FBI arrests Howard County employee Woman is charged with check kiting

January 14, 1992|By Michael James | Michael James,Howard County Bureau of The Sun

An employee of the Howard County government was arrested yesterday by the FBI and charged with bilking Citizens Bank of Maryland of $93,000 through a mounting check-kiting scheme that required her to visit the Ellicott City bank nearly every business day for six years.

Federal agents arrested Lavida B. Smith, 40, of Columbia shortly before noon at the offices of the county Department of Finance in Ellicott City, where she has worked for the past 10 years as an administrative aide.

Although county officials said they planned to perform an audit of the department's books over the next few weeks, investigators said they had as yet no evidence that county money was used in the check-cashing scheme. The woman allegedly obtained cash, money orders and treasurer's checks from Citizens Bank with personal checks drawn on the Bank of Baltimore, where there were never sufficient funds to cover them.

According to the FBI, Ms. Smith began in December 1985 to use her two personal bank accounts in the check-kiting scheme. Allegedly, she obtained the cash, money orders and treasurer's checks from the Citizens Bank and quickly deposited them at the Bank of Baltimore in Columbia to give the impression that she had sufficient funds at the latter.

The investigators said Ms. Smith was required to do business at both banks nearly every day just to avoid being found out.

"In any check-kiting scheme, you start with nothing and end with thousands," explained Andrew Manning, a spokesman for the FBI. "Theproblem is, you become enslaved in the routine and you can't miss a day at the bank. After a while, you wish you'd never started the whole thing."

Investigators said that Citizens Bank officials finally caught on when Ms. Smith finally missed one of her deadlines at the bank.

She began by writing checks drawn on a Bank of Baltimore account that she opened with no more than $100 in 1985, the indictment said. It is alleged that she then immediately deposited the money orders or treasurer's checks obtained at Citizens Bank back into her Bank of Baltimore account before the original check cleared. Allegedly, the process was repeated more than a thousand times over a six-year period, with amounts ranging from $100 to $4,000 skimmed in a single transaction.

During that time, Ms. Smith "obtained cash, money orders and treasurer's checks in ever-increasing amounts, such that by March of1990, she made deposits in amounts exceeding $80,000 per day, and wrote checks . . , exceeding $80,000 per day," the indictment said.

Ms. Smith, described by co-workers as an affable woman who drove to work every morning in a Cadillac, was released on her own recognizance. She could not be reached by phone at her home last night.

Raymond F. Servary Jr., the director of Howard County's Department of Finance, said no discrepancies had been noticed in that office's accounts but added, "We're going to be doing an audit anyway."

Ms. Smith worked with county residents' water and sewer bills, and did not have the authority to disburse any county money, Mr. Servary said. "She had always been dependable for us," he said.

County Executive Charles I. Ecker said no decision had been made about Ms. Smith's employment status. "We're going to meet with the FBI to find out exactly what's going on," Mr. Ecker said. "All I can say is, she's not coming in tomorrow."

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