|For Immediate Release
Case # 08HF1994
Septemeber 9, 2011
|Susan Kang Schroeder
Chief of Staff
ATTORNEY SENTENCED FOR STEALING OVER $90,000 IN BANK CHECK-KITING SCHEME
SANTA ANA – An attorney was sentenced today for stealing over $90,000 by overdrawing two bank accounts and hiding his theft in a check-kiting scheme. Herbert R. Schnapp, 65, Newport Beach, pleaded guilty to the court on May 23, 2011, to one felony count of grand theft and four felony counts of writing a non-sufficient fund check with a sentencing enhancement for property damage over $50,000. The defendant was sentenced to 270 days in jail and was ordered to pay $90,000 in restitution.
Between August 2005 and March 2006, Schnapp engaged in a scheme known as check-kiting, which takes advantage of the banking “float period,” or the time between depositing a check and the receiving bank’s receipt of funds from the issuing bank. The receiving bank will credit the check depositor’s account prior to actually receiving money from the issuing bank.
Schnapp maintained two bank accounts, one at a Wells Fargo Bank branch in Newport Beach and another at a LBS Financial Credit Union in Long Beach. Beginning in 2005, Schnapp made nearly daily deposits into each account by writing a check to himself from the other bank account in constantly increasing amounts. The defendant deposited 261 fraudulent checks totaling over $6 million between the two accounts, which in reality had no money but appeared to have high balances because of his scheme.
All of the checks were written by Schnapp without sufficient funds to clear them but the defendant regularly withdrew cash anyway because he had deceived the banks into showing there were funds in his account. In all, the defendant stole over $90,000 and spent it on personal and business expenses.
In March 2006, LBS Financial Credit Union became suspicious and placed a verification hold on the last two checks deposited into their account from Schnapp’s Wells Fargo account. As a result, the checks he deposited into the Wells Fargo accounts were returned and caused the Wells Fargo account to be overdrawn. Both banks subsequently closed the defendant’s checking accounts and Wells Fargo reported the incident to the Newport Beach Police Department, who investigated the case.
Deputy District Attorney Yvette Patko of the Major Fraud Unit prosecuted this case.