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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
day.
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