Day care CEO pleads guilty to financial fraud

Nov. 19 – MACON – The CEO of a Georgia-based day care company has pleaded guilty to federal charges arising from an investigation into a check kiting and tax fraud scheme involved.

Ilene Farley, 62, of Stone Mountain, pleaded guilty to bank fraud and non-payment of trust fund taxes on November 16 before the US District of Marc T. Treadwell. Farley faces a maximum sentence of 30 years in prison and a $1 million fine. Sentencing is scheduled for February 1.

“Ilene Farley’s long-standing plan to swap millions of dollars between banks and avoid paying federal taxes on employees adds up to a serious fraud that carries a lengthy prison sentence,” said US Attorney Peter D. Leary. “These types of criminal activities are not ignored by this office or our law enforcement partners. We will hold scammers accountable.”

“Ilene Farley thought she found a shortcut to put money in her pocket, and now she’s going to pay for her criminal behavior,” said Keri Farley, FBI Atlanta special agent. “Today’s guilty plea reflects the FBI’s commitment to work with our partners to bring bank stealing fraudsters to justice.”

According to court documents, Farley was the president and chief executive officer of Tender Years Learning Corporation. TYLC operated a number of day care centers in the Middle District of Georgia and elsewhere in the state of Georgia and had a registered office at 1010 N. Houston Road in Warner Robins. Farley took care of his financial affairs; The company had a number of bank accounts including with Bank of America and Citizens Trust Bank.

When a customer presents a check to fund an account, it can take anywhere from 24 hours to seven days for the check to clear. The time between presenting and cashing a check is called the “float”. The term “check kiting” refers to a form of check fraud in which the float — the time between the presentation of a check and the actual receipt of funds — is exploited to use funds that are not present in a checking or other bank account. The purpose of check kiting is to falsely inflate a checking account balance to clear written checks that would otherwise bounce.

From April 2018 to July 2019, using the TYLC bank accounts at Bank of America and Citizens Trust Bank, Farley conducted a check-kiting program and transferred more than $75,000,000 to banks that were unfunded amounts and equivalent to receiving money from banks with no secured loans. A total of 19 checks totaling $2,202,162.41 were bounced during the program.

Bank of America ended with a loss of $514,240.89.

In addition, Farley had to collect, account for, and pay so-called “trust fund taxes” on its employees, including Social Security, Medicare, and federal income taxes. Employers are required to remit these trust fund tax withholdings to the Internal Revenue Service on a quarterly basis. Between 2015 and 2019, Farley failed to pay the IRS $844,091.77 of TYLC employees’ trust fund taxes that were withheld from their paychecks. By pleading guilty, Farley admitted that she knowingly carried out a plan to defraud Bank of America and Citizens Trust Bank; In addition, she admitted that she had not paid any taxes on her employees’ trust funds.

The case was investigated by the FBI and IRS. Assistant US Attorney Elizabeth Howard is pursuing the case for the government.