Larry’s Laws of Larceny- Law 5: Kiting Isn’t a Windy March PastimeBondBeebe
Larry Beebe, CPA
Kiting, or check kiting, is a scheme where a person deposits checks back and forth between banks. The fraudster steals and covers up the theft by continuing to deposit checks back and forth between accounts. The amount of the checks deposited is often so large that the amount stolen appears small in comparison. In one recent case the checks deposited back and forth totaled $114 million to cover a theft of approximately $1.6 million.
To prevent kiting the individual who authorizes checks should not have access to the checks once they are drawn. Kiting should be discovered relatively early. The person reconciling the bank statements should notice that there have been many transfers in and out of the bank account and that none of those transfers have been recorded in the accounting records