Check Kiting Charges Under Federal Law
Understanding Bank Fraud Under 18 U.S.C. § 1344
Check kiting is a federal financial crime prosecuted as bank fraud under 18 U.S.C. § 1344. It involves using multiple bank accounts to create the appearance of available funds that do not actually exist.
While it may appear to be a temporary cash flow tactic, federal law treats check kiting as a deliberate scheme to defraud financial institutions.
If convicted, individuals may face severe penalties, including substantial fines and up to 30 years in federal prison.
Because these cases often involve detailed financial records and intent-based evidence, early legal guidance is critical.
For the best possible outcome, reach out to an experienced California criminal defense attorney at Eisner Gorin LLP.
We're here to help—call us at (818) 781-1570 or contact us through our website to schedule your consultation.
Quick Answer: What Is Check Kiting?
Check kiting is a form of bank fraud where a person uses multiple bank accounts to create the false appearance of available funds. This is done by writing checks on accounts with insufficient balances, depositing them into other accounts, and withdrawing money before the checks clear.
Because the scheme relies on deception and exploits banking delays, it is illegal under federal law and can lead to serious criminal charges.
How Check Kiting Works
Check kiting takes advantage of the delay between when a check is deposited and when it clears the bank.
A typical scheme involves:
- Writing a check from Account A with insufficient funds
- Depositing that check into Account B
- Withdrawing money from Account B before the check clears
- Repeating the process to maintain the illusion of available funds
This creates temporary, unauthorized access to money and exposes banks to financial loss.
Real-World Example of Check Kiting
Example:
A person has two bank accounts at different institutions. They write a $5,000 check from Account A, which has only $100, and deposit it into Account B. Before the check clears, they withdraw $4,000 from Account B.
They then deposit another check from Account B back into Account A to cover the original check.
This cycle continues, creating the appearance of funds that do not actually exist.
Federal Law: Bank Fraud Under 18 U.S.C. § 1344
Federal law makes it illegal to knowingly execute or attempt a scheme to:
- Defraud a financial institution, or
- Obtain money or property under a bank's control through false or fraudulent representations
Check kiting falls within this definition because it involves deception and misuse of banking systems.
Importantly, even an attempted scheme can result in prosecution.
Key Elements Prosecutors Must Prove
To secure a conviction, the government must prove:
Intent to defraud
The accused knowingly acted to deceive a financial institution
Use of false or misleading conduct
This includes writing checks without sufficient funds or creating artificial balances
Involvement of a financial institution
The scheme must involve a federally insured bank or credit union
Intent is often the most contested issue in these cases.
Penalties for Check Kiting
Federal penalties for check kiting under 18 U.S.C. § 1344 may include:
- Up to 30 years in federal prison
- Fines up to $1,000,000
- Restitution to financial institutions
- Long-term financial and professional consequences
Sentencing depends on factors such as the amount of money involved, duration of the scheme, and prior criminal history.
Related Federal Crimes and Charges
Check kiting cases are often charged alongside other federal offenses.
Wire fraud – 18 U.S.C. § 1343
Using electronic communications, such as bank transfers or emails, to carry out a fraudulent scheme.
Mail fraud – 18 U.S.C. § 1341
Using the postal system to execute or further a fraud scheme.
Conspiracy – 18 U.S.C. § 371
An agreement between two or more people to commit fraud, even if the scheme is not completed.
False statements – 18 U.S.C. § 1001
Providing false information to federal investigators or financial institutions.
Money laundering – 18 U.S.C. §§ 1956, 1957
Transferring or disguising funds obtained through illegal activity.
Attempt and conspiracy – 18 U.S.C. § 1349
Allows prosecution even if the fraudulent scheme was not successful.
These additional charges can significantly increase potential penalties.
Common Legal Defenses to Check Kiting Charges
A strong defense often focuses on intent and the facts of the case.
Lack of intent
If the conduct resulted from poor financial management rather than intentional fraud, this may weaken the case.
Mistake or accounting error
Clerical mistakes or misunderstandings about account balances may provide a defense.
Insufficient evidence
The prosecution must prove each element beyond a reasonable doubt.
Duress or coercion
If the defendant was forced to participate under threat, this may be a valid defense in certain cases.
Why Federal Prosecutors Take Check Kiting Seriously
Check kiting is viewed as a threat to the financial system because it:
- Creates artificial credit without authorization
- Exposes banks to financial loss
- Undermines trust in banking institutions
For this reason, federal agencies aggressively investigate and prosecute these cases.
What to Do If You Are Under Investigation
If you are contacted by federal agents or believe you are under investigation:
- Do not provide statements without legal counsel
- Preserve all financial records and communications
- Speak with a federal criminal defense attorney immediately
Early action can significantly impact the outcome of your case.
Frequently Asked Questions
Is check kiting always a federal crime?
Yes, if it involves federally insured banks or interstate financial systems, it is typically prosecuted as federal bank fraud.
Can I be charged if the scheme failed?
Yes. Attempting to commit bank fraud can still result in criminal charges.
How do banks detect check kiting?
Banks use automated systems to monitor unusual deposit and withdrawal patterns, especially across multiple accounts.
What is the difference between check kiting and overdrafting?
Overdrafting may be accidental, while check kiting involves intentional manipulation of account balances.
Can I go to prison for check kiting?
Yes. Convictions can result in significant prison sentences, depending on the severity of the case.
What is the most important issue in a check kiting case?
Intent. Prosecutors must prove that you knowingly intended to defraud a financial institution.
Speak With a Federal Criminal Defense Attorney
Check kiting charges carry serious federal penalties and require a strong legal defense. If you are under investigation or have been charged, an experienced attorney can help protect your rights and build your defense.
Reach out to a federal criminal defense law firm today for a confidential and personalized consultation. Eisner Gorin LLP is here to support you every step of the way.
Schedule your appointment today—we're conveniently located in Los Angeles, ready to assist you.