Business executives await sentencing in $3.6 million check kiting scheme

COLUMBIANA – Two local business executives are awaiting criminal sentencing for their involvement in a $3.6 million check kiting scheme.

Dart Trucking CEO Timothy Kephart, 54, of Morrisdale, Pa., and Chief Financial Officer Mark Michael, 55, of Clearfield, Pa., were recently found guilty of one count of conspiracy to commit bank fraud and one count of bank fraud related to the scheme.

The men appeared in the U.S. District Court Northern Division before Judge Dan Polster, who set the sentencing for Sept. 4.

According to a press release issued by the U.S. Justice Department, the scheme occurred between October 2007 and February 2010. The bad checks were written on accounts held at the Columbiana Huntington Bank.

Dart Trucking President Lee Stoneburner, 44, of Columbiana, also appeared before Polster and pleaded guilty to conspiring to commit bank fraud by engaging in the scheme, according to the release. His sentencing has not yet been scheduled.

The three men were charged in August of 2011 following an extensive investigation by the Youngstown FBI. Dart Trucking is located on Esterly Drive.

The justice department said the men kited the checks to pay their bills, expense and salaries. They did this by depositing bad checks into controlled disbursements accounts, or CDAs, at the local Huntington Bank. When a bad check was written and deposited into an account another bad check would be written to conceal the overdraft, creating a “float” in the accounts which was then used to for the bills, salaries and expenses. By using the CDAs, the business had an extra day to post its expenses before they were paid. According to the press release, the evidence at the trial last week established it was a “complicated, daily task to compute the amount of non-sufficient funds checks which had to be written and to track what accounts had to be ‘covered’”

The scheme was so extensive the department had also involved their clerical staff in tracking and covering the checks, the department said. The case was prosecuted by Assistant United States attorneys Christian H. Stickan and Perry D. Mastrocola.