Elba Businessman Pleads Guilty to Bank Fraud Charges
Former Owner of Mobile Attic Engaged in a $8 Million Check Kiting Scheme
Montgomery, Alabama - Peter L. Cash, 49, currently of Auburn, Alabama, and formerly of Elba, pleaded guilty today to a one-count felony information charging him with bank fraud, United States Attorney Leura G. Canary announced.
According to court records, Cash was a director of the Peoples Bank of Coffee County (now known as Troy Bank and Trust Co.). Cash owned or otherwise controlled Bridgeville Trailers, Inc. (“Bridgeville”), Cash Brothers Leasing, Inc. (“Cash Bros.”), and Mobile Attic, Inc. (“Mobile Attic”).
Between October 2005 and July 2008, Cash “kited” checks among various accounts held by these businesses at Peoples, Wachovia Bank, Community Bank and Trust of Southeast Alabama, and The Citizens Bank. Cash would continuously draw an insufficient check on one of these accounts and deposit the check in another account, thus giving the banks the false impression that there were significant balances in the accounts and causing the banks to honor checks that the banks would have dishonored had they known the true state of affairs. In effect, the kite created an involuntary overdraft loan to Cash’s businesses, the amount of which–$8,123,738–only became apparent when the kite ended in July 2008. Certain property of Cash’s has been sold with the proceeds used to reduce the debt, with the current amount owed approximately $7,566,367. Citizens and Peoples are involved in litigation that will determine the amount of the loss to be borne by each bank.
In addition to the check kiting scheme, in May 2008, Cash proposed that Trinity Bank loan Cash Bros. $1.5 million to finance Cash Bros.’ purported purchase of 600 storage containers from Mobile Attic. The storage containers were to be the collateral for the loan. In order to induce Trinity to make the loan, Cash provided Trinity with a forged document purporting to be an invoice from Mobile Attic to Cash Bros. reflecting the sale of the storage containers to Cash Bros. for a total price of $1,810,000. In fact, no such storage containers had been sold. On or about June 16, 2008, Trinity funded the loan to Cash Bros. in the approximate amount of $1,502,676. Since the storage units did not exist, Trinity ended up making what in effect was an unsecured loan to Cash Bros. Trinity has suffered a significant loss on this loan.
When he is sentenced by United States District Judge W. Keith Watkins, Cash faces a statutory maximum sentence of 30 years imprisonment, a term of supervised release of no more than 5 years, a fine of up to $1,000,000 (or, if greater, twice the loss to the victims), and an order of restitution. United States Magistrate Judge Charles S. Coody today released Cash on a $25,000 unsecured bond pending sentencing.
The case was investigated by the United States Secret Service and was prosecuted by Assistant U.S. Attorney Andrew O. Schiff.
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