11:44
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Simple English definitions for legal terms
kiting
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A quick definition of kiting:
Term: Kiting
Definition: Kiting is when someone writes a check from one bank account, even though they don't have enough money in that account to cover the check. Then, they deposit that check into another account, which makes it look like they have more money than they really do. This is illegal because it's like borrowing money that you don't have and not paying it back. Banks try to stop kiting by making people wait before they can use the money from a deposited check. If someone keeps kiting, they could be charged with a crime called bank fraud.
A more thorough explanation:
Kiting, also known as check-kiting, is a fraudulent practice where a person covers a bad check from one bank account to another. This is done by depositing a check from one account into another account, even though there are insufficient funds in the first account to cover the check. The deposited check increases the available funds in the second account, which can then be used to cover the bad check in the first account.
For example, let's say John has two bank accounts, Account A and Account B. John writes a check for $500 from Account A, even though there are only $100 in the account. He then deposits the $500 check into Account B, which now has a balance of $500. John can then use the $500 in Account B to cover the bad check in Account A.
Kiting is illegal and can result in criminal charges. To prevent kiting, many financial institutions have a waiting period before checks are deposited.
In the United States, kiting can violate the federal bank fraud statute if the victim is a federally insured financial institution. This means that if someone kites a check at a bank that is insured by the federal government, they could face federal charges.