What Is Check Kiting? The Fraud Scheme That Can Land You in Prison

If you’ve ever heard the phrase “playing the float”, you might already be familiar with check kiting, one of the most common forms of bank fraud.

Check kiting exploits the delay between check deposits and withdrawals, allowing fraudsters to create fake account balances, withdraw non-existent funds, and deceive banks and businesses. While it may seem like a simple loophole, kiting is a serious federal crime that can lead to prison time.

In this guide, we’ll break down:

• What check kiting is and how it works
• Major kiting scandals that made headlines
• How banks and regulators combat check kiting
• The penalties for check kiting (spoiler: it’s not just a slap on the wrist)

Let’s take a deep dive into one of the most deceptive financial frauds in history.

What Is Check Kiting?

Check kiting is a fraudulent practice where someone writes checks from an account without sufficient funds, using the delay (or “float” time) before the check clears to withdraw cash or create fake account balances.

The scheme relies on the time it takes for banks to process checks, allowing fraudsters to “borrow” money that doesn’t actually exist.

Example of Basic Check Kiting

Day 1	Joe deposits a $5,000 check from Bank A into his Bank B account.
Day 2	Before the check clears, Joe withdraws $5,000 from Bank B.
Day 3	The check bounces because there were never any real funds in Bank A.
Final Result	Bank B loses money, and Joe gets away with stolen cash—at least until he’s caught.

This process can be repeated across multiple banks and accounts, creating an illusion of real funds that don’t actually exist. Check kiting is a fraudulent practice that exploits banking float times to steal money or create fake account balances.

How Does Check Kiting Work?

Check kiting can happen in several ways, but the core concept is always the same: manipulating bank processing times to access non-existent money.

Types of Check Kiting Schemes

Circular Kiting

This involves two or more bank accounts where checks are constantly written and deposited between accounts to create the illusion of available funds.

1. A fraudster writes a $10,000 check from Bank A to Bank B (without actually having the money).
2. Before the check bounces, they write another check from Bank B to Bank A to cover the first one.
3. This cycle continues indefinitely—until the scheme collapses or they get caught.

Retail Kiting (Floating Fraud)

This happens when someone writes a check to a business (like a grocery store or gas station) with no real money in their account.

1. A fraudster buys $500 worth of groceries using a check that won’t clear.
2. By the time the store realizes the check is bad, the fraudster is long gone.

Corporate Kiting

Some businesses inflate their bank balances by moving funds between multiple accounts. This makes them look more profitable to investors, banks, or customers.

1. A struggling company deposits checks between its own accounts to appear financially healthy.
2. This deception allows them to secure loans or keep vendors from demanding payment.

All kiting schemes rely on timing loopholes, but eventually, the checks bounce, and the fraud unravels.

Famous Check Kiting Scandals

Check kiting has been behind some of the most notorious banking fraud cases in history. Here are a few of the biggest kiting schemes ever uncovered.

Frank Abagnale Jr. – The Con Man Behind “Catch Me If You Can”

In the 1960s, Frank Abagnale Jr. (famously played by Leonardo DiCaprio in Catch Me If You Can) kite-flew millions of dollars across multiple banks before being arrested. His scheme involved:

• Printing fake checks on his own letterhead.
• Opening dozens of bank accounts in different states.
• Taking advantage of delays in bank processing.

After serving time, he later became a security consultant for the FBI.

The First National Bank of Keystone – $500 Million Kiting Scheme

In the late 1990s, executives at The First National Bank of Keystone (West Virginia) used check kiting and fraudulent transactions to cover up massive financial losses.

• The fraud created fake profits and inflated the bank’s balance sheets.
• When the scheme collapsed, the bank lost half a billion dollars.
• Multiple executives were sentenced to prison for their roles.

Kiting schemes can be as small as an individual check or as massive as a multi-million-dollar bank fraud.

How Banks and Regulators Fight Check Kiting

Banks and financial regulators have stepped up their defenses against kiting, making it much harder to pull off today.

Modern Protections Against Check Kiting

Real-Time Check Clearing	Many banks now process checks within hours instead of days.
Anti-Kiting Software	Banks use AI to flag suspicious deposit patterns.
Check 21 Act (2004)	Allows banks to process digital check images, speeding up clearance times.

Even with these protections, some fraudsters still find ways to game the system—but banks are far less vulnerable than they were decades ago. Advances in real-time banking and fraud detection have made check kiting much riskier than in the past.

The Penalties for Check Kiting (It’s a Federal Crime!)

Check kiting isn’t just a bad financial move—it’s a serious crime under U.S. federal law.

Legal Consequences of Check Kiting

Bank Fraud Charges	Check kiting is a federal offense with up to 30 years in prison (18 U.S.C. § 1344).
Fines of Up to $1 Million	Courts can impose massive financial penalties.
Permanent Banking Blacklist	Convicted individuals lose banking privileges for life.

Kiting might seem like a clever loophole, but it’s a felony that can lead to years behind bars.

Check Kiting Is a Crime—Not a Loophole

Check kiting may have worked in the past, but today’s banking system has advanced fraud detection tools that make it nearly impossible to get away with.

If you need cash, don’t resort to illegal schemes. Instead of breaking the law, consider safe alternatives like BuckUp, where you can get instant cash for your phone—without scams or fraud.

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Citations

• U.S. Department of Justice: Bank Fraud Laws
• Federal Reserve: The Check Clearing Process
• FBI Case Studies: Financial Crimes and Fraud