Vice President of A&B Check Cashing Sentenced to Three Years in Prison in $12.4 Million Check Kiting Scheme

One of the Largest Fraud Schemes Ever Perpetrated in Maryland

May 28, 2010 - BALTIMORE—U.S. District Judge Benson E. Legg, Jr. sentenced Brian I. Satisky, age 56, of Pikesville, Maryland, today to three years in prison, followed by four years of supervised release, for bank fraud in connection with a check kiting scheme in which his check cashing service business withdrew money based upon inflated balances in its business accounts. Judge Legg also ordered Satisky to pay restitution totaling $12.4 million to the victim banks.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.

“Mr. Satisky did not use a weapon, but his specialty was stealing money from banks,” said U.S. Attorney Rod J. Rosenstein. “This was essentially a bank robbery scheme carried out by con artists who caused one of the largest fraud losses ever prosecuted in Maryland, resulting in actual losses of more than $12 million to local banks.”

Brian Satisky became the President of the Maryland Association of Financial Service Centers, Inc., a trade group. He served on the board of directors of Financial Service Centers of America (FiSCA) which is a national trade group representing more than 5,000 money service businesses. In June 2003, Satisky testified before Congress on behalf of FiSCA. According to the plea agreement, the check kite fraud scheme described below began in June 2003.

According to Satisky’s plea agreement, Brian Satisky and his brother Alec owned and operated Colleen, Inc., which their parents began as a family shoe store in the Hollingswood Shopping Center. The shoe store became their secondary business and their primary business became A&B Check Cashing, a money services company operating from 21 locations in the Baltimore metropolitan area. For a fee, A&B Check Cashing: cashed checks; sold money orders, transit passes, prepaid phone and calling card products and lottery tickets; transferred money; and provided bill payer services for Verizon and BGE. Many of its customers were “unbanked” individuals who did not have access to traditional forms of banking, credit, or traditional loans.

In 2001, the business was sued in a class action law suit alleging that one of its products constituted a payday loan in violation of Maryland law. Brian Satisky and his brother settled the law suit in 2003, agreeing that they would not collect some $1.6 million in customers’ checks which had been received to repay the alleged payday loans. This caused a significant and immediate shortfall for the business.

In an effort to stay ahead of the business’s debt, the brothers began to “kite” checks between two of the business’s bank accounts. Each day, checks were drawn on two of the business’s bank accounts when the brothers knew A&B Check Cashing had insufficient funds to cover the checks. The checks, when cross-deposited into the two bank accounts, artificially inflated the balances of the accounts and enabled the brothers to write checks to the operating account and to third party vendors and creditors in excess of the amounts of cash their business actually had.

The scheme required that either Alec or Brian write fraudulently inflated checks every day to cross deposit into the business’s bank accounts. Whomever was to write the checks that day calculated the amount needed for the kited checks by examining the day’s legitimate deposits, the online bank balance and outstanding checks for the account at Carrollton Bank. A telephone call would then be made to the Baltimore County Savings Bank (BCSB) to obtain a telephonic message of the bank balance and outstanding checks there. Eighty percent of the checks were written by Alec, with Brian writing checks on days when Alec had his regularly scheduled day off or was on vacation. While Alec was on vacation from October 18 - 26, 2005, Brian wrote in excess of $10 million of kited checks daily to keep the kite going. The kited amounts gradually increased as A&B Check Cashing used kited funds to cover business expenses, including paying their own salaries and the costs of opening new locations.

The kite continued until it collapsed in June 2006. At that time, Alec Satisky committed suicide. A&B Check Cashing is no longer in business. BCSB lost $10.6 million and Carrollton Bank lost $1.8 million.

United States Attorney Rod J. Rosenstein thanked Assistant United States Attorney Joyce K. McDonald, who prosecuted the case.