Payment processor EMO unlicensed, insolvent; Texas money firm placed in receivership

Online payment processor EMO Corp. cannot account for $2.4 million belonging to customers and has no license to operate, the office of Texas Attorney General Greg Abbott said.

The state obtained an asset freeze and emergency approval for a court-appointed receiver to take over EMO Corp., Abbott said this morning.

Company officers Todd L. Tredeau, Tracey Jones and Nancy C. Humphries cannot fully account for more than $5.4 million that consumers placed into their accounts, Abbott said.

EMO's books show it has only $3 million cash on hand. EMO cannot account for $2.4 million belonging to its customers, Abbott said.

Abbott said the officers failed to register with the Texas Banking Department and obtain a license as a "money services business," as required by law.

"These officers must account for their outrageous mismanagement of consumers' money, which they promised would be secure," said Abbott. "The court's appointment of a receiver to seize control of this company's assets will provide an opportunity to determine where this money has gone."

EMO's website touts the service as a safe way to conduct financial transactions online, as a service to assist consumers who are recent victims of fraud and businesses that handle payrolls, Abbott said.

The firm has a current customer base of 17,000 nationwide, with 6,000 of these in Texas, according to information provided the Banking Department.

The Banking Department denied EMO a license for failure to meet minimum net worth requirements of $500,000 and other statutory requirements. Furthermore, according to the company's own financial statements presented to the Department of Banking, the company is insolvent.

Upon investigation following the asset freeze, the Attorney General will seek restitution to any consumer harmed by these transactions, as well as civil penalties and attorneys' fees.