Ga. daycare CEO ‘schemes’ major banks, employees out of millions, prosecutors say

“Ilene Farley’s long-running scheme of check kiting millions of dollars between banks and not paying federal taxes for employees adds up to a serious fraud which carries a lengthy prison sentence,” Leary said. “These types of criminal schemes will not be ignored by this office or our law enforcement partners. We will hold fraudsters accountable.”

Court documents revealed that Farley was the CEO of Tender Years Learning Corporation, an organization that operated a number of daycare centers across Georgia. Farley handled its financial affairs, which included several bank accounts, including with Bank of America and Citizens Trust Bank.

Leary said when a customer presents a check for deposit into an account, it can take anywhere from 24 hours to seven days for the check to clear. The term used to define that period of time as the “float.”

The term “check kiting” refers to a form of check fraud that involves taking advantage of the float to use the non-existent funds in another bank account.

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Leary added that the purpose of check kiting is to falsely inflate the balance of a checking account in order to allow written checks that would otherwise bounce to clear.

From April 2018 until July 2019, Leary said Farley check kited with the TYLC bank accounts with Bank of America and Citizens Trust Bank and sent over $75,000,000 to banks in unfunded amounts. The equivalent of the amount obtained from banks without secured loans.

During that time, Leary said 19 checks bounced in the amount of $2,202,162.41, resulting in Bank of America losing $514,240.89.

“Ilene Farley believed she had found a shortcut to put money in her pocket, and now she will pay for her criminal behavior,” said Keri Farley, Special Agent in Charge of FBI Atlanta. “Today’s guilty plea reflects the FBI’s commitment to work with our partners to bring fraudsters who steal from banks to justice.”

In addition to the check kiting scheme, between 2015 and 2019, Leary said she failed to pay the Internal Revenue Service $844,091.77 of the TYLC employees’ trust fund taxes that had been withheld from their paychecks. Leary added that employers are required to remit the withheld trust fund taxes to the IRS on a quarterly basis.

Leary said in court Farley admitted that she knowingly carried out a scheme to defraud Bank of America and Citizens Trust Bank. She also admitted that she did not pay her employee trust fund taxes.

“Employers have a lawful duty and responsibility to withhold income taxes from their employees’ payroll check; failure to do so negatively impacts the U.S. Government and the employees,” said James E. Dorsey, Special Agent in Charge, IRS Criminal Investigation, Atlanta Field Office. “IRS-Criminal Investigation is committed to finding and holding those employers engaging in employment tax evasion accountable so that American taxpayers who are entitled can enjoy the benefits of Medicare and social security.”

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