An irreverent Wall Street Blog
by Bill Singer
by Bill Singer
Deli Owner Bounces $82 Million In Checks
May 23, 2013
You got your folks who dream. You got your folks who dream big. And then you got a guy like Saquib Khan, 51, Staten Island, NY, who, well, to be frank, truly dreamed outside the box - but for the fact that he's headed for prison.
As we come upon Khan in 2012, we find the owner/operator of both a wholesale cigarette/grocery business and delicatessens in Staten Island. Apparently that mini-empire was not enough to satisfy the goals and aspirations of this businessman. No - Khan seems to have wanted bigger and better things. He had the vision think working. The American Dream.
During the holiday season from November through December 2012, Khan seems to have come up with an idea. Some might see his plan as brilliant and dynamic. Federal prosecutors, however, called it illegal and criminal. Essentially, Khan's get-rich-quick plan was to write $82,000,000 in checks from bank accounts under his control.
Respectfully, Khan may well have been a very, very successful entrepreneur, but I'm sort of guessing that there just isn't 82 million bucks to be made from selling cigarettes, lottery tickets, beef jerky, and cold cuts on lovely Staten Island. As it turns out, all the time that Khan was writing those millions of dollars worth of checks, he didn't have sufficient funds in his checking accounts. While it would be easy to simply dismiss Khan as a penny ante deli owner, the fact is that he was also a wholesaler of cigarettes and groceries; so let's not get too carried away by pretending that this is just another simple fellow standing behind a counter at some local store.
Khan's plan seems fairly simple. After filled in the dollar amounts of his NSF checks, he deposited the instruments into various banks; thereafter, the banks provided immediate credit for the entire amount of the deposits. Immediate credit on millions of dollars worth of presented but uncleared funds? Hey, ya gotta love it!
It seems that Khan's initial plan was to forestall detection as he rolled his scheme into even bigger amounts. As such, Khan wired most of the immediately credited funds from the banks where he had deposited the NSF checks back to the accounts upon which he had drawn those sums. Astonishingly, Khan needed only two weeks to accumulate some $5 million - not a bad take when you consider it was sort of the hidden profit on some $82 million in bogus checks.
Milo Minderbender SIDE BAR: Of course, banks also lent billions of dollars in mortgages to folks who couldn't actually afford the homes that they were buying, but the folks in the C-suites thought that they could make money by giving away money to folks who probably wouldn't be able to repay the loans. Not to worry. In Catch 22, the 1961 iconic novel by Joseph Heller, Lieutenant Milo Minderbinder, the mess officer, bought eggs for seven cents each, sold them for five cents, but still made a profit. Sure,you can dismiss Minderbender as a fictionalized character in a work of fiction; but, if you think about it (and maybe you don't want to think about too much because your head might explode), a lot of what brought us into the Great Recession was funny money being loaned to strawmen by folks simply trying to create the impression of non-existent mortgage demand by unqualified borrowers.Bill Singer's Grandmother SIDE BAR: All of which reminds me of my grandmother. When the family would go out for dinner, we would invariably wind up at some restaurant that offered a prix fixe dinner. Let's just say that this occurred in the 1950s and 1960s and imagine that you paid $10 for a appetizer, main course, dessert, and beverage. My grandmother, a somewhat petite woman with a modest appetite, would eat her appetizer, sort of make it through the bulk of the main course, and then announce that she was stuffed - however, she would still order a slice of pie. More often than not, after the dessert was placed in front of her, she would either take a solitary bite or leave it untouched. Having observed for a few years this curious behavior of ordering something but not eating it, I finally asked my grandmother why she ordered the dessert if she was too full to eat it. Her reply was "Your father paid $10 for a dinner. What? They should come out ahead?" If you think about my grandmother's explanation, there is quite a bit of logic in it. On the other hand, don't think too much about that logic because it becomes circular and may drive you crazy. Sort of like trying to understand why banks would extend immediate credit on $82 million in checks to a guy who sells Marlboros and cold cuts.
Alas, all good and bad things come to an end and on May 21, 2013, Khan pleaded guilty in federal court in Brooklyn, NY to eight counts of bank fraud and agreed to a forfeiture of his proceeds. He faces up to 30 years in prison per count, a $1,000,000 fine, and restitution. Sentencing is scheduled for September 2013.
Also READ:
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- Fuggedabout Facebook Or MF Global, Get The Stockbroker With The Bouncing Checks
- Bounced Personal Checks Get Merrill Lynch Broker Suspended By FINRA
- NSF Checks Checkmate Stockbroker's Career
- Former Bank of America Broker Suspended and Fined For NSF Checks and ATM Withdrawals