Trucking Officials Guilty In $3.6 Million Check-Kiting Scheme
June 13, 2013
Two officials with Ohio-based Dart Trucking have been found guilty of bank fraud charges related to a $3.6 million check-kiting scheme.
The U.S. Attorney’s Office for the Northern District of Ohio says Timothy Kephart, the chief executive officer and Mark Michael, the chief financial officer, were both found guilty of one count of conspiracy to commit bank fraud and one count of bank fraud.
Kephart and Michael were charged with kiting checks, in conspiracy with Lee Stoneburner, the president of Dart Trucking, from October 2007 until February 2010, from various accounts of Dart Trucking at Huntington Bank, in Columbiana, Ohio.
Stoneburner previously pleaded guilty to conspiring to commit bank fraud and is awaiting sentencing.
A check kiting scheme involves writing a series of worthless, non-sufficient funds checks where a NSF check from one bank account was deposited into another account; another NSF check would then be written to cover the previous NSF check, concealing the overdraft from the bank, such that a false balance, or “float,” was created in the accounts. The defendants would then use that falsely created “float” to pay bills, expenses and their salaries.
According to prosecutors, the evidence at trial established that it was a complicated, daily task to compute the amount of NSF checks that had to be written and to track what accounts had to be “covered” and from which accounts an NSF check could be written to cover a particular account. These officers involved their clerical staff in tracking and covering these checks. The use of “controlled disbursement accounts” or “CDAs,” which allowed the company an extra day to post its expenses before they paid them, gave the company a float it could draw upon over the course of this scheme.
Kephart and Michael are scheduled to be sentenced on Sept. 4.
Minnesota-based Dart Transit is not affiliated in any way with Dart Trucking.