Posted on 02/21/2005 1:58:04 PM PST by hoosier_RW_conspirator
Hendricks County) –A prominent real estate developer is the subject of a 13-count federal indictment. The charges could land him in prison for years.
Some of the homes developed by Eric Tauer include the Harvest Ridge subdivision in the Avon area. Now Tauer is facing facing federal charges of bank fraud, money laundering and conspiracy.
"This is the largest check kiting scheme that this district has seen," said Susan Brooks, US attorney.
Brooks says Eric Tauer deposited thousands of insufficient-funds checks during a three-month period that added up to more than $217 million. "He would essentially move one check from another from his various accounts, but it was a $217 million check kite,” said Brooks.
The victims were several banks, notably First Indiana Bank, which the US attorney says lost more than $6 million. She says contractors who helped build the homes lost out as well.
Some of the homeowners are also victims. They've unwittingly bought houses that have liens on them. Some of the homes have several liens.
"We actually do not know the extent and the number of those individuals. We have been unable to determine how many of those individuals exist,” said Brooks.
Eric Tauer's attorney calls him a respected builder who got himself into an "unfortunate business situation" that led to federal charges. Tauer is expected to appear in court in March.
He is also planning on running for Congress.
"Some of the homeowners are also victims. They've unwittingly bought houses that have liens on them. Some of the homes have several liens."
The homeowner - or the title insurance company?
Barbara Boxer did this better than anyone in the House, and now she's a Senator!
Short and sweet...the homeowner is the victim. IF they are insured with an owners title insurance policy, they may be covered against a financial loss, but that sure doesn't make them feel any less victimized.
(And if you REALLY want a bit more info on the role played by title insurance, you might check out my replies on an earlier real-estate fraud thread:
5 Accused of Selling Dozens of Houses With Fake Deeds )
With that kind of money and with the speed at which deposits clear now, there is no way these banks are victims. They had to have had employees that looked the other way and/or were hoping the other bank would loose. I'd bet they had loans to loose as well.
Check out the Indy Star article, it details exactly how this guy got away with it. Also, the check-kiting was going on in 2001, well before the new Check-21 rules were put in place that speeded up the process.
The truth I believe is they really didn't want to know because if they stopped it they would be the ones to lose both the money and probably their jobs. They turned their heads hoping it would go away of the other banks would take the hit.
The biggest clue is the frequency and volume of checks. Imagine being at the bank and your customer who ordinarily deposits a million per month is now depositing 6 million per day.
I'm certainly not arguing that the banks are innocent victims in this. It's interesting to see your take on the article (presuming, from your screen name, that you're looking at it from a CPA's perspective). Personally, my interest is in the manner in which real estate fraud is committed (and, hopefully, can be prevented).
This guy had to be dancing as fast as could - even under the old check clearing regime.
Check kiting is as old as banking itself. It isn't hard to detect but it is hard to be the bank to stop it. The bank that stops it is guaranteed a loss. Its even possible lender banks become complicit.
It takes two banks to pull off a big check kiting scheme. I've seen banks get away clean by telling the kiter that the Bank is going to close their accounts in x number of days, giving the kiter time to open accounts with another bank. Or more likely to start using accounts with other banks that are already open. The lesson being that if the bank can spot it early enough they can shift the loss.
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