* Mair Faibish said to run $750 mln check-kiting scheme
* Bank fraud, conspiracy, false statements to SEC alleged
* Defendant expected to plead not guilty
By Jessica Dye
April 13 A former chief executive of bankrupt
food company Synergy Brands Inc has been criminally
charged with attempting to inflate sales through a massive
cross-border check-kiting scheme that cost one bank $26 million,
federal prosecutors said on Friday.
Mair Faibish, 52, was charged with bank fraud, making false
statements and conspiracy. He faces up to 30 years in prison,
according to a spokesman for the U.S. Attorney's Office in
Brooklyn, New York.
Faibish intends to plead not guilty and will be "defending
the charges vigorously," his lawyer Bradley Simon said in an
interview. "When we have our day in court, I think it will be
very clear there was absolutely no fraud."
The defendant was arrested on Friday morning, and was
expected to be arraigned in Brooklyn federal court.
According to the indictment, Faibish and various accomplices
ran a $750 million check-kiting operation in which checks backed
by insufficient funds were transferred between associated
companies and various banks in the United States and Canada.
Prosecutors said banks would make funds from the bad checks
available, allowing Faibish and others to write more checks,
which were then transferred to other companies.
One lender, Signature Bank, lost $26 million from
the activity, according to the indictment.
A spokeswoman for the bank did not immediately respond to a
request for comment.
Faibish was also charged with overstating Synergy's
financial condition in an August 2008 filing with the U.S.
Securities and Exchange Commission.
According to prosecutors, about 20 percent of the $44.5
million of sales that the Syosset, New York-based company
reported for the second quarter of 2008 were fictitious.
Synergy also inflated its cost of goods sold and "prepaid"
expenses, prosecutors said.
"Corporate executives who abuse their positions of trust can
expect to be investigated and prosecuted to the full extent of
the law," U.S. Attorney Loretta Lynch said in a statement.
Synergy was a holding company with subsidiaries that
distributed a variety of food and beauty products, cigars and
It was delisted from the Nasdaq in December 2008, and filed
for Chapter 7 bankruptcy in January 2011.
Among its directors at the time of the bankruptcy was Bill
Rancic, winner of the first season of Donald Trump's reality
show "The Apprentice."
A call and email to a representative listed for Rancic were
not immediately returned Friday.
Synergy shares now trade on the Pink Sheets. They closed
Thursday at 9/100ths of a cent.
The case is U.S. v. Faibish, U.S. District Court, Eastern
District of New York, No. 12-265.