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New Jersey Dealer Arrested for $7 Million Check Fraud

August 18, 2009

TRENTON, N.J. — The former owner of a Bordentown, N.J.-based car dealership was arrested for allegedly defrauding local banks of more than $7 million in a check-kiting scheme, according to the U.S. Attorney’s Office.

Denis Kelliher, 39, was arrested August 10 at his home in Toms River by the FBI and IRS Criminal Investigation. He was charged by federal indictment with two counts of bank fraud, one count of wire fraud, and eight counts of money laundering.

Kelliher was the former operator of Cartec Motors LLC, which bought and sold new- and used-motor vehicles, including recreational vehicles.

The federal indictment stated that Kelliher attempted to create artificial balances in checking accounts that he controlled, including Cartec accounts at KeyBank, Commerce Bank (now known as TD Bank), 1st Constitution Bank and Roma Bank, and his personal account at 1st Constitution, by transferring monies between these accounts.

Kelliher allegedly wrote checks on accounts that he controlled, and deposited these checks into other accounts that he controlled, while knowing there were insufficient funds in the accounts against which the checks were drawn — a scheme commonly known as “check kiting.” The indictment charges that as a result of the defendant’s check kiting activity, Cartec’s account at KeyBank was overdrawn by more than $6.9 million, and that its account at Commerce was overdrawn by more than $200,000.

In addition, the wire fraud count charges Kelliher in connection with a separate scheme in which he approached a prior Cartec customer for a $410,000 loan purportedly to be used to purchase recreational vehicles for re-sale. Kelliher allegedly provided the former customer with a false personal financial statement which claimed that as of Dec. 31, 2008, Kelliher’s net worth exceeded $6.2 million. The false financial statement failed to disclose that, in September 2008, KeyBank obtained a judgment for approximately $27 million against Cartec and Kelliher individually.

The bank fraud charges carry a maximum penalty of 30 years in prison and a fine of $1 million. The wire fraud charges carry a maximum penalty of 20 years in prison and a fine of $250,000 or twice the loss to the victims. The money laundering charges carry a maximum penalty of 10 years in prison and a fine of $250,000 or twice the loss to the victims.

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