16 Defendants Charged in 112-Count Indictment Alleging Bank Fraud and Aggravated Identity Theft in Stolen Mail Scheme
MACON, Ga. – The CEO of a Georgia-based daycare business has pleaded guilty to a federal charge resulting from an investigation into an involved check kiting and tax fraud scheme.
Ilene Farley, 62, of Stone Mountain, Georgia, pleaded guilty to bank fraud and failure to pay over trust fund taxes before U.S. District Marc T. Treadwell on Nov. 16. Farley faces a maximum sentence of 30 years in prison and a $1,000,000 fine. Sentencing is scheduled for Feb. 1, 2023.
“Ilene Farley’s long running scheme of check kiting millions of dollars between banks and not paying federal taxes for employees adds up to a serious fraud which carries a lengthy prison sentence,” said U.S. Attorney Peter D. Leary. “These types of criminal schemes will not be ignored by this office or our law enforcement partners. We will hold fraudsters accountable.”
“Ilene Farley believed she had found a shortcut to put money in her pocket, and now she will pay for her criminal behavior,” said Keri Farley, Special Agent in Charge of FBI Atlanta. “Today’s guilty plea reflects the FBI’s commitment to work with our partners to bring fraudsters who steal from banks to justice.”
“Employers have a lawful duty and responsibility to withhold income taxes from their employees’ payroll check; failure to do so negatively impacts the U.S. Government and the employees,” said James E. Dorsey, Special Agent in Charge, IRS Criminal Investigation, Atlanta Field Office. “IRS-Criminal Investigation is committed to finding and holding those employers engaging in employment tax evasion accountable so that American taxpayers who are entitled can enjoy the benefits of Medicare and social security.”
According to court documents, Farley was the President and Chief Executive Officer (CEO) of Tender Years Learning Corporation (TYLC). TYLC operated a number of daycare centers within the Middle District of Georgia, and elsewhere in the state of Georgia, and had a registered office at 1010 N. Houston Road, Warner Robins, Georgia. Farley handled its financial affairs; the business had a number of bank accounts, including with Bank of America and Citizens Trust Bank.
When a customer presents a check for deposit into an account, it can take anywhere from 24 hours to seven days for the check to clear. The time between presentment and clearing of a check is called the “float.” The term “check kiting” refers to a form of check fraud which involves taking advantage of the float – the time between presentment of a check and the actual receipt of funds – to make use of non-existent funds in a checking or other bank account. The purpose of check kiting is to falsely inflate the balance of a checking account in order to allow written checks that would otherwise bounce to clear.
From April 2018 until July 2019, Farley executed a check kiting scheme using the TYLC bank accounts with Bank of America and Citizens Trust Bank, sending more than $75,000,000 to banks which were unfunded amounts and were the equivalent of obtaining money from banks without secured loans. All told, 19 checks bounced during the scheme in the amount of $2,202,162.41. Bank of America ended up with a loss of $514,240.89.
In addition, Farley was required to collect, account for and pay so-called “trust fund taxes” for its employees which includes Social Security, Medicare and federal income taxes. Employers are required to remit these withheld trust fund taxes to the Internal Revenue Service (IRS) on a quarterly basis. Between 2015 and 2019, Farley failed to pay over to the IRS $844,091.77 of the TYLC employees’ trust fund taxes that had been withheld from their paychecks. Through her guilty plea, Farley admitted that she knowingly carried out a scheme to defraud Bank of America and Citizens Trust Bank; in addition, she admitted that she did not pay over her employee trust fund taxes.
The case was investigated by FBI and IRS.
Assistant U.S. Attorney Elizabeth Howard is prosecuting the case for the government.