BCSB Bankcorp Inc. the holding company of Baltimore County Savings Bank, said it will report a $6.9 million after-tax lose or about $1.18 per share for the current quarter, which ended Friday. David Meadows, general counsel for BCSB, said the loss involves a check-kiting scheme perpetrated by a commercial customer.
The commercial customer went out of business last week, Meadows said. Check kiting typically involves one person who has control of at least two checking accounts at different banks, according to Dee Millard, of Carretaker, a Dallas software company that helps banks fight fraud.
In the usual situation, the check kiter writes a bogus check from Bank A for Cash and deposits it into the Bank B checking account, Millard said.
Then a short time later, the check kiter withdraws cash from the Bank B account that Bank B made available based on the check from Bank A. Later Bank B discovers that the Bank A money never existed, Millard said.
Meadows of BCSB said that several banks were victimized by the customer, who has filed for bankruptcy.
