Local businessman Brian Satisky, whose A&B Check Cashing has been accused of costing two banks and a money-order firm $10 million in an alleged check-kiting scheme, testified at a bankruptcy hearing yesterday that he didn't know about several financial matters at the company. He said his brother, Alec, handled the cash-flow bookkeeping.
A&B shut down its 20 locations around Baltimore last month after Alec Satisky committed suicide, according to Baltimore police and the state medical examiner, at the company's headquarters. Brian Satisky told police investigators that his brother had said he was contemplating killing himself because their business was in financial ruin. Together, the brothers owned A&B's parent company, Colleen Inc., and ran the check casher.
The FBI has opened an investigation into the allegations of check kiting. No criminal charges have been filed.
During a meeting of creditors in U.S. District Court in Baltimore, where Colleen Inc. has filed for bankruptcy protection, Brian Satisky gave his first public statements on the case. He revealed a few details about the company's operations and the roles he and his brother played, but responded to several inquiries saying: "I decline to answer the question as it may tend to incriminate me."
"Everybody is still feeling around trying to figure out what happened here," Howard Cardin, an attorney for Brian Satisky, said after the hearing.
Brian Satisky declined a request for an interview.
A&B, which had been in business more than three decades, offered check cashing and bill payment services and sold money orders and prepaid phone cards, often to customers who didn't have bank accounts. Brian Satisky, 54, served as vice president. Alec Satisky, who was 57, was president.
The alleged check-kiting scheme was uncovered last month shortly after Alec Satisky's death. Since then, Baltimore County Savings Bank has announced a $6.9 million loss, alleging check kiting by A&B, and Carrollton Bancorp has revealed that it lost $1.2 million. Global Express Money Orders Inc. put its losses at $1.8 million. The three are listed as A&B's largest creditors in its bankruptcy filing.
Baltimore County Savings also secured a lien against the personal assets of Brian Satisky. Baltimore Circuit Judge Patrick Cavanaugh granted the lien, and noted in his June 30 order Satisky's "apparent criminal activity."
In court filings, Baltimore County Savings said it received notice on June 23 that several "payment items" of six-figure dollar amounts from A&B were being returned unpaid. The items were drawn from an account at another bank and deposited at Baltimore County Savings. Alec Satisky signed some of the items, but most were signed by Brian Satisky, the filings state.
Baltimore County Savings regularly permitted A&B to withdraw proceeds from checks and other payment items before they had cleared because it had been considered "a long-standing and very reputable customer," the bank said in court papers. Because of the nature of A&B's business, it deposited enormous sums each day, the papers said. Both Brian and Alec Satisky had signature authority on the account.
David Meadows, general counsel at Baltimore County Savings and a former prosecutor, said in an affidavit that A&B and the Satiskys perpetrated a "massive check kiting" scheme that apparently involved the movement of millions of dollars a day between several bank accounts. In general, kiting schemes are a kind of shell game that takes advantage of the "float," or the amount of money in checks that have not cleared because of a time delay between when a check is written and when funds to cover that check are deducted from an account.
At the bankruptcy hearing yesterday, creditors questioned Brian Satisky about A&B's bank accounts and any remaining assets. He said Alec Satisky and another manager handled the ledger of receipts and disbursements. As for accounts receivable, Brian Satisky said he has not been in contact with the manager who handled that matter since the day his brother died.
`I have no idea'
On a number of questions, Brian Satisky said he didn't have the answer. When asked if the company had a key-man life insurance policy that would pay out upon Alec Satisky's death, he said he didn't know. When asked about accounting for $230,000 deposited in one account the day A&B shut down, he said, "I have no idea."
When reviewing what the brothers were paid, Brian Satisky said, "That's news to me," in reference to Alec Satisky expensing $60 a month for his cell phone to the company. Brian Satisky took home $310,000 in salary and bonus last year; Alec Satisky made $315,000.
As part of the bankruptcy proceeding, Colleen and A&B are expected to sell off equipment and leases for its locations, many of which are in supermarkets and liquor stores.
Marc R. Kivitz, a bankruptcy attorney for Colleen, said yesterday that four businessmen, whom he declined to name, have offered to buy half of A&B's stores for $400,000. While an agreement may be signed by the end of the week, Kivitz said, the court must approve the deal, and other parties could still outbid them.
Food King Inc., which subleased space to A&B in three stores, estimates it is losing $50,000 a week because of the check casher's closure and has asked the bankruptcy court to expedite the termination of the sublease so that it can find another tenant. DT&T Food Inc., which subleased to one A&B location, filed a similar motion.
"It certainly doesn't benefit the public to have a dark location," Kivitz said. "We're working as fast as we can."