Saturday, January 9, 2010

Check cashing scam being investigated

From the NY Post:

Investigators for New York City and State are zeroing in on corporate cheats that have allegedly been using storefront check-cashing operations to launder money and evade possibly hundreds of millions of dollars in taxes, according to very reliable sources.

The scam goes something like this, according to Mazzilli and the sources involved in the probe:

Let's say a bowling alley in the city needs a contractor to repair some concrete work.

The management of the bowling alley would, obviously, pay a contractor with a check.

In the illegal way of doing it, that check would then be brought by the contractor to a check-cashing operation -- rather than a regular bank.

The contractor would, of course, be given cash minus a fee of perhaps 2 percent to 5 percent of the total amount.

The check-cashing firm, ultimately, would deposit the check in its own account at a bank.

Investigators believe that contractors are routing these payments through check-cashing firms in order to avoid having the money show up as income, and thus skipping the payment of taxes.

Plus, doing it this way gives the contractor better cash flow for things like paying undocumented workers and, perhaps, making under-the-table payments to others.

Photo from the Daily News


Babs said...

Just contractors?

Anonymous said...

Since when is it a crime to cash a check at a check-cashing place?? There's plenty of people out there who simply don't like to deal with banks!!!!!!

Anonymous said...

Maspeth mom says..

If you are a legal business you must have an account with a bank or credit union.

You cannot go into a check cashing service and cash a check made out to ABC Corporation. ABC Corp must deposit that check into their bank account. But that does not stop shady check cashing places all over NYC from doing it. They charge a 5% fee.

Check cashing services must know their endorser. That is why you have to have ID to prove who you are when you cash a check at a check cashing service.

Anonymous said...

Speaking of checks...remember Congressman Ackerman...king of the check bouncers?

Did Gary ever pay back all that money?

Anonymous said...

Yes, you can cash a check in a check cashing place. It's not a crime to cash a check, as long as you report income on your books. Many people cash checks to get money quickly. Some banks have 3-5 day waiting period (for out of states checks). Maspeth mom, get your facts straight.