Money Order Firm Short of Funds, Shut Down by State

The state Department of Corporations said late Thursday that it has shut down a money order firm that did not have the funds to pay for the money orders its agents issued, which could leave hundreds of consumers unable to pay their bills.

The Department of Corporations will seek a court-appointed receiver today to use the few remaining assets of Long Beach-based United Express Money Order Co. to pay the holders of the bad money orders, said senior counsel Judy Hartley.

“It’s not a very nice situation,” Hartley said, noting that United each month sold an average of 50,000 money orders worth $5 million through 130 agents, including liquor stores and check-cashing outlets.

Money orders typically are purchased by people who use them to pay basic expenses because they cannot afford or don’t like personal checking accounts at banks or savings and loans. Check-cashing centers, which usually sell money orders, have come under increasing financial pressure because of heavy competition.

United Express owner George Co could not be reached for comment.

Hartley said 12 of the company’s agents allegedly were not giving the company the proceeds from money order sales, and United had a shortage of about $790,000 in a trust fund from which money orders are paid when they are cashed. United had not collected from some of the agents for as long as five months, she said.

The Department of Corporations will be contacting many of the creditors and utilities named as payees on the money orders and ask them to give their customers extra time to pay, Hartley said.

“We’re asking them to understand that it’s not the person purchasing the money order . . . who is at fault,” she said, “but we have no authority to stop them.”

United has very few assets remaining beyond the $75,000 bond the company is required to post, Hartley said.