Albemarle First Gets Scammed

Albemarle First Bank has lost somewhere in the vicinity of $2.4MM in a scam known as “check kiting.” It involves a chain of checks between banks, the final one in the chain being left holding the bag when it comes time to produce the money. Albemarle First does not think that they’ll be able to recover the money. Consequently, the bank will now has a first-quarter loss of $1.94. In heavy trading, their stock dropped 28% on the news. Dow Jones has the story.

18 thoughts on “Albemarle First Gets Scammed”

  1. The average Joe has all sorts of restrictions when it comes to checks. Normally, upon the 1st check, it would have ‘bounced’ because of insufficient funds. The only way a scheme like this can occur is if the bank agreed to extend additional privileges. Like I say, the rules are scewed for some people.

    On the other hand, this sounds like a hoax, a real one at that. The article states this all came from a single customer. A customer, btw, that could wield almost a quarter (25%) of Sharholder Equity. Come on now…

  2. I find it nauseating how white-collar crime seems to slip by continuously, far from the radar of public outrage.

  3. What do you want, lynch mobs?

    It’s a crime, people who do it get hard time when they’re caught, but it’s not like anyone is getting killed over it.

  4. I agree 100%. Their claim of a kiting scheme just doesn’t pass the smell test. There’s more going on here than is apparent on the surface. The only way I could imagine something like this happening in this town is if the perpetrator is a well-known local person of substantial (known or imagined) wealth.

  5. A little off topic but:

    Only a few years ago and in police circles "check kiting" was the act of (by very selective choice of checks and skilled penmanship) raising the face amount of a valid, legal check to a higher amount, thus " kiting " the value, and then cashing the check. Checks were obtained in various ways but all were "legal" checks before "kiting". Different than "pure" forgery in that the check was , in its` original form, a valid check.

    Wonder how this evolved or is it perhaps just another example of the media "getting it wrong"at some point and it then became gospel as media mistakes (and there are many of them!)seem to do. Maybe the media is still wrong although the bank should know the proper terminology for their goofs.

  6. The bank said "no harm to anyone except of course our capital dollar figures" – Oh yeah – try to tell that to a stockholder facing reduced dividends.!

  7. This is the OLDEST trick in the book. I’m amazed they let it go through. When I take a few grand out of the bank I’m usually annoyed by checks and double checks that I actually have the money that my balance shows. You’d think someone spending that much money based solely on brand new uncleared checks would raise a red flag.

    Welcome to banks with no security department. Fun isn’t it? Lets all start our own duct tape and twine banks locally! WHEEE!!!

    The real question is what island is this guy sipping umbrella drinks on right now.

  8. …but since we did a lot of that with Ms. Lundy, I think it’s fair-play to try that with the principles of Albemarle First. Say, were any of the stockholders or management in need of a little over 2 million bucks? Who was that “single customer” [name?] related to? You know, in New Rome, Ohio, they’ve got a clan running the racket over there. Maybe some Cville yahoos think they can do it here. I dunno.

    Disclaimer: this is just gratuitous hypothesizing. Jack, or others: this is not really ad hominem, so keep off my back, in case you know personally the head honchos at Albemarle First.

  9. Is it just me or is cville adrift in a sea of companies set up solely to screw investors?

    For such a small town, we sure have had more than our fair share of them. Maybe it’s just the way things are done everywhere these days, considering the screwed up accounting practices of corporations. But I think we seem to have more than we should.

  10. What are the 3 stages of grief, again? Disbelief, anger, acceptance? The point being, unethical behavior is dominant now. Get used to it. Although you’ll have to make a choice whether you want to join the parade or not.

  11. The pentalities for many white collar crimes are pretty steep – comparable to murder in many respects. I’ve read articles on guys getting 30 years for insider trading. So, perhaps the public is not outraged, but the law certainly takes white collar crime very seriously.

  12. I disagree. I worked for a couple of banks in the mid-1970s, and our interpretation of check kiting is precisely what is being reported today. It was my impression that the term came fromt he act of floating various checks between several different institutions.

    I believe the media got it right in this case. Their terminology is dead-on.

  13. In order for this big ole kite to have flown it requires 2 other banks. Supposedly one is the bank formerly known as Crestar and the other has a big office out near State Farm. It is a game of musical chairs. It is interesting how quiet everyone is. I mean, 2400 large is a huge number. If they don’t get back at least half they will be done.

  14. The question is, will the bank protect this individual, perhaps bypassing prosecution for restitution? THAT would be pathetic.

  15. WINA has the story:

    "A local businessman says he’s responsible for a recent check-kiting scheme at Albemarle First Bank. The former President and C-E-O of Ivy Industries, John C. Reid, says he is solely responsible for the scheme that resulted in a 2-point-4 million dollar loss for Albemarle First. Reid’s attorney, Fran Lawrence, says Reid expects to be charged with federal fraud crimes as soon as the F-B-I completes an investigation. Reid’s confession follows a lawsuit filed yesterday afternoon in County Circuit Court in which the bank is asking for damages from Reid and Ivy Industries."

    I know John Reid. Used to work for him. You could knock me over with a feather right about now. He’s the last, and I mean the LAST person I would have suspected in this.

  16. Supposedly a really good guy. I’m guessing the company was f***ing up and he was juggling and dropped a ball. That is really too bad. This is definitely no time to be a white collar criminal. He is going to pay and he should.

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