Maurice D. and Elinor Taylor - Page 5

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          of her sons 7 days a week, operating the cash register, taking              
          inventory, depositing receipts, and writing checks to pay the               
          store's creditors.                                                          
          Check-Kiting Scheme                                                         
               In late 1980 or early 1981, petitioner began a check-kiting            
          scheme.  Check kiting involves writing checks on a bank account             
          that has insufficient funds and depositing those checks into an             
          account at another bank (the second bank).  The credit received at          
          the second bank for the deposited checks is then used to issue              
          checks from the account at the second bank.  The check kiter relies         
          on the time (the "float time") it takes a bank (the second bank) to         
          process checks for deposit and payment.  The check kiter uses the           
          float time (normally 3 days) to cover the "bad" checks.  In the             
          case at hand, petitioner's check-kiting scheme primarily involved           
          accounts at Irvington Federal Savings & Loan (Irvington Federal)3           
          and Commercial & Farmers Bank (Commercial & Farmers).  During the           
          years at issue, petitioner kited as much as $60,000 in checks per           
               Occasionally petitioner used check-cashing services to obtain          
          cash needed to keep his check-kiting scheme afloat.  In general,            
          these services charged 2-1/2 percent of the amount of the check.            
          At other times, in order to obtain cash,  petitioner wrote checks           

               3    Irvington Federal Savings & Loan accounts were taken              
          over by the Resolution Trust Corporation in February 1992.                  

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Last modified: May 25, 2011