Staten Island Man Pleads Guilty in $82 Million Check Kiting Scam
Defendant’s Scheme Involved Complex Web of Worthless Checks and Wire Transfers and Approximately $5 Million in Fraud Proceeds
|U.S. Attorney’s Office May 21, 2013|
BROOKLYN, NY—Staten Island, New York, resident Saquib Khan, 51, waived indictment and pleaded guilty today to charges that he engaged in a bank fraud scheme that netted approximately $5 million from six New York City area banks insured by the Federal Deposit Insurance Corporation (“FDIC”). To implement his scheme, the defendant transferred more than $82 million among various bank accounts, using a complex web of worthless checks, which the banks initially credited, and wire transfers to cover his tracks. Khan pleaded guilty to eight counts of bank fraud and agreed to forfeit all of the proceeds of his fraud to make the banks whole. The defendant faces up to 30 years’ imprisonment on each count, as well as a $1,000,000 fine and restitution.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI).
According to court documents, from November 2012 through December 2012, Khan, a businessman who owned and operated a wholesale cigarette and grocery business, as well as delicatessens in Staten Island, wrote checks for more than $82,000,000 from various bank accounts under his control. Those accounts did not have sufficient funds to cover the checks.
However, upon depositing the worthless checks, the victim banks provided immediate credit for the entire amount of the checks even though the checks had not yet cleared. To cover these worthless checks, Khan wired most of the fraudulently obtained funds from the deposit accounts back to the accounts upon which they were drawn. During each round of these ever-increasing checks and wires, Khan withdrew a portion of the money. In this manner, Khan fraudulently extracted approximately $5 million from the victim banks in less than two weeks.
“As demonstrated by the bank fraud charges and the admissions at his guilty plea, Khan’s greed was matched only by his nerve. But law enforcement promptly shut down Khan’s $82 million check kiting scheme, and he has now been brought to justice. We are committed to protecting the integrity of our banking system and protecting the public from the effects of fraud,” stated United States Attorney Lynch. “I would like to thank our partners at the FBI for their swift action and effective work on this important investigation. ”
FBI Assistant Director in Charge Venizelos stated, “As alleged, and as he has admitted, Khan was a con man. Taking advantage of the banks’ policy of crediting deposited checks before they clear, he stole approximately $5 million. What the scheme likely earned him in the long run is a significant prison term.”
The defendant’s guilty plea took place this morning before United States Magistrate Judge Ramon E. Reyes, Jr. at the federal courthouse in Brooklyn. Sentencing in this case is scheduled before United States District Judge Raymond J. Dearie on September 27, 2013.
The government’s case is being prosecuted by Assistant United States Attorney Christopher A. Ott.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Staten Island, New York