$17 million still lost in check case

December 02, 2007|By Laura Smitherman | Laura Smitherman,Sun reporter

A year and a half after Baltimore-based A&B Check Cashing collapsed, $17 million is still missing, one owner is dead and the other one isn't talking.

The check-cashing company shuttered its 20 stores shortly after allegations of a massive check-kiting scheme surfaced in June 2006. Alec C. Satisky, one of two brothers who ran A&B Check Cashing, died from a self-inflicted gunshot wound at the company's headquarters in a strip mall on West Patapsco Avenue - six days before the business filed for bankruptcy protection.

The suicide and A&B's demise sent shock waves through Baltimore's financial community; several institutions claimed that they lost more than $17 million through the check-kiting. A bank president resigned after his company was crippled by the losses. For a time, many residents faced difficulties getting their checks cashed.

An FBI probe continues.

Now independent bankruptcy trustees, frustrated in their efforts to track down assets for A&B's creditors, are seeking a highly unusual secret meeting in federal court in hopes of jumpstarting their investigation. The trustees asked to keep related court documents that contain "highly sensitive information" under seal, and to exclude the surviving A&B owner, Brian I. Satisky, from a hearing in judge's chambers.

Kiting is a kind of shell game in which perpetrators typically aim to quickly steal small amounts of cash from banks by taking advantage of a delay between the time checks are accepted and cleared. Two area banks and a money-order business say in court documents that A&B skimmed money in an elaborate ruse that went undetected amid the big sums of cash and checks it moved through accounts as part of its business.

But the whereabouts of the missing millions remains a mystery, according to the trustees and others involved in the case. The nature of A&B's cash-intensive business means that the paper trail is scant, and Brian Satisky has provided few answers, trustee Zvi Guttman said.

"One of them is not talking, and the other one's dead," he said.

Brian Satisky, 55, who has repeatedly asserted his Fifth Amendment right against self-incrimination in bankruptcy hearings and filings, declined to comment. Deborah S. Satisky, Alec Satisky's widow, could not be reached. Her lawyer, Deborah H. Devan, said her client wasn't involved in A&B and doesn't know whether the business was kiting checks or whether her husband was involved.

Events unfolded last year when Alec Satisky, 57, committed suicide - a .38 caliber revolver was found next to his body, according to police records and the state medical examiner's office.

Two people dialed 911 to report the shooting. One caller told the operator that a shot had been fired but didn't know who had done it; people can be heard crying in the background. Another caller knew that someone had shot himself in the head.

An operator asked, "You know the reason why he done this?"

The caller replied, "No, I have no idea."

According to a police report, Brian Satisky said that he and Alec had been talking that day about committing suicide because their business was in financial ruin. Brian told police that Alec said he needed to make phone calls and went to a back room. Brian said he heard a "pop" sound and went to the room where he found his brother lying on the floor. In the report, police said employees there didn't know the business was having financial problems.

Within a week, state regulators at the Department of Labor, Licensing and Regulation issued a cease-and-desist order against A&B, and the check casher's parent company, Colleen Inc., filed for bankruptcy.

Two banks, Baltimore County Savings Bank and Carrollton Bancorp, soon reported their losses and went to court along with Global Express Money Orders Inc. of Silver Spring to make claims against A&B and the Satiskys. Amid the fallout, Baltimore County Savings CEO Gary Loraditch resigned - the bank lost nearly $11 million. Several banks severed ties with check cashers.

The Satisky brothers spent decades building the A&B chain of stores that offered check-cashing and bill-payment services. They also sold money orders and prepaid phone cards. The stores catered to the so-called "unbanked," or people who need other means of cashing checks. They were scattered throughout the Baltimore area, primarily in working-class neighborhoods.

The business, according to Brian Satisky's testimony in bankruptcy court, struggled after paying $2 million in 2003 to settle a class-action lawsuit regarding payday loans. Under such loans, people borrow against their paychecks at high interest rates that critics say exploit the working poor.

Nonetheless, Brian Satisky went on to become a prominent member of a trade association and testified to Congress about the need for check-cashing services.

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