A chief U.S. bankruptcy judge has granted Lake City Bank’s motion to dismiss certain civil claims related to the July 2019 check kiting scheme orchestrated by Najeeb Khan.
U.S. Bankruptcy Court for the Western District of Michigan Chief U.S. Bankruptcy Judge Scott W. Dales granted the dismissals May 30 as part of a 43-page ruling.
Check kiting is a form of check fraud, involving taking advantage of the float to make use of non-existent funds in a checking or other bank account.
In a news release Wednesday afternoon from Lake City Bank, it states that Dales’ decision “significantly narrows the scope of the trustee’s overly broad and legally and factually insufficient claims. If the trustee decides to continue pursuing this meritless case, despite having failed - over three complaints spanning two years - to provide evidence to support its allegations, the court has acknowledged that Lake City Bank will have several strong defenses.”
Lake City Bank Chief Executive Officer David M. Findlay stated, “With two hands legally and procedurally tied behind our back, the bank knocked out the greatest alleged exposure at the very beginning of the judicial process. At this early stage, the trustee benefits from the legal position that requires the court to presume that all allegations as plead are true. Despite this favorable presumption, the court agreed with the bank’s argument and dismissed four counts from the complaint that sought recovery of $73 million Khan diverted from IOI...
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