Auroraadvocate.com - Restaurateur gets jail term for 'check kiting'

by Marci Piltz

Record-Courier Reporter

Kent -- A popular restaurant has closed following a federal lawsuit involving what authorities said is one of the largest "check-kiting'" schemes ever prosecuted in Northeast Ohio.

The Ponderosa Steak House on Route 59 just outside the Kent city limits has been closed for about two weeks.

Fred Boukzam, 49, of the Cleveland suburb of Brooklyn and his restaurant company, PON Management, owned and operated 15 Ponderosa restaurants in Northeast Ohio, including the Kent-area location.

On Sept. 24, Boukzam was sentenced to 33 months in prison by U.S. District Court Judge Solomon Oliver Jr.

Boukzam and his company were named in an April indictment from U.S. District Court, Northern District of Ohio. According to the indictment, both Boukzam and PON Management were charged with one count of felony bank fraud stemming from the scheme.

According to federal court documents, Boukzam used his 15 company accounts at FirstMerit Bank to float $824 million in checks during a 21-month span. FirstMerit sustained a loss of $4.1 million after discovering Boukzam's activities in fall 2007, according to the documents.

During that time period, the documents say, Boukzam used several of his restaurants, including the Franklin Township location, as collateral for more than $2 million in loans.

The indictment states that between January 2006 and Sept. 24, 2007, Boukzam and other defendants wrote more than 44,000 checks in the scam.

During its final days, the indictment says, the defendants' scheme had increased to a level where more than 300 checks were being cashed daily for amounts totaling between $4.9 million and $5.25 million.

"WE CERTAINLY be-lieve this is the largest case of this type ever prosecuted here in the Northern District of Ohio," Assistant U.S. Attorney Jack Sammon said Sept. 23.

Check-kiting is a type of fraud perpetrated when one writes a bad check off one account and deposits it into a second account to cover the checks written off the first account.

The perpetrator uses lag time between when a check is deposited in a bank and when it clears the account it was written from to commit the fraud.

In June, Boukzam entered a guilty plea to the charge on behalf of himself and PON Management.

In February, Irwin Franchise Capital Corp. filed a breach of contract lawsuit in the district court against Boukzam and several other defendants seeking to recoup on the loans.

Court records indicate a settlement was reached between the defendants earlier this month, but despite the agreement, nine of Boukzam's 15 Ponderosa franchises closed, including those in Kent, Cuyahoga Falls, Akron and Austintown.

Former Ponderosa employee Carrie Grumney estimated about 40 people worked at the Kent restaurant.

Ponderosa's parent company, Metromedia Restaurant Group, did not return phone calls seeking comment on the restaurant's future.

In addition to owning Ponderosa, Metromedia also is the parent company of the Bennigan's and Steak and Ale chains, which have closed after filing for bankruptcy.

E-mail: mpiltz@recordpub.com

Telephone: 330-296-9657