar to writing a check for an amount you do not have in your checking account, hoping that you can make a deposit before the check clears. MVMC was allegedly doing this on a massive scale, but with funds that were supposed to be held on behalf of its customers. Instead of keeping the funds secure and in separate accounts, MVMC used its customers’ funds to pay for its operating expenses.
The case against MVMC was brought by the Financial Fraud Enforcement Task Force, which was formed to aggressively investigate and prosecute white collar crimes. The Task Force is combination of federal agencies and departments that work with local law enforcement.
Playing the float is a dangerous proposition, especially when doing so with money that belongs to other people. In this case, many of MVMC’s clients were banks that had accepted TARP funds. When taxpayer dollars go missing, you can expect the authorities to be very aggressive in investigating any fraud or abuse.
Source: NewYork.FBI.gov: Chief Operating Officer of Money Service Company Pleads Guilty in Manhattan Federal Court to Defrauding Banks, Retailers, Hospitals, and Universities Out of Over $50 Million; 10/14/10