MACON, Georgia — The CEO of a Georgia-based daycare company was sentenced this week to jail and paying more than $1.3 million in compensation for running a check-kiting and tax program.
Ilene Farley, 62, of Stone Mountain, Georgia, was sentenced by the US District of Marc to 37 months in prison, followed by three years of supervised release, and to pay a $514,240.89 restitution to Bank of America and a restitution of $844,091.77 to the IRS, convicted T. Treadwell on April 12, after previously pleading guilty to bank fraud and non-payment of trust fund taxes on November 16, 2022. There is no probation in the federal system.
“These types of criminal schemes — whether the damage is to individuals or businesses — are not ignored by this office or our law enforcement partners,” said US Attorney Peter D. Leary. “We will uncover the fraud and hold the perpetrators accountable for their crimes.”
“Ilene Farley thought she found a shortcut to put money in her pocket, and now she’s going to pay for her criminal behavior,” said Keri Farley, the FBI’s Atlanta special agent in charge. “Today’s guilty plea reflects the FBI’s commitment to work with our partners to bring bank stealing fraudsters to justice.”
“Employers have a legal duty and responsibility to withhold income taxes from their employees’ payslips; failure to do so will adversely affect the U.S. government and employees,” said James E. Dorsey, Special Agent in Charge, IRS Criminal Investigation, Atlanta Field Office. “IRS-Criminal Investigation is committed to finding and holding accountable employers who engage in tax evasion so eligible American taxpayers can enjoy the benefits of Medicare and Social Security.”
According to court documents, Farley was the president and chief executive officer (CEO) of Tender Years Learning Corporation (TYLC). TYLC operated several day care centers in the Middle District of Georgia and elsewhere in the state of Georgia and had a registered office at 1010 N. Houston Road, Warner Robins, Georgia. Farley took care of his financial affairs. The company had several bank accounts, including with Bank of America and Citizens Trust Bank.
When a customer presents a check to fund an account, it can take anywhere from 24 hours to seven days for the check to clear. The time between presenting and cashing a check is called the “float”. The term “check kiting” refers to a form of check fraud in which the float — the time between the presentation of a check and the actual receipt of funds — is exploited to use funds that are not present in a checking or other bank account. The purpose of check kiting is to falsely inflate the balance of a checking account to clear written checks that would otherwise bounce.
From April 2018 to July 2019, Farley conducted a check-kiting program using the TYLC bank accounts at Bank of America and Citizens Trust Bank and transferred more than $75,000,000 to banks that were unfunded amounts and equivalent to receiving money from banks with no secured loans. A total of 19 checks totaling $2,202,162.41 were bounced during the program. Bank of America ended with a loss of $514,240.89.
In addition, Farley had to collect, account for, and pay so-called “trust fund taxes” for TYLC employees, including Social Security, Medicare, and state income taxes. Employers are required to remit these trust fund tax withholdings to the IRS on a quarterly basis. Between 2015 and 2019, Farley failed to pay the IRS $844,091.77 of TYLC employee trust fund taxes that were withheld from employee paychecks. By pleading guilty, Farley admitted that she knowingly carried out a plan to defraud Bank of America and Citizens Trust Bank; In addition, she admitted that she had not paid her employee trust fund taxes.
The case was investigated by the FBI and IRS.
Assistant US Attorney Elizabeth Howard prosecuted the case for the government.