Bank fee goof nets fortune, trouble

Shore man moved millions credited him by computer

October 26, 2006|By Matthew Dolan | Matthew Dolan,Sun reporter

Hate banking fees? Imagine if it worked in reverse.

It happened to Kenneth Shockley when a computer error turned charges against his account into enormous assets. His original balance of $10.86 grew so rapidly that by the spring of 2005, the owner of an Eastern Shore trucking business had millions to his name.

If only he hadn't gotten greedy.

In pleading guilty to larceny yesterday in federal court in Baltimore, Shockley, 41, of Salisbury admitted he transferred $3,429,020 out of a business bank account that should have been closed years ago. U.S. District Judge William D. Quarles Jr. could sentence him to up to 10 years in prison when Shockley is scheduled to return to court Jan. 10.

Shockley, the owner and operator of North America Logistics Services, a trucking company in Hurlock, opened an account in March 2002, court papers show. After he made several overdrafts, Transportation Alliance Bank attempted to close the account in February 2003, but mistakenly left it open.

During this time, according to prosecutors, a "computer logic error" occurred so that service fees were charged to the account, and the bank automatically began crediting and compounding the amount of the service fees to the account.

In April 2005, Shockley discovered the error and decided to tap the growing funds through the Internet, according to court papers. Shockley transferred $500 from the closed account to a separate operating account in his own name.

Between April 14, 2005, and May 17, 2005, Shockley moved $3,429,020 in 31 transactions from the closed business account to his personal account. The transfers only made the error credit his account exponentially.

Then Shockley took his biggest gamble. On May 20, 2005, Shockley requested that $500,000 be wired out of his personal account.

The large wire transfer request alerted the bank to examine the account and shut it down. At that time, Shockley's available balance had been almost $15 million.

While the account was still accessible, Shockley used the funds to buy a 2005 GMC Yukon Denali, a 2002 Mercedes Benz, trucks for his business, and retail items, as well as depositing funds in accounts owned by his wife, brother and an employee, court papers show.

"He was a hard-working businessman struggling to keep his business afloat," Shockley's attorney Scott Goldstein said yesterday. "If you're in a financially strapped situation, people get tempted."

matthew.dolan@baltsun.com

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