David Saks: Former Title Company Owner Heads to Prison in Bank Fraud Conspiracy

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Former Title Company Owner Heads to Prison in Bank Fraud Conspiracy

Former Title Company Owner Heads to Prison

in Bank Fraud Conspiracy

U.S. Attorney’s Office February 18, 2015
  • Southern District of Texas (713) 567-9000

HOUSTON—Harris County resident

Kirk Smith

has been ordered to prison following his conviction for defrauding seven different Houston-area banks or more than $2 million in 2007 and 2008, announced United States Attorney Kenneth Magidson. Smith pleaded guilty Oct. 9, 2013.

Today, U.S. District Judge Lee H. Rosenthal, who accepted the guilty plea, handed Smith a 36-month sentence to be followed by three years of supervised release. He will also have to pay $2,078,783.68 in restitution.

As outlined in documents filed with the court and admitted by Smith during his guilty plea, he orchestrated a check kiting scheme that targeted seven different financial institutions in the Houston area. The scheme used multiple bank accounts held in the name of title companies and financial service companies Smith controlled. Smith carried out the scheme by signing checks drawn on the business accounts of these companies knowing the accounts lacked sufficient funds to cover the checks.

At Smith’s direction, an employee of the title companies named Maria Eliza Garza deposited the checks into other company accounts. This conduct artificially inflated the account balances. Smith then wrote additional checks, using the inflated balance caused by the deposit of the insufficient fund checks and caused Garza to deposit those checks into either the original issuing account or other company accounts.

Smith admitted that he used the fraudulently-inflated account balances at the Houston-area banks without institutional approval as interest-free loans, lines of credit and sources of funds for his personal use. He admitted he and Garza discussed these account balances on a near daily basis and that even after two of the Houston-are banks discovered the kiting scheme and notified him that they were closing his accounts, Smith continued the kiting scheme by opening new accounts at two different financial institutions.

From January through June 2008, the number and amount of checks kited by Smith increased substantially. During this six-month time period, the combined deposits of nine accounts at the remaining Houston-area banks totaled $128,499,315.99. Almost 99% of these deposits—$127,010,571.40—were from checks made payable between the nine accounts. The kiting activity occurred on a near-daily basis and averaged almost 14 deposited items per day. Smith signed approximately 98% of the checks used during this time period.

The scheme collapsed in June 2008, when another bank learned of these financial irregularities and suspended Smith’s immediate access to checks deposited in the corporate accounts. The scam caused a total loss of $2,078,783.68.

Garza also pleaded guilty to conspiracy to commit bank fraud. She was sentenced Jan. 21, 2015, to 18 months in prison and restitution for the full loss amount.

Smith was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.

The investigation was worked jointly by the FBI, Harris County District Attorney’s Office and the Webster and Friendswood Police Departments. Assistant U.S. Attorney John Pearson is prosecuting the case.

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Comment balloon 18 commentsDavid Saks • February 19 2015 05:19PM

Comments

David Saks  This is some serious money scheme

Posted by Hannah Williams, Expertise NE Philadelphia & Bucks 215-953-8818 (Re/Max Eastern inc.) almost 5 years ago

It really is crazy what some people will do for money, luckily most things seem to catch up and punishment is handed out.

Posted by Brian England, MBA, GRI, REALTOR® Real Estate in East Valley AZ (Arizona Focus Realty) almost 5 years ago

David, I do enjoy reading the news of people like this being convicted and sent away!

Posted by Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES, Florida Waterfront and Country Club Living (Tropic Shores Realty - Ich spreche Deutsch!) almost 5 years ago

How in the world are they going to pay back 2 million dollars?  Is this an item they can file bankruptcy on?  If it is the payback clause is a joke!

Posted by Evelyn Johnston, The People You Know, Like and Trust! (Friends & Neighbors Real Estate) almost 5 years ago

Well I guess that is good that they are going to jail....I hope you have a fabulous weekend too!

Posted by Kristin Johnston - REALTOR®, Giving Back With Each Home Sold! (RE/MAX Realty Center ) almost 5 years ago

Two million is a heavy loss to the banks, Hannah Williams . Thanks.

Posted by David Saks ((retired)) almost 5 years ago

These are very common crimes in the real estate business, Brian England.

Thanks.

Posted by David Saks ((retired)) almost 5 years ago

I do too, Silvia Dukes PA, REALTOR  Thanks.

Posted by David Saks ((retired)) almost 5 years ago

I couldn't say Evelyn Johnston but perhaps a court appointed trustee would try to recover what they could for the victims of that criminal. Thanks.

Posted by David Saks ((retired)) almost 5 years ago

It's very good, Kristin Johnston, Waukesha Realtor 414-254-6647 !

Posted by David Saks ((retired)) almost 5 years ago

Hi David Saks 

It is always good news to read about people who are convicted for this distasteful and criminal activity who victimize buyers and sellers Thanks for sharing. I hope the govt. gets a handle on this big problem.

 

Posted by Kristin Hamilton CA Realtor, (909) 557-6966- Specialize 55+ Communties Banning (Sun Lakes Realty) almost 5 years ago

Amazing when you think about it.  6 years to get something like this handled.  The money and time spent...   Make it a great weekend.  mark

Posted by Mark Don McInnes, Sandpoint, North Idaho Real Estate - 208-255.6227 almost 5 years ago

Lot's of lost loot in this swindle, Kristin Hamilton CA Realtor They should twist the handle on his jail cell to the "locked for ten years" position. I would have protested his sentence if I believed that the federal sentnecing guidlines were to lenient.

Posted by David Saks ((retired)) almost 5 years ago

Thanks, Mark Don McInnes, Sandpoint 

Posted by David Saks ((retired)) almost 5 years ago

David, I'm glad to see that justice was finally served...even though karma took a little while to take place!

Posted by Bob & Leilani Souza, Greater Sacramento Area Homes, Land & Investments (Souza Realty 916.408.5500) almost 5 years ago

So right, Bob & Leilani Souza 

Seven years is a ripe interlude. Thanks for reviewing the press release from the DoJ,

Posted by David Saks ((retired)) almost 5 years ago

The scary thing is they walk among us.

Posted by John McCormack, CRS, Honesty, Integrity, Results, Experienced. HIRE Me! (Albuquerque Homes Realty) almost 5 years ago

Indeed they do, John McCormack 

Posted by David Saks ((retired)) almost 5 years ago

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