3 face charges of bank fraud

Staff report

Lee W. Stoneburner, 43, of Canfield, Timothy L. Kephart, 52, of Morrisdale, Pa. and Mark D. Michael, 53, of Clearfield, Pa. are facing conspiracy to commit bank fraud after a one-count information was filed by the United States Department of Justice in the Northern District of Ohio Court.

The prosecution alleges that the defendants, and an unnamed employee not charged, conspired to kite approximately $3.6 million in nonsufficient-funds checks, from October 2007 through February 2010, between five business accounts of Dart Trucking Co. at the Huntington Bank in Columbiana.

According to the information, Kephart was the chief operating officer, Stoneburner was the president, and Michael was the chief financial officer of the Columbiana trucking business, which did business as Dart Services Inc., Dart Transport Inc., Dart Trucking Co. Inc., and Dart Trans Inc. The company also had offices in Pennsylvania.

The businesses’ accounts were set up as controlled-disbursement accounts and were supposed to be a means of organizing and controlling payments related to operation of the business.

But because CDA’s have a separate routing number for checks that are to clear an account and the bank’s internal process procedure, a day of “float” time was created for a check item to clear an account.

The information charges that Kephart, Stoneburner and Michael deposited in one of their CDA’s checks from other CDA’s, which did not have sufficient funds to cover the check. This falsely inflated the account, since Huntington Bank extended immediate credit for deposited items. The balance remained available for use for the one-day float until another NSF check from another CDA was deposited into the CDA to “cover” that check. The charges state that the inflated and false amount increased over the course of the scheme as the check-kiting activity accelerated and grew to point that it had to be monitored daily to keep it going for as long as possible.

The case is being prosecuted by Assistant U.S. Attorney Christian H. Stickan, following an investigation by the FBI in Youngstown.