Lawsuit filed against former lumberyard owners

    The former owners of Franklin County Lumber are being sued by a Missouri bank for more than $3.6 million in checking account overdrafts and other unpaid obligations.
    A lawsuit filed Feb. 25 in Franklin County District Court alleges Roger and Kaye Peters used a “check kiting” scheme to obtain more than $2.8 million from the Exchange Bank of Missouri. Additionally, the lawsuit claims the couple owes more than $780,000 on an unpaid promissory note.
    The family sold Franklin County Lumber in January 2016. The business is now under new ownership and has a new name.
    According to court documents, Franklin County Lumber had checking account overdrafts totaling $2,882,904.20 as of Feb. 8. Additionally, documents state $781,748.58 is owed on the unpaid promissory note. The Exchange Bank of Missouri is seeking immediate payment in the overall amount of $3,664,652.78.
    Check kiting occurs when a bank customer exploits the time it takes for financial insitutions to clear checks. The customer writes a check from an account with insufficient funds, then covers that check by depositing another check drawn against insufficient funds. Essentially, the scheme works as a way to obtain unauthorized interest-free credit.
    “FC Lumber purported to cover those checks by depositing in such account other checks drawn against insufficient collected funds, specifically, an intentional scheme to float checks between Exchange Bank and [undisclosed Hampton bank], and other financial institutions,” court documents state.
    Both the Peterses and the bank’s attorney, Gary Norton, declined to comment on the lawsuit.