Con Man Admits to Running Ponzi & $5 Million Monthly Check Kiting Schemes

A South Carolina man who ran a Ponzi scheme and a $5 million a month check kiting fraud that victimized a credit union and banks will be sentenced in December.

Wade T. Caughman, 51, of Columbia pleaded guilty last month in U.S. District Court to operating a con operation to bilk investors and financial institutions, including the $829 million Palmetto Citizens Federal Credit Union and six other banks.

In exchange for his guilty plea, federal prosecutors agreed to drop six felony counts of bank fraud and money laundering, according to court documents.

The con man solicited investors by telling them he had lucrative auto sales leads from local credit unions. He also told investors that if they provided financing to buy the cars, they would make $800 in interest for every car sold to credit union members, federal prosecutors said in court documents.

To convince investors his operation was legitimate, Caughman made up phony auto loan and purchase paperwork, including fake names of buyers, vehicle identification numbers and insurance documents and emails from purported credit unions.

Prosecutors did not identify these credit unions in court documents. Caughman ran the con operation from 2011 to 2016.

To gain confidence from investors, Caughman took out funds deposited by investors to make payments to other investors. He also deposited and withdrew investors’ funds among multiple bank accounts, taking advantage of the float time to run his check-kiting fraud.

In addition to Palmetto Citizens FCU, other banks victimized were Congaree State Bank, First Citizens Bank, First Community Bank, National Bank of South Carolina, Southern First Bank and Wells Fargo, according to court documents.

Federal prosecutors did not report the total monetary losses of the financial institutions or the number of investors conned by Caughman.