Kiting

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Kiting

Used in banking to refer to the practice of depositing and drawing checks at two or more banks and taking advantage of the time it takes for the second bank to collect funds from the first bank.
Also refers to illegally increasing the face value of a check by changing the numbers on the check.
In the context of securities, refers to the manipulation and inflation of stock prices.

Kiting

1. The illegal practice of deliberately misrepresenting the value of a security or transaction in order to extract more funds from a counterparty.

2. The illegal practice of writing a bad check on an account at one bank, depositing it at a second bank, and withdrawing cash. Check holds have made kiting more difficult than it once was.

3. The illegal practice of defacing a check by increasing the amount of money written on it. One may take advantage of bad handwriting, for example, by changing "ten" to "twenty" on the check.
References in periodicals archive ?
The insurer maintained that the check kiting losses were in the nature of an extension of credit by the bank to which the exclusion should apply.
The board should have known that the subsidiaries didn't have the money in their bank accounts to cover the checks to Affiliated, "but nevertheless close to half a billion dollars in insufficient checks were being written on these accounts to perpetrate this massive check kiting scheme," Cox said.
If the auditors had inquired, they would have learned that Minkow submitted phony tax returns and that banks closed his accounts for check kiting, writing excessive non-sufficient-fund checks, using fictitious checks, and conducting loan fraud.
Butler pleaded guilty to check kiting and fraud, and received a sentence of three years in prison, but upon completion of a substance abuse program later this year, he will be eligible for release to a halfway house, according to Butler's fiancee Paige Howard, who has handled many of Butler's legal affairs while he has been in prison.
Difficult to detect and prosecute, check kiting schemes have gained popularity in recent years.
Carruth maintained that all of Butler's allegations stating that Alabama One employees were aware of, and even assisted with, his check kiting activities were fabricated.
The Department of Justice will aggressively investigate and prosecute Ponzi schemes, bank fraud, check kiting, and other similar types of financial 'shell games' specifically designed to lull banks, investors, and employees into having a false sense of security."
Butler explains his check kiting activity and attempts to boost his hometown's economy ...
Schick was sentenced in August 2004 to 97 months in federal prison for an unrelated scheme to defraud several banks through check kiting.
Danny Ray Butler, who is currently serving a sentence for defrauding the Small Business Administration and check kiting against the $613 million Alabama One Credit Union in Tuscaloosa, Ala., came face-to-face with credit union lawyers and executives on May 22 in what legal observers at the meeting described as an intense hearing.
District Court for being involved in a check kiting scheme, according to information sheet filed by the U.S.
has asked the Alabama Credit Union Administration and the NCUA to approve another loan for Danny Butler, despite the fact he is serving a sentence for fraud and check kiting at the federal correctional facility in Talladega, Ala.