2 cattle-lot operators plead guilty to bank fraud in connection with a check-kiting scheme


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Posted Online: Jan. 04, 2013, 8:02 pm
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By Rachel Warmke, rwarmke@qconline.com
Two area cattle-lot operators have pleaded guilty in federal court to bank fraud in connection with a check-kiting scheme to try to swindle area banks out of thousands of dollars.

Elbea Edward Malone, who worked at an Abingdon cattle feedlot, pleaded guilty in Central Illinois District Court, Rock Island branch, to one count of bank fraud and a second count of engaging in monetary transactions in criminally derived property.

Richard Anderson, who served as president of Galesburg Livestock Sales Inc., pleaded guilty on Dec. 6 to 10 counts of bank fraud.

The pair remained out on bond on Friday pending an April 11 sentencing, according to federal court records.

For about eight years, beginning in 2002, Mr. Anderson transported his company's cattle to Mr. Malone, whom he would pay to feed the animals, according to federal court records.

The two men were indicted on July 17 on 10 counts of bank fraud and one count of engaging in monetary transactions in criminally derived property, in connection with check kiting -- a process in which "accounts are maintained in different banks and checks are drawn on each account and deposited in the other," despite neither account having the necessary money, according to a federal indictment.

Records further state "Check kiting depends on the delay in collecting a check, known as the 'float,' and requires the continual deposit of checks from each of the accounts so that each account will show credits of uncollected checks, thereby tricking the banks to pay the worthless checks written on the account."

It is believed that from September through November 2009, Mr. Anderson and Mr. Malone "devised a scheme" to engage in check kiting using GLS' bank account at First Midwest Bank and Malone Farm Account at Raritan State Bank, records state.

During one instance in November 2009, several checks were deposited each day between the two bank accounts, often totaling between $200,000 and $600,000 each time, records further indicate.

In December of that year, Raritan State Bank told the men they would hold checks written on behalf of Galesburg Livestock Sales for two days before the money was deposited in the Malone Farm Account.

Raritan also said there was not enough funds to cover three checks, totaling $544,272.70, which had been deposited on Nov. 30, 2009, into the GLS account at First Midwest Bank, records state.

"Approximately $400,000 was needed to cover the kited checks," according to the indictment.

In order to procure the necessary funds, the indictment alleges that Mr. Anderson and Mr. Malone convinced a Vermont, Ill., cattle farmer to pay them $400,000 in exchange for buying 700 head of cattle.

Instead of purchasing the cattle, however, the indictment claims Mr. Anderson and Mr. Malone planned to use the money to pay for the kited checks at Raritan Bank. Records further allege the men tried to obtain a bank loan by creating a false sales agreement that claimed they had bought the cattle.



















 




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  Today is Tuesday, Sept 2, the 245th day of 2014. There are 120 days left in the year.

1864 — 150 years ago: It is estimated that 300,000 people attended the recent Democratic convention in Chicago when Gen. George B. McClellan of New Jersey was nominated as a candidate for president of the United States.
1889 — 125 years ago: Alderman Frank Ill, Winslow Howard and Captain J.M. Montgomery returned from Milwaukee, where they attended the national Grand Army of the Republic encampment.
1914 — 100 years ago: Three members of the Rock Island YMCA accepted positions as physical directors of other associations. Albert Cook went to Kewanee, C.D. Curtis to Canton and Willis Woods to Leavenworth, Kan.
1939 — 75 years ago: Former President Herbert Hoover appealed for national support of President F.D. Roosevelt and Congress in every effort to keep the United States out of war.
1964 — 50 years ago: The Rock Island Junior chamber pf Commerce has received answers to about 65 % of the 600 questionnaires mailed out recently in a "Community Attitude Survey" to analyze sentiments of citizens towards their city's various recreational, educational, and civic service programs.
1989 — 25 years ago: The two thunderstorms passing through the Quad Cities last night and early today left some area residents reaching for their flashlights.






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