Texas Man Guilty of $1 Million Check Kiting SchemeA Texas man this week pled guilty to defrauding three Texas banks of more than one million dollars.
Jeff Woodard, 48, of Harlingen, Texas, pled guilty to one count of bank fraud, admitting he operated a check kiting scheme involving four bank accounts held in the names of several of his former businesses.
At a hearing before United States District Judge Andrew Hanen, Woodard admitted to his scheme. He operated Harlingen Imports, also known as Competition Car and Truck Center, in Harlingen, TX; Competition Chrysler Dodge Jeep and Competition RGV in Raymondville, TX; and Competition Motor Sports, with locations in Harlingen, Texas, and McAllen, TX. The check kite scheme happened from Nov. 1, 2004 through Jan. 30, 2006.
A check kite occurs when a person passes checks back and forth between banks before the checks have time to clear to create the appearance that the bank customer has more money in the accounts than he actually does. A check is written on one bank and deposited in a second bank. Checks not backed by sufficient collectable funds are written from the second bank (or other banks) and deposited with the first bank to mask the fact that there are insufficient funds to pay the initial check. The process continues until the kite is discovered.
Prosecutors say Woodard or persons acting under his direction wrote multiple checks on one account and deposited them with another of the three banking institutions every day. There was no legitimate business reason for the vast majority of the checks to be written. The checks were all written in whole dollar amounts, typically in even hundreds, and were typically sequential. Woodard signed half of the checks. Others were signed by employees or business partners acting under his direction. The number and size of the checks dwarfed the reported revenues of his three businesses combined.
Through the FBI's detailed computer analysis, Woodard was responsible for kiting approximately $1.6 million. Woodward faces a maximum of 30 years in prison, a $1 million fine and five years of supervised release. His sentencing will be in May.