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Bankruptcy to conceal fraud?

August 21, 2019

A US businessman has been accused by a credit card processing company of hiding his fraudulent toner cartridge activities by filing for Chapter 11 bankruptcy protection.

In April, David Reich from Veteran Toner filed for Chapter 11 bankruptcy protection, declaring liabilities of $3.1 million (€2.8 million). Some of the debt is owed to Reich’s other company (NY Toner & Supplies Inc.) for services rendered, but $2 million (€1.8 million) is owed to TSYS Merchant Solutions, Broomfield, Colorado, credit card processing company.

As reported by Daily Voice Plus, TSYS believes that NY Toner & Supplies Inc. was only a front for Veteran Toner Services allegedly sold and serviced toner cartridges. Since 2013 credit card services for Veteran Toner were provided by TSYS.

The federal bankruptcy court in Poughkeepsie heard on 15 August, that TSYS Merchant Solutions seeks approval to continue a Colorado lawsuit against Reich, since it believes Reich “used fake invoices to disguise credit card transactions as toner sales, to raise cash for operations and personal expenses.”

Veteran Toner had offices in San Pedro, California, Chicago and Monroe. Its Monroe set up, TSYS alleges, is the source of fraudulent credit card activities, which caused TSYS to file a lawsuit in 2016 against Reich and his associates.

According to the article, TSYS in its lawsuit claims that Veteran Toner increased credit card activities in 2015 and began using the chargeback feature and suddenly ceased operations in August 2016. These transactions add up to $1.8 million (€1.6 million). The article said: “Credit card holders claimed that goods had not been delivered, but the correspondence, purportedly sent by unrelated individuals, used nearly identical language, including grammatical errors.”

When trying to recover the charges from Veteran Toner, TSYS got told by the bank there were insufficient funds which meant none of the chargeback transactions could be recovered by TSYS.

TSYS claims its debt is disputed and therefore is asking the bankruptcy court should not automatically discharge his debt, stating Reich’s filed bankruptcy is “almost certainly in an effort to delay or derail trial, or to seek a more convenient forum.”

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