FORT JENNINGS, Ohio - The owner of a popular area catering service has been indicted by a federal grand jury on a charge of bank fraud for allegedly depositing at least 323 bad checks that added up to more than $25 million at two area banks.
Eugene R. Miller, 43, of Fort Jennings, was named in an indictment filed this week in U.S. District Court, Toledo. The Putnam County man owns Lock 16 Catering in Ottoville.
According to Assistant U.S. Attorney Thomas A. Karol, Mr. Miller was engaged in a classic check-kiting scheme - writing checks with insufficient funds from one bank account to another and back again in an attempt to establish fictitious balances and obtain false credit.
“The kiter counts on the float - the period of time it takes for a check to clear,” Mr. Karol explained. “In a sense most banks give you instant credit. When you make a deposit, they don't wait a couple days for the check to clear. The illegality is it's a fictitious balance you are creating. In essence the check right from the get-go does not have sufficient funds.”
The indictment alleges that in a three-month period between Dec. 1, 1999, and Feb. 8, 2000, Mr. Miller made deposits at the Ohio Bank and at the Community First Bank and Trust on about 52 occasions. He deposited at least 323 worthless checks that totaled $25.8 million, the indictment states.
Mr. Karol said that does not mean $25 million was lost.
“It's money going back and forth,” he said. “It's only when checks are written to a third party, when money goes out of those two accounts that the losses start to occur.”
He said one of the two banks incurred losses from Mr. Miller's scheme after the other bank realized what was happening and stopped accepting checks from the other bank account.
The actual damages are uncertain at this point, Mr. Karol said, although he understands Mr. Miller is trying to repay the bank.
“It's a game of hot potato,” he said. “As long as neither bank knows about it, the kite can go on forever. But when one bank discovers what's happening in this game of hot potato they will no longer honor the checks from the other bank.”
The other bank then gets stuck holding the hot potato, he said.
Ned Compton, president of Community First Bank & Trust of Celina, said the bank's attorney had advised him not to comment on the case. Mr. Miller could not be reached for comment yesterday.
Mr. Karol said Mr. Miller will not be arrested but will be summoned to appear in federal court for an arraignment. No date had been set yesterday.