The chief financial officer of a trucking company has received a sentence of two and half years in prison in relation to a $3.6 million check-kiting scheme.
Mark Michael was found guilty in June along with Timothy Kephart, the chief executive officer of Ohio-based Dart Trucking, on one count of conspiracy to commit bank fraud and one count of bank fraud in U.S. District Court Judge for the Northern District of Ohio.
Kephart and Michael were charged with kiting checks, in conspiracy with Lee Stoneburner, the president of Dart Trucking, from October of 2007 until February of 2010, from various accounts of Dart Trucking.
Stoneburner earlier pleaded guilty to conspiring to commit bank fraud is still awaiting sentencing while it was continued for Timothy Kephart.
A check-kiting scheme involves writing a series of worthless, non-sufficient funds checks, where an NSF check from one bank account was deposited into another account. Then 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 their bills, expenses and to pay their salaries.
The evidence at trial established that it was a complicated, daily task to compute the amount of NSF checks, which had to be written and to track what accounts had to be “covered” and from which accounts a 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 “CDA’s,” 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.
Minnesota-based Dart Transit is not affiliated in any way with Dart Trucking.