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October 25, 2006

SALISBURY MAN PLEADS GUILTY TO BANK LARCENY

Stole Over $3 Million Deposited in His Account Through a Computer Error

BALTIMORE, Maryland - Kenneth Shockley, age 41, of Salisbury, Maryland, pleaded guilty today to bank larceny after transferring, for his personal use, $3,429,020 from a closed business account which he discovered was being funded by a bank computer error, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

According to the statement of facts provided to the court as part of the plea agreement, Shockley was the owner and operator of North America Logistics Services, a trucking company located in Hurlock, Maryland and New York. In March 2002, Shockley opened a bank account in the name of his company with Transportation Alliance Bank. After numerous overdrafts were made, the bank closed the business account in February 2003 with an account balance of $10.86.

The bank re-opened the business account for its own internal accounting purposes. From February 2003 through March 2004, Shockley had no transactions on the account. Bank employees attempted to re-close the account in December 2004. During this attempt, a computer logic error occurred so that service fees were charged to the account, and the bank automatically began compounding and crediting the amount of the service fees to the account.

In mid April 2005, Shockley discovered that the old, closed business account was open and that he could access the account through the internet. Shockley transferred $500 from the closed account to a separate operating account in his own name. Shockley had made no deposits to the closed account.

Upon the success of the first transfer, Shockley began to transfer additional funds from the closed account to his personal account. Each transfer caused the bank’s faulty computer logic program to make a larger compounded credit to the business account and to increase the available bank balance. Between April 14, 2005 and May 17, 2005, Shockley moved $3,429,020 in 31 transactions from the closed business account to his personal account.

On May 20, 2005, Shockley requested that $500,000 be wired out of his personal account. This large wire transfer request caused the bank to examine the account and shut down Shockley’s accounts. As of May 20, 2005, the available balance in the closed business account was almost $15 million. Shockley used the funds to purchase cars, trucks for his business, and retail items, as well as depositing funds in accounts owned by his wife, brother and an employee.

Shockley faces a maximum sentence of 10 years imprisonment and a $250,000 fine, followed by supervised release of 3 years. U.S. District Judge William D. Quarles, Jr. has scheduled sentencing for January 10, 2007.

United States Attorney Rod J. Rosenstein praised the investigative work performed by the Federal Bureau of Investigation. Mr. Rosenstein also thanked Assistant U.S. Attorney Joyce K. McDonald, who is prosecuting the case.