SANTA ANA, Calif. – A Newport Beach attorney on Friday was sentenced to nine months in jail for overdrawing two checking accounts at LBS Financial CU and Wells Fargo as part of a $6-million kiting scheme.
Beginning in 2005, Herbert Schnapp, 65, made daily deposits into checking accounts by writing a check to himself from the other account in constantly increasing amounts. He deposited 261 fraudulent checks totaling over $6 million between the two accounts, which in reality had no money but appeared to have high balances because of his scheme.
All of the checks were written by Schnapp without sufficient funds to clear them but the defendant regularly withdrew cash anyway because he had deceived the credit union and bank into showing there were funds in his account. In all, the defendant stole more than $90,000 and spent it on personal and business expenses.
In March 2006, LBS Financial Credit Union became suspicious and placed a verification hold on the last two checks deposited into its account from Schnapp’s Wells Fargo account. As a result, the checks he deposited into the Wells Fargo accounts were returned and caused the Wells Fargo account to be overdrawn.
