Court, FBI looking at missing ATM funds

Tuesday, March 23, 1999 | 11:40 a.m.

District Court has been asked to resolve Business Bank of Nevada's $2 million loss of cash alleged to have been diverted illegally through an ATM network.

The loss, which resulted in a charge against 1998 earnings for the three-year-old community bank based at 6085 W. Twain Ave., is the subject of a suit filed in Clark County District Court against the owner of 117 automated teller machines located throughout Las Vegas.

The bank is attempting to recover cash it supplied to the machines through an agreement with NMS Financial Inc. that began May 22, 1997.

Business Bank of Nevada's suit, filed in December, names NMS Financial and its sole shareholder, president and director, Errol Vestuto.

NMS Financial, which now is operated by Vestuto's DCI Inc., in February filed a countersuit against Business Bank saying it was conspiring to take business away from NMS.

The bank's suit said through its agreement with NMS the bank provided cash to the ATMs, which was replaced or offset the next business day by electronic transfer from NMS. The two companies split the fees generated in the ATM transactions.

The suit said in December, the bank identified four ATMs as being inactive since the previous spring. When a bank officer investigated, it was discovered that two locations had no ATMs and two others had machines owned or operated by another company.

The bank sought to recover $110,940 in the machines. Meanwhile, the bank began investigating the status of other ATMs with random checks and became concerned when bank officers discovered that on seven high-volume ATMs, two were inoperative and five had their terminal identification numbers changed.

The bank then decided to file suit, alleging breach of contract, conversion and fraud.

In DCI Inc.'s response and countersuit, the company sued for breach of contract, fraud, civil conspiracy, interference with contract and defamation. DCI's suit accuses the bank of conspiring to take over a company that operated as a broker for several financial institutions that also worked with NMS.

The attorney who filed the countersuit on behalf of DCI has since withdrawn from the case. No new counsel has been retained. Vestuto could not be reached for comment.

The attorney who filed the bank's original suit has turned the case over to a larger Las Vegas firm because of its complexity.

The bank said a criminal investigation is under way, but declined to say which agency or agencies are looking at the case.

Bank fraud cases usually are investigated by the FBI. A spokesman for the FBI's Las Vegas office said that in light of public disclosures about the case, agents have begun looking into it.

Bank President Al Alvarez said on Monday that examiners from the Federal Deposit Insurance Corp. are expected to conclude a review of bank books this week. Customers aren't at risk because the funds are federally insured.

Alvarez said the financial integrity of the bank is stable and that the ATM system is secure.