Did You Even Know It Was Called Check Kiting?
Insufficient funds. If you’ve ever bounced a check, you already know the consequences. It’s guaranteed to make a headache of your bank account with overdraft fees. Meanwhile, it could put the bank on alert. If you find yourself accused of check kiting, you’ll absolutely need the advice of an experienced criminal defense attorney.
Check-kiting constitutes a form of check fraud. That said, it represents a very serious offense and could find you facing both federal and state charges. In some cases, accusations involving check-kiting schemes include the indictment of multiple defendants.
Just about everybody knows that it can take banks a few days to register deposits and withdrawals. In banking terminology, this time period represents the float. Check-kiting schemes take advantage of the float.
How Check-Kiting Works
Here’s what happens. Say you open a checking account at one of the banks located in the Journal Square area. All things considered, it doesn’t matter if you represent the need for a personal account or one for your business. In most situations involving check-kiting, the initial deposit matches the bank’s minimum requirements. It could be as low as $100.
In the meantime, you or a friend decides to start an account at one of the big banks on Kennedy Boulevard. You’re both careful to choose a financial institution that isn’t related to the first one. This time, you get away with only depositing $50.
The problem occurs when you issue bad checks from one bank to the other. You write a $500 check from the Journal Square account and deposit it in the other bank. You know you don’t have enough money to cover the check, but you figure you’ll take advantage of the situation.
As luck would have it, the bank on Kennedy Boulevard instantly credits your account. You decide to withdraw cash or even write checks from the second bank account. You’re counting on the fact that it will take a couple of days for the float to catch up and your first check to come back marked with insufficient funds.
More Than a One-Time Transfer
When it comes to check-kiting schemes, the transfers continue back and forth. It essentially amounts to chasing funds. If you presented a check for insufficient funds to pay a bill, the business might come after you. Many times, it’s the financial institution that loses out and suffers harm by allowing checks to clear during the float period.
Of course, you could be simply playing your odds. Maybe you know that you’re expecting a direct deposit to the Journal Square account that will well cover your $500 check. However, that doesn’t change the fact that you acted to transfer money, knowing the funds weren’t in your account.
This describes check-kiting in the simplest of terms. According to news reports, a Bergen County woman received a two-year sentence for her role in a check-writing scheme. A number of banks reported losses in excess of $1.7M as a result of this individual’s actions.
The Law and Check-Kiting
Truth be told, New Jersey law does not dedicate a section of the statutes to check-kiting. Instead, it falls under NJSA 2C:21-5, also known as the law pertaining to bad checks.
When you are charged with an offense under this section of the law, the prosecution needs to prove that you issued the check or checks “knowing that it will not be honored by the drawee.” Of course, this would also apply to writing checks from closed accounts.
The total amount of the check dictates the level of your offense and is akin to misusing electronic funds transfers (EFT). If you’re accused of passing a bad check of less than $200, you’re only faced with charges as a disorderly person.
For the most part, check-kiting charges represent vast sums of money and are indictable offenses. (Some other states refer to this level of crime as felony charges.)
Meanwhile, you could also face other charges related to check-kiting, including the following:
- Possession and use of a fake identification
- Identity theft
In many cases, there’s also the possibility that someone will sue you in civil court. If you used a check-kiting scheme to avoid paying a business for goods and services, you should anticipate collection efforts.
A criminal conviction could easily change your life. At the Law Offices of Anthony Carbone, we have thirty years of experience assisting individuals charged with all levels of crimes. Give us a call to see how we can help you.