The former operator of a Bordentown, N.J., car and recreational vehicle dealership was arrested Tuesday (Aug. 11) on a federal Indictment in connection with his check-kiting scheme that resulted in losses of more than $7 million to banks, Acting U.S. Attorney Ralph J. Marra, Jr., announced.
Denis Kelliher, 39, who resides in both Toms River and Monroe Township, was arrested at his home in Toms River by special agents with the FBI and IRS Criminal Investigation early this morning. Kelliher made his first appearance in federal court and was arraigned on the 11-count indictment Tuesday before U.S. District Court Chief Judge Garrett E. Brown Jr. in the federal courthouse in Trenton, according to newjerseynewsroom.com.
On Aug. 6, a federal grand jury returned the indictment which charges Kelliher with two counts of bank fraud, one count of wire fraud and eight counts of money laundering.
According to the Indictment, Kelliher was the principal operator of Cartec Motors LLC, located in Bordentown, which was in the business of buying and selling both new and used motor vehicles, including RVs.
The indictment describes a scheme in which 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 resale. The Indictment alleges that Kelliher provided the former customer, identified only as “Victim-1″ in the Indictment, with a personal financial statement which claimed that as of Dec. 31, 2008, Kelliher’s net worth exceeded $6.2 million. The indictment alleges this financial statement was false and that it failed to disclose that, in September 2008, KeyBank obtained a judgment for approximately $27 million against Cartec and Kelliher individually.
Counts one and two of the indictment, charging Kelliher with bank fraud, each carry a maximum penalty of 30 years in prison and a fine of $1 million. Count three, which charges wire fraud, carries a maximum penalty of 20 years in prison and a fine of $250,000 or twice the aggregate loss to the victims or gain to the defendant. Counts four through 11, charging money laundering, each carry a maximum penalty of 10 years in prison and a fine of $250,000 or twice the aggregate loss to the victims or gain to the defendants.