an illegal scheme that establishes a false line of credit – by the exchange of worthless checks between two banks.
EXAMPLE:
John has empty checking accounts at two different banks (Bank A and Bank B). He writes a check for $50,000 on his Bank A account, and deposits it in his Bank B account. John has good credit at Bank B. As such, he’s able to draw funds against the deposited check before it clears (ie, is forwarded to Bank A for payment, and paid by Bank A). Since the clearing process takes a few days, John deposits the $50,000 in his Bank A account – before the $50,000 check drawn on that account clears. As a result, he steals/kites $50,000.
see float; floating debt
