Check kiting is the practice of carefully manipulating the balance of a bank account by floating checks that inflate the balance of those accounts. This is used to deceive another party into obtaining something of value, such as a loan. Inevitably those perpetrating check kiting schemes intend to defraud the financial institution by taking advantage of typical bank functions, such as “floating” funds to cover checks deposited.
Check floating is taking advantage of delays in processing payments, such as anticipating a payment will be made after funds are made available. This is not illegal, but you will be penalized by the financial institution with overdraft fees if you anticipate wrongly and are unable to cover the balance. Those with an existing relationship with the financial institution that is aware the process for floating checks can exploit this knowledge to defraud the institution.
Check kiting is carried out by writing a check for greater than the balance of one account and then writing a second check from another account to cover the check from the first account. The float allows the check to be cleared, even though the accountholder does not actually have the funds. While this can be as innocuous as writing a personal check while anticipating your paycheck will cover it, it can also be as insidious as obtaining secret loans to misappropriating funds.
If you have engaged in check kiting, the criminal penalty varies depending on the number of checks passed and the amount subject to the fraud.
For an evaluation of your legal options, contact our New York City criminal defense lawyers at (212) 577- 6677 without delay.