TUSCALOOSA, Ala. A local real estate developer was charged with several frauds, including a check kiting scheme that cost Alabama One CU almost $1.3 million in losses.
Danny Ray Butler, 57, was charged in a 51-count indictment that includes charges of making false statements connected to schemes to defraud financial institutions and the U.S. Small Business Administration of more than $3 million. The schemes focused on Butler’s ownership of Butler Wholesale, a used car lot in Tuscaloosa, and Fosters Groceries, which he formed to build and operate a supermarket in Fosters.
The indictment charges Butler with a check-kiting scheme in 2011 and 2012 by making “carefully timed deposits and checks between his Butler Wholesale account at Alabama One CU and his account at West Alabama Bank and Trust to artificially inflate the account balances.” Hundreds of checks, totaling about $45 million, were deposited from one account to the other at the two financial institutions, according to the indictment.
When West Alabama Bank discovered the check-kiting scheme in February 2012 and refused to honor a number of Fosters Groceries’ checks deposited into Butler’s Alabama One account, the credit union lost about $1.275 million.
Butler also was charged with defrauding the SBA out of $1.76 million in connection with a loan to build Fosters Groceries, and making misrepresentations to a company that financed the car inventory at his used car lot.
