Former car dealer gets four years for check-kiting scheme - Brownsville Herald: Valley

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Former car dealer gets four years for check-kiting scheme

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Posted: Wednesday, August 31, 2011 12:00 am

A former Harlingen-based auto and motorcycle dealer was sentenced to four years and three months in federal prison Wednesday after pleading guilty to a $114 million check-kiting scheme, the U.S. Justice Department said.

John Jeff Woodard Jr., 49, conducted the scheme from Nov. 1, 2004, to Jan. 30, 2006, costing banks about $1.6 million by the time the scheme collapsed, U.S. Attorney José Angel Moreno said.

The scheme resulted in a significant financial loss for three local banks, which the U.S. Attorney’s office did not identify, in February 2010, according to a Justice Department news release.

Woodard used multiple bank accounts held in the names of several of his former businesses, prosecutors said.

According to the Justice Department, Woodard operated Harlingen Imports, also called Competition Car and Truck Center in Harlingen, Competition Chrysler Dodge Jeep and Competition RGV in Raymondville, and Competition Motor Sports, a motorcycle dealership with locations in Harlingen and McAllen.

Check kiting is a tactic in which a check is written on one bank and deposited in a second bank. Using several bank accounts, checks are passed between banks before the checks have time to clear, creating the appearance that the bank customer has more money in the accounts than he actually does, the Justice Department said.

In addition to the prison term, Woodard was ordered to serve five years of supervised release and to pay $2.5 million in restitution to the banks and to his former business partner.

Woodard was allowed to remain free on bond and to voluntarily surrender to a Bureau of Prisons facility to be determined in the near future, the Justice Department said.

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