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 was sentenced to prison and ordered to pay more than $1.3 million in restitution this week for conducting a check kiting and tax scheme.
Ilene Farley, 62, of Stone Mountain, Georgia, was sentenced to serve 37 months in prison to be followed by three years of supervised release and ordered to pay $514,240.89 in restitution to Bank of America and $844,091.77 in restitution to the IRS by U.S. District Marc T. Treadwell on April 12 after she previously pleaded guilty to bank fraud and failure to pay over trust fund taxes on Nov. 16. 2022. There is no parole in the federal system.
“These type of criminal schemes—whether the harm is directed to individuals or businesses—will not be ignored by this office or our law enforcement partners,” said U.S. Attorney Peter D. Leary. “We will unravel the fraud and hold wrongdoers accountable for their crimes.”
“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 several 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 several 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 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 TYLC’s employees, which includes Social Security, Medicare and federal income taxes. Employers are required to remit these withheld trust fund taxes to the IRS on a quarterly basis. Between 2015 and 2019, Farley failed to pay the IRS $844,091.77 of the TYLC employees’ trust fund taxes which had been withheld from the employees’ 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 her employee trust fund taxes.
The case was investigated by FBI and IRS.
Assistant U.S. Attorney Elizabeth Howard prosecuted the case for the government.