MACON, Ga. (WRBL) — The CEO of a Georgia-based daycare is sentenced to more than 3 years in prison and ordered to pay more than $1.3 million in restitution for 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 to the IRS.
Farley previously pleaded guilty to bank fraud and failure to pay over trust fund taxes on Nov. 16.
According to court documents, Farley was the President and CEO of Tender Years Learning Corporation (TYLC). TYLC operated several daycare centers in Georgia and 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 24 hours to seven days to clear. The time in between is called the “float.” The term “check kiting” refers to a form of check fraud that involves taking advantage of the float. 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, according to the Attorney's Office.
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.
The Attorney's Office says through her guilty plea, Farley admitted that she knowingly carried out a scheme to defraud Bank of America and Citizens Trust Bank. She also admitted that she did not pay her employee trust fund taxes.
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